The Insiders Are Buying These Beaten Up Stocks
Today’s screen for insider buying stocks turned up three names that we are interested in. Groupon, Desktop Metal, and Sonic Automotive all have a positive outlook for business but their share prices have been trending lower on a variety of concerns. The leading cause for concern is inflation and the systemic headwinds dragging on results across sectors and industries and yet the insiders are buying the stocks.
Insiders Get A Deal On Groupon
Shares of Groupon (NASDAQ: GRPN) have been trending lower for years but have hit a bottom. After no insider transactions for several quarters, all of a sudden the insiders are buying. Major shareholder Jan Barta purchased more than $11.25 million worth of the shares in 5 transactions over two quarters. The purchases are worth about 1.95% of the market cap with shares trading near $19.50 and the institutions are buying too. Total insider holdings, including large shareholders, topped 16% with these new purchases, and the institutions together hold about 90%. On the institutional side of the story, they’ve been net buyers for the last 6 quarters and bought about 3.25% of the market cap in Q1 of 2022 alone.
Institutional and Insider activity is putting a bottom in share prices that is being aided by the analysts as well. The analyst's consensus price target is moving lower but is still more than 31% above the recent price action even with the latest reductions. The four most recent reductions, issued in March, have the stock trading just under the broad consensus of $25.50 and even the low price target of $20 is still above the recent price action. Assuming the company is able to outperform the very low bar set by the analysts when it reports in early May, we see this stock entering a reversal that could get it up into the $40 range.
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Desktop Metal Is On The Brink Of Reversal
Desktop Metal’s (NYSE: DM) Q4 results were game-changing for the business and the market. The company began production of one of its key products and made several high-profile sales that we see driving business as we move forward. That’s why it’s no surprise to see both the insiders and the institutions buying the stock and why we think this market is on the brink of a reversal. In regard to insider buying, CEO Ric Fulop purchased $0.526 million worth of the shares bringing the total insider ownership up to 19.25%. His purchase was a small percentage of 1% of the total market cap but a telling indication after the previous quarter’s sales. That sale was made by director Leo J. Hindery, jr.
There are 6 analysts following Desktop Metal and they see big things in store for the company. They rate the stock at a firm Hold/weak Buy with a price target more than 125% above the current price action. Desktop Metal will next report results in mid to late May and is expected to post a sequential decline in revenue that we do not see happening.
Sonic Automotive, Quietly Building A Winning Business
Sonic Automotive (NYSE: SAH) is a new and used car dealership that is quietly competing with the likes of Carmax and winning in the business. The company’s used car concept is called Echo Park, it has a healthy eCommerce channel, and both are growing like gangbusters. There is concern that used car sales will flag due to higher prices but that did not stop insider Paul P. Rusnak from buying more than $5.25 million worth of shares in early April. His buying helped put a bottom in the price action that we see keeping the stock above the $40 level. The analyst's sentiment is waning a bit, JPMorgan recently downgraded to Neutral, but even their price target is still more than 30% above the current price action. Sonic Automotive reports earnings in 2 weeks and is expected to post a large sequential increase in revenue driven by new stores, strong comps, and higher prices.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Groupon (GRPN) | $11.86 | -2.0% | N/A | 23.26 | Moderate Buy | $17.00 |
| Desktop Metal (DM) | $2.41 | -3.2% | 61.24% | -0.22 | Hold | $5.50 |
| Sonic Automotive (SAH) | $63.91 | -0.4% | 2.19% | 11.37 | Moderate Buy | $67.40 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
