Understanding Insider Activity

For investors, insider activity holds a special allure. But who exactly are these ‘insiders’?

Insiders, as per Section 16 of the Securities Exchange Act, include company officers, directors, 10% stockholders, or those privy to exclusive company information by virtue of their association with the organization.

Insiders abide by stringent rules which impose longer holding periods than those required of most investors. This regulation is a critical consideration for market participants.

Post Holdings: A Strong Buy

Post Holdings, a consumer-packaged goods holding company, engages in producing a wide range of food categories, including center-store, refrigerated, and convenient nutrition products, among others.

The company holds a Zacks Rank #1 (Strong Buy) and has witnessed a surge in earnings forecasts across multiple timeframes. Recently, a director made a substantial purchase of 1000 POST shares, amounting to approximately $105,000.

A robust earnings report propelled the stock, with POST exceeding the Zacks Consensus EPS estimate by a remarkable 60% and surpassing sales expectations by 2%. Both figures significantly surpassed the previous year’s results, attributed to a more favorable operating environment.

Post-pandemic, the company’s revenue has rebounded impressively, indicating a positive trend.

Casey’s General Stores: Value at a Discount

Casey’s General Stores operates convenience stores in various midwestern states. With a Zacks Rank #1 (Strong Buy), the company has seen an uptick in earnings outlook.

Trading at a slight discount compared to historical levels, its forward earnings multiple (F1) of 22.7X is currently below the five-year high of 32.2X and in line with the Zacks Retail – Convenience Stores average.

Additionally, the stock boasts a Style Score of ‘B’ for Value.

Aon: A Momentum Play

Aon, a multinational corporation offering risk management and insurance services worldwide, recently drew attention with a director acquiring 50,000 shares, valued at around $7.5 million.

The company’s shareholder-friendly nature is underscored by a robust 9.2% five-year annualized dividend growth rate, with shares currently yielding 0.8% annually and a sustainable payout ratio of 17% of its earnings.

Consensus estimates for its current fiscal year indicate a solid 12.7% earnings growth alongside nearly an 8% rise in sales. The positive momentum is expected to continue into the following year, with projections suggesting an additional 8% earnings increase and a 15% rise in sales.

The Significance of Insider Activity

Insider buying often instills significant confidence in investors. After all, why would an insider invest in a company if they lacked faith in its future?

All three aforementioned stocks – Post Holdings, Casey’s General Stores, and Aon – have witnessed recent insider activity.