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Amid Market Uncertainty, Insiders are Bullish on These Two Stocks
Stock Analysis & Ideas

Amid Market Uncertainty, Insiders are Bullish on These Two Stocks

Led by the tech sector, the last month has seen U.S. capital markets notch all-time highs. At first glance, it may appear the economy is in a healthy state, but several pressures and counterproductive forces are mounting within the financial system. A noticeable divergence has been building between the records set by the S&P 500, and inflationary fears, supply-chain constraints, and a growing labor shortage.  

Making long-term investments in this kind of environment can be tricky, to say the least. In this case, investors can take a cue from those in the know.

Insiders, as they’re called, are individuals with a 10% or more stake in a company, hold a senior officer role, or sit on a board of directors. Just like any other investor, they are allowed to make trades, even with shares of their own companies. While the phrase “insider trading” typically has a negative connotation, it is not necessarily an illegal activity. Insiders must submit their trades to the Securities and Exchange Commission (SEC) within two days, and once cleared, they are then published and made available to the public.  

Anyone can spend their time sifting through these disclosures, although thousands can be submitted each week. Additionally, there are multiple types of transactions made, with only one that usually indicates anything worth examining. The Informative Buy signals that the insider used their own capital to increase their holdings of a company. TipRanks’ unique tools, such as the Insiders’ Hot Stocks and the Top 25 Corporate Insiders, aggregate these transactions and classify them according to their relevance. 

While the everyday investor may not have access to the same information as an insider, following their trades can provide valuable insights. Let’s take a look at two stocks the insiders have deemed worthy of their own hard-earned money.  

Lionsgate  

The streaming wars have been heating up for some time now, with multiple established players making serious investments in their content slates and expansion. Most companies saw significant growth throughout the COVID-19 pandemic, as consumers were stuck at home with much more time on their hands. As economies now continue to reopen and individuals make their slow return to office-based lifestyles, questions regarding streaming’s staying power are being raised.  

One company with potentially more room to run is Lions Gate Entertainment Corp. (LGF.A), which has seen an insider throw his confidence behind it in recent days. Three days ago, member of the board, Gordon Crawford, completed an Informative Buy of $1,570,500 of company stock. The insider has been correct in his trades 75% of the time, bringing in an average return of 13.2% over the last year.  

After the purchase, Crawford’s holding value now stands at $22,314,242. While it’s unclear why he decided to increase his holdings, one thing is for sure: he is confident in the company.  

Recently publishing his bullish report on LGF.A is James Goss of Barrington, who wrote that the company has just closed a merger with television network Starz, and has been shifting its focus to generating revenues primarily from subscriptions. Goss argued that “Lionsgate has significantly growth the international reach of the Starz service,” and that “management views this asset as significantly undervalued and is exploring various options to better realize its value.”  

Goss rated the stock a Buy, and assigned a price target of $20.

EverQuote  

With the general trend in consumer society moving toward digital and online-based solutions across nearly every industry, EverQuote, Inc. (EVER) saw a sharp rebound from the pandemic induced sell-off in March 2020. After this, the stock continued to gain, moving beyond its previous all-time high. Unfortunately, the share price reached its peak in mid-2020 and has been in decline ever since.  

EverQuote runs an online insurance marketplace, linking consumers with providers by leveraging its data-based platform. The firm has capitalized on a larger shift toward increased spending on digital mediums by insurance companies, and has been the most successful in the auto sector. It should be noted, though, EVER recently reported a disappointing Q3, despite vertically integrating more types of insurance in its platform.  

While this is a cause for concern, one individual has been loading up on EVER stock. Over the last 10 days, David Blundin has purchased over $3 million in company stock. Blundin currently serves on the board of directors for EverQuote, and he also owns over 10% in the company. 

Although the stock has underperformed the market over the last year or so, this does not necessarily indicate future performance. In fact, it’s possible Blundin sees EVER’s discounted price as an attractive point of entry.  

Offering his opinion on the matter is Mayank Tandon of Needham & Co., who wrote that he expects the headwinds brought in by the company’s auto segment to be short-lived. Moreover, he calculates that the other emerging insurance offerings most likely won’t be affected by the same challenges felt by the company’s primary sector.  

Tandon is ultimately bullish on the stock, and rated it a Buy. He provided a new price target of $19, significantly lower than his previous at $45 per share.  

Despite his optimism, the analyst did offer some cautionary words, stating that he believes “it will take some time for marketing budgets to recover as carriers adapt to the current underwriting environment.” 

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Insiders’ Hot Stocks, a newly launched tool which identifies stocks that exhibit Strong Buy indicators, based on insider trading. 

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article. 

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance. 

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