Stock Analysis & Ideas

2 Insiders’ Hot Stocks Worth Considering

The coronavirus disease (COVID-19) that started in December 2019 has turned the tide of global stock markets. The virus spread like a wildfire, engulfing the whole world, and the stock markets saw their biggest fall since the global financial crisis of 2008.

As the world turned to work from home, prices of e-commerce, technology, electronics, pharmaceutical and medical devices stocks touched record highs. The worst-hit sectors were travel, airline and hospitality, as lockdowns and the fear of catching the virus forced people to stay indoors.

As coronavirus became weaker with each wave, the skies opened to travel and the stock markets reflected positivity. But the happiness was only short-lived and got majorly impacted after Russia invaded Ukraine on February 24, 2022, in a special operation.

The invasion was followed by a swathe of sanctions against the transcontinental nation, which led to all major U.S. companies pulling out of Russia. Oil prices zoomed, inflation hit the roof, and supply chain disruption worsened, as both nations engaged in numerous rounds of futile peace talks.

As the conflict nears 50 days, uncertainty continues to dominate the global stock markets. In these unprecedented times, it is very difficult to identify stocks worth investing in. To make this task easier, we used the TipRanks Insiders’ Hot Stocks tool, which provides a list of stocks that saw recent insider trading activity.

Two Insiders’ Hot Stocks worth considering are IT giant HP, Inc. (NYSE: HPQ) and utility company PG&E Corp. (NYSE: PCG).

HP

Based out of Palo Alto, California, HP manufactures and sells hardware and software products and solutions. Its offerings include personal computers and other access devices, imaging and printing products, and related technologies, solutions and services.

Boasting a market cap of $40.23 billion, the company employs 51,000 people across the world.

Recently, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) acquired an 11% stake in HP, thus becoming the tech firm’s largest shareholder. A filing with the Securities and Exchange Commission (SEC) showed that Berkshire Hathaway bought nearly 121 million shares of the company with a value of $4.2 billion.

On February 28, HP reported better-than-expected financial results for the fiscal first quarter ended January 31, 2022. Adjusted EPS grew 20% year-over-year to $1.10, beating the Street’s estimate of $1.02. Revenues jumped 8.8% to $17.03 billion, surpassing analyst expectations of $16.52 billion.

Along with the first-quarter results, the company also provided guidance for the second quarter and Fiscal Year 2022. For the second quarter, it expects adjusted EPS to range from $1.02 to $1.08, and between $4.18 and $4.38 for the full year.

During the first quarter, HP repurchased approximately 42.6 million common shares for $1.5 billion cash and paid $0.25 as dividend per share totaling $300 million.

Last week, UBS (NYSE: UBS) analyst David Vogt downgraded the rating on the stock to Hold from Buy and maintained a price target of $40 (5.6% upside potential).

The analyst said that the stock has a balanced risk/reward profile and its price has almost doubled since the beginning of the COVID-19 pandemic.

Vogt’s cautious stance on HP is because of “incremental signs of softness in low-end consumer PCs.”

He also thinks that after the $3.3 billion acquisition of Plantronics (NYSE: POLY) by the end of this year, HP’s share repurchases will take a back seat.

Overall, the stock has a Hold consensus rating based on one Buy, five Holds and two Sells. HPQ’s average price target of $36.36 implies 4% downside potential.

Further, according to TipRanks’ Insider Trading Activity monitoring tool, Insider Confidence Signal is Positive for the stock as corporate insiders have bought $397.6 million worth of HP shares over the last three months.

PG&E

Founded in 1905, PG&E provides natural gas and electricity to nearly 16 million people in northern and central California. It generates electricity using nuclear, hydroelectric, fossil fuel, fuel cell, and photovoltaic sources.

Based out of San Francisco, California, the company’s service area stretches from Eureka in the north to Bakersfield in the south, and from the Pacific Ocean in the west to the Sierra Nevada in the east. It has 5.5 million electric customer accounts and 4.5 million natural gas customer accounts.

Recently, PG&E signed an agreement with six Californian counties that were devastated by a wildfire. The $55 million deal requires the company to carry out independent oversight in these counties for five years. The agreement also closed criminal investigations against the $29.95 billion utility company related to the 2019 Kincade Fire and last year’s Dixie Fire in the Sierra Nevada.

On February 10, PG&E reported financial results for the fourth quarter of 2021 and provided guidance for full-year 2022. Adjusted EPS came in at $0.28 per share, higher than the year-ago figure of $0.21 and the Street’s estimate of $0.27. However, it did not provide quarterly revenue figures.

For the full year, PG&E expects adjusted earnings in the range of $1.07 to $1.13 per share.

On April 12, Mizuho Securities analyst Paul Fremont maintained a Buy rating on the stock and raised the price target to $18 from $16 (43.7% upside potential).

The analyst is hopeful that the company will reach a settlement in the 2020 Zogg Fire incident in California’s Shasta and Tehama Counties.

Based on four Buys and two Holds, PG&E has a Moderate Buy consensus rating. PCG’s average price target of $16 implies 27.7% upside potential from current levels. Shares have gained 19.3% over the past six months.

Moreover, as per TipRanks’ Insider Trading Activity monitoring tool, Insider Confidence Signal is Positive for the stock. Corporate insiders have sold $474.1 million worth of PG&E shares over the last three months.

Conclusion

Investors looking for long-term returns may consider HP and PG&E stocks. It seems that the strong fundamentals and growth strategies of both companies make them a safe bet in the current economic scenario.

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