Investors are constantly looking for ways to generate big returns, after all that is the whole point of investing. Achieving that goal is easier said than done, however. As with anything, if it were really simple, investors would only have success stories to tell.
That said, there are ways to gain an edge in the market, and one common route is to keep track of insiders’ actions. Insiders are corporate officers responsible for their respective companies’ performance and have access to information not available to casual investors. So, if they are seen purchasing shares of their own company’s stock, especially in bulk, it usually indicates that they believe the shares offer good value at the current price.
To keep the playing field level, insiders are required to make their purchases public and TipRanks’ Insiders’ Hot Stocks tool offers a way to follow all the latest insider transactions.
Against this backdrop, we delved into the platform to get the lowdown on a pair of stocks that some of those in the know have splashed out at least $1 million on.
In fact, these insiders are not the only ones thinking the time is right for loading up on these equities. According to the analyst consensus, both stocks are rated as ‘Strong Buys’ and boast triple-digit upside potential for the coming year. Let’s find out just why these stocks may double or more in the year to come.
Reneo Pharmaceuticals (RPHM)
We’ll start with Reneo Pharmaceuticals, a clinical-stage biotech firm that has an interesting take on genetic diseases. The company is focused on developing new therapeutic agents to treat genetically-based mitochondrial diseases. These diseases are linked to conditions involving deficits in metabolism and energy production at the cellular level. Mitochondria, the particular cellular organelles that Reneo is focused on, are the ‘powerhouses’ of animal cells. They produce the basic metabolic energy for the organism and carry a unique genetic code, separate from the cell’s nucleus.
Mitochondrial diseases are rare, and in the jargon of cutting edge biopharmaceutical research, they have ‘high unmet medical needs,’ which is to say, these conditions are difficult to treat, and have few or no effective treatments. Reneo is developing a novel drug candidate, mavodelpar (also called REN001), on a track it calls ‘one approach, multiple diseases.’ The company has designed mavodelpar as a multipurpose tool in the treatment of mitochondrial and related diseases, gaining efficiency through creating one drug with more than one application.
That can be seen in Reneo’s clinical trial program. Mavodelpar is the subject of several trials, with two main tracks – one as a treatment for primary mitochondrial myopathies (PMM) and the other testing the drug in the treatment of long-chain fatty acid oxidation disorders (LC-FAOD).
The first of these tracks is the farther along. During the first quarter of this year, Reneo reported completing patient enrollment in the STRIDE study, a pivotal trial of mavodelpar in adults with PMM. The company planned for 200 patients and enrolled 213; topline results are expected in 4Q23.
In addition, Reneo has also enrolled more than 100 patients in STRIDE AHEAD, a follow-on trial. This study, an open-label extension trial of mavodelpar in adults with PMM, now has more than 50 patients reaching the 6-month marker. The STRIDE AHEAD study marks an expansion of Reneo’s program, as it has been amended to include adult PMM patients whose disease was caused by defects in nuclear DNA (nDNA) within the cells. Enrollment of these patients began in the current quarter, 2Q23.
Finally, during Q1, Reneo received the FDA’s Fast Track designation for mavodelpar for the treatment of LC-FAOD.
With all of these catalysts coming up, it’s clear that Reneo’s mavodelpar is bursting with opportunities for investors. And it’s also clear that at least one insider is willing to put his money down on this stock. According to insider data, Niall O’Donnell, co-founder of Reneo, purchased 125,000 shares of RPHM earlier this month, totaling a million dollars.
He’s not the only bull, though. Baird analyst Brian Skorney liked the company’s latest quarterly update and writes of Reneo: “The 1Q print was straightforward, with management continuing to execute toward the STRIDE top line readout, which remains on track for 4Q23. We continue to expect that a clear benefit on the walk test primary endpoint, with support from secondaries, would elucidate the remaining development path necessary to get to approval, and lead to a substantial upward rerating in the share price.”
Looking forward, Skorney puts an Outperform (i.e. Buy) rating on Reneo shares, and his $28 price target indicates the extent of his confidence, pointing to a 282% one-year upside potential. (To watch Skorney’s track record, click here)
Overall, there are 3 recent analyst reviews on this stock, and they are all positive – for a unanimous Strong Buy consensus rating. (See RPHM stock forecast)
Caesars Entertainment (CZR)
Moving on from biotech, let’s shift our focus to the leisure industry and explore Caesars Entertainment. Formed in 2020 through the acquisition of Eldorado Resorts by Caesars, this company carries the esteemed legacy of a venerable name in the casino and resort industry. With 51 casino and resort properties spread across 16 states, Caesars offers an extensive portfolio that includes 2,800 table games, over 52,000 e-games (such as slot machines and video lotteries), and more than 47,000 hotel rooms. Moreover, Caesars has made significant investments in the digital gaming space, allowing customers to engage in gaming experiences through platforms like Caesars Sportsbook, Caesars Racebook, and various iGaming mobile apps.
On the ground, the company’s brands include such well-known names as Caesars Palace, Eldorado, and Harrah’s, and Caesars has made great strides in customer retention, with the development of the casino industry’s largest customer rewards program. Overall, with a market cap just under $9 billion and approximately $10 billion in annual revenue, Caesars is one of the largest casino, resort, and gaming companies in the US.
Its size, and its recovery from the pandemic shutdown policies, is visible in the full-year revenue numbers. Last year, Caesars brought in $10.82 billion at the top line, up more than 14% year-over-year. In the first quarter of this year, the company continued to show top-line strength, despite some mixed results.
The 1Q23 revenue total came to $2.83 billion, up 21% y/y and beating the forecasts by $40 million. However, on the bottom-line, a 63-cent EPS loss was 59 cents below the forecast. On the balance sheet, the firm had $965 million in cash on hand as of the end of Q1.
Looking at insider activity, we discover a notable buy made by Michael Pegram, a member of the Board of Directors, earlier this month. He acquired 25,000 shares of CZR, investing $1.125 million in the purchase.
Also bullish on the stock is TD Cowen analyst Lance Vitanza. He was struck by the company’s continued improvement in quarterly financial results, and wrote of the casino operator: “Caesars successfully executed across its portfolio as evidenced by strong first quarter revenue and Adj. EBITDAR in Las Vegas, consistency in Regional operations, and improved financial performance in Digital, the latter of which is expected to generate positive EBITDA as early as 2Q, we believe… Underlying strength in the industry, adequate levels of liquidity, and continued commitment to deliver the balance sheet increase the value of the shares, in our opinion.”
For Vitanza, this adds up to an Outperform (i.e. Buy) rating, while his $88 price target implies that CZR stock will gain 101% in the next 12 months. (To watch Vitanza’s track record, click here)
Overall, Caesars has picked up 9 recent reviews from the Wall Street stock analysts and these break down 7 to 2 favoring Buys over Holds, for a Strong Buy consensus rating. (See CZR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.