U.S. stocks have repeatedly been in and out of bear market territory in 2022. The market’s downturn this year can be attributed to an increasing level of uncertainty for investors. Persistently high inflation, the economic fallout from Russia’s invasion of Ukraine, and recessionary fears have majorly contributed to the uncertain market environment.
Major stock indices retreated in October and November. The S&P 500 lost gains made over the last week after Fed Chair Jerome Powell indicated a downshift in the size of interest rate hikes. “The Powell pump has been erased,” said Fawad Razaqzada, market analyst at City Index.
Furthermore, the better-than-expected jobs report in November and strengthened activity in the services industry fueled concerns that the Fed will keep raising rates beyond a widely anticipated 5% terminal rate. The Fed’s continued rate hikes will likely tip the economy into a recession by next year.
Amid a volatile market backdrop, tracking insider transactions and trading activities is considered a smart strategy. An insider can be anyone employed by the company, typically an executive, director, or manager, who owns more than 10% of the company’s voting shares. Insiders tend to have better practical insights into a company’s outlook than the average investor due to their active involvement in the company’s affairs.
Peter Lynch, a well-known investor of all time, said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
Fundamentally sound stocks The Coca-Cola Company (KO), Biogen Inc. (BIIB), and Pure Storage, Inc. (PSTG) have witnessed high insider buying activity over the past six months. So, it could be wise to add these stocks to your portfolio now.
The Coca-Cola Company (KO)
KO is a famous beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide. The company offers sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, and energy drinks. Insiders were net buyers of 1,236,607 shares of KO in the last six months.
On September 29, KO and Molson Coors Beverage Company (TAP) entered an exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails inspired by the bright and refreshing taste of tequila and vodka-based beverages. It will be launched in more than 20 markets across the country in 2023 and might boost the company’s revenue stream.
For the fiscal 2022 third quarter ended September 30, 2022, KO’s net operating revenues increased 10.2% year-over-year to $11.05 billion. The company’s gross profit grew 7.1% year-over-year to $6.50 billion. Its operating income came in at $3.09 billion, up 6.6% year-over-year.
Furthermore, the net income attributable to shareholders of KO was $2.83 billion, up 14.3% year-over-year. Its non-GAAP net income per share grew 6.2% from the year-ago value to $0.69.
Analysts expect KO’s EPS to increase 7.4% year-over-year to $2.49 for the fiscal year ending December 2022. Similarly, the revenue estimate of $42.70 billion represents a 10.5% growth from the previous year. Also, KO has surpassed the consensus EPS and revenue estimates in all four trailing quarters.
The stock has gained 6.7% over the past month and 15.5% over the past year to close its last trading session at $63.44.
KO’s POWR Ratings reflect this promising outlook. The stock’s overall B rating translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
KO is rated a B in Stability, Sentiment, and Quality. Within the A-rated Beverages industry, it is ranked #16 out of 34 stocks.
Beyond what we’ve stated above, we have also given KO grades for Value, Momentum, and Growth. Get all KO ratings here.
Biogen Inc. (BIIB)
BIIB develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. The company has a leading portfolio of medicines to treat multiple sclerosis, has introduced the first approved treatment for spinal muscular atrophy, and developed the first and only approved treatment to address a defining pathology of Alzheimer’s disease. In the last six months, insiders purchased a net of 15,635 shares of BIIB.
Yesterday, BIIB and Sage Therapeutics, Inc. (SAGE) completed the rolling submission of a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for zuranolone in the treatment of major depressive disorder and postpartum depression. The submission completed the NDA filing that was initiated earlier this year.
On November 29, BIIB and Eisai Co., Ltd. (ESALY) announced the release of the results from ESALY’s global Phase 3 confirmatory Clarity AD clinical study of lecanemab, an investigational anti-amyloid beta (Aβ) protofibril antibody for the treatment of mild cognitive impairment (MCI) due to Alzheimer’s disease (AD) and mild AD with confirmed presence of amyloid pathology in the brain.
This is yet another step towards the efficacy and safety of an agent in development to treat MCI.
On October 17, BIIB announced that the FDA extended the review period for the New Drug Application for tofersen by three months. This follows responses submitted by BIIB to information requests by the FDA, which the FDA considered a Major Amendment to the application that will require additional time for review.
In the fiscal 2022 third quarter ended September 30, 2022, BIIB’s income before income tax expense and equity in loss of investee, net of tax, came in at $1.37 billion, up 371% year-over-year. The company’s net income increased 256.8% from the prior-year period to $1.13 billion, while earnings per share attributable to BIIB stood at $7.84, up 253.2% year-over-year.
In addition, the company’s cash and cash equivalents were $3.68 billion as of September 30, 2022, compared to $2.26 billion as of December 31, 2021.
Analysts expect BIIB’s EPS for the fourth quarter of the current fiscal year (ending December 2022) to increase by 3% year-over-year to $3.49. Also, the company’s EPS for the fiscal 2023 first quarter (ending March 2023) is expected to grow 9.6% year-over-year to $3.97. The company has surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
Shares of BIIB have gained 47.9% over the past six months and 30.1% over the past year to close the last trading session at $291.47.
BIIB’s fundamental strength is reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
BIIB also has grade A for Value and Quality and grade B for Sentiment. It is ranked #6 among 378 stocks in the Biotech industry.
To see additional POWR Ratings for Growth, Momentum, and Stability for BIIB, click here.
Pure Storage, Inc. (PSTG)
PSTG provides data storage technologies, products, and services in the United States and internationally. Its products and subscription services serve a wide variety of structured and unstructured data at scale and across all data workloads in hybrid and public cloud environments. Over the past six months, insiders purchased a net of 60,139 shares.
On October 26, PSTG announced a new fully managed service for Portworx® Enterprise to provide a Kubernetes-ready data plane to every developer that works on containerized applications. The company will gain strategically by giving access to the cloud experience to every developer who wants to work with Kubernetes apps in production on any storage infrastructure.
In June, PSTG announced AIRI®/S, the next iteration of its total AI-ready infrastructure, developed by PSTG and NVIDIA Corporation (NVDA). AIRI/S gives businesses a simple, on-demand infrastructure that speeds up AI initiatives of any size. This will allow businesses to scale their AI and data science expenditures without complication.
For the fiscal 2023 third quarter ended November 6, 2022, PSTG’s product revenue grew 15% from the previous year to $431.28 million, while its total revenue increased 20.1% year-over-year to $676.05 million. Its gross profit increased 24.4% from the year-ago value to $466.34 million.
Furthermore, as of September 30, 2022, the company’s cash and cash equivalents were $795.93 million, up 70.7% year-over-over and its total assets increased 3.7% year-over-year to $3.25 billion.
The consensus EPS estimate of $1.27 for the current fiscal year (ending January 2023) indicates a 91.5% year-over-year improvement. Likewise, the consensus revenue estimate of $2.75 billion for the same year reflects a rise of 26.3% from the prior year.
Furthermore, the company’s EPS and revenue for the next year are expected to increase 2.3% and 13.7% year-over-year to $1.30 and $3.13 billion, respectively. Shares of PSTG have gained 4.5% over the past six months to close the last trading session at $29.02.
PSTG’s POWR Ratings reflect this strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Quality and Growth. It has topped within the A-rated Technology – Storage industry.
Beyond what we stated above, we also have PSTG’s ratings for Value, Stability, Sentiment, and Momentum. Get all PSTG ratings here.
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KO shares fell $0.15 (-0.24%) in premarket trading Wednesday. Year-to-date, KO has gained 10.02%, versus a -16.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...
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