After January’s stock rally, the story in the markets for the past two months has been volatility. Stocks were on a seesaw even before the recent SVB crash, and the banking woes of the last two weeks have simply exacerbated the up and down swings.
The increased uncertainty in the market conditions has put a premium on data analysis, the ability to collect and decipher the mass of information generated by Wall Street’s aggregated trading activity. Fortunately, there are already experts out there doing just this – and investors can follow their leads to find solid stock choices.
The insiders, corporate officers with positions of high responsibility and answerable to both Boards of Directors and stockholders, have a clearer view of their own companies’ shares than any investors can get – and being human, they’ll trade on that information. To keep the playing fields fair, regulatory authorities require them to regularly publish those trading activities – and those published trades give investors a valuable peek into an array of stocks. After all, if the insiders are buying big, perhaps the stock deserves a closer look.
So we’ve done just that. Using the TipRanks data tools, we’ve picked out two stocks that feature recent multi-million insider stock buys. These aren’t your usual trades – these are company officers putting down $2 million or more in major purchases. Add to that the stocks’ Strong Buy consensus ratings and near-100% upside potential for the coming year, and there’s something to interest any investors. Here are the details.
Guardant Health (GH)
The first stock on our list is Guardant Health, a leader in innovation genomic testing. The company uses liquid biopsy, mainly blood draws, as the basis for its precision oncology testing. Guardant offers medical labs access to a range of proprietary blood tests, data sets, and advanced analytical methods, with the long-term goal of using these methods and datasets to fight various cancers.
For now, Guardant can offer several blood test kits that provide complete genomic testing through a minimally invasive method. The company’s Guardant360 CDx test, a complete genomic blood test for all solid cancers, was the first such test to receive FDA approval. The test is able to give guideline-complete results in just 7 days, without the invasive aspects of tissue testing.
In addition, Guardant does have a test to work with more traditional tissue biopsies. The Guardant360 TissueNext test can use these larger samples to provide genomic data and other results when a blood draw will not be sufficient. And finally, the company’s Guardant360 Response test is a blood-only test that allows doctors to see changes in circulating tumor DNA, the molecular response, giving them a faster look at a patient’s response to targeted therapeutics such as immunotherapies or chemotherapy treatments.
In a recent news release, showing the practical value of Guardant’s tests, Sermonix Pharmaceuticals revealed that it is using the Guardant360 CDx test to screen patient enrollments for a Phase 3 clinical trial in the treatment of breast cancer.
In another recent news release, Guardant made public its submission of the premarket approval application to the FDA for its Shield blood test. This new test is a screen for colorectal cancer; the approval submission was based on a registrational study involving over 20,000 patients, which achieved an 83% sensitivity rate in the detection of colorectal cancer.
While Guardant typically operates at a net loss, the company has seen its top line revenues increase sequentially for the past three quarters. In the last quarter reported, 4Q22, Guardant had a top line of $126.9 million, for a 17% year-over-year increase. This was almost $3 million higher than had been expected. On the negative side of the ledger, the company’s forward guidance, predicting revenues for fiscal 2023 between $525 million and $540 million, was well below the analyst consensus estimate of $554.6 million.
Turning to the insiders, we find that the company’s co-CEO Helmy Eltoukhy just last week bought more than 93,000 shares for nearly $2.45 million. His colleague, and co-CEO, AmirAli Talasaz, made a similar purchase at the same time, picking up 97,000 shares for $2.5 million. These purchases brought Eltoukhy’s total stake in the company to $57.3 million, and Talasaz’s to $54.5 million.
For Canaccord Genuity analyst Kyle Mikson, the key point in all of this is the Shield approval submission. Mikson writes, “We view this as a solid milestone, recognizing this timing was largely expected… [we] see a solid future for Shield in CRC and other cancers (recognizing blood-based screening adoption may take longer than we originally anticipated). We fully expect Shield to achieve FDA approval (perhaps by 1H24) and Medicare reimbursement. However, these catalysts (as well as USPSTF guideline inclusion) will take at least 12 months to occur. That said, we believe the shares do not reflect the company’s other solid franchises… we believe the stock is highly compelling at current levels based on our 10-year DCF analysis.”
Based on all the above, Mikson rates this stock as a Buy, with a $60 price target indicating a robust 128% upside potential for the next 12 months. (To watch Mikson’s track record, click here.)
This cutting-edge health stock has acquired 15 recent Wall Street analyst reviews, including 12 to Buy and 3 to Hold – for a Strong Buy consensus rating. The stock is trading for $26.26 and its $51.38 average price target suggests its has a 96% upside for the coming year. (See Guardant’s stock forecast at TipRanks.)
Switching from healthcare to high-end battery tech, the second stock we’ll look at is Enovix, a leader in the design and manufacture of next-generation batteries. The company focuses on the development of new batteries using silicon anodes, 3D architecture, and anti-swelling constraints, all used together to create batteries with the higher energy densities needed to power today’s high-end products, from top-end electronics to electric vehicles.
Enovix’s technology is based on silicon anodes, which show promise to allow batteries with double the storage capacity of current graphite anodes. The high energy densities allowed by this new battery technology underlies Enovix’s lines of products, small battery cells designed for wearable electronics, mobile handsets, and laptop computers.
In recent days, Enovix has released two important updates. The first concerns its next generation autoline, the design of its next manufacturing line, called ‘Gen2 Autoline.’ This is an important milestone on the company’s path forward to scaling up manufacturing. The Gen2 Autoline design was approved by the company Board of Directors, and will feature increased automation and parallelism, along with additional in-line metrology.
Also announced earlier this month is the location of Enovix’s first high-volume production facility. The company will locate this facility, dubbed ‘Fab-2,’ in Penang, Malaysia. The location will take advantage of a skilled workforce, a business-friendly environment, and proximity to customers’ production floors.
Looking at the insider trades, we find that Thurman Rodgers, of Enovix’s Board of Directors, made a series of large purchases in recent days, totaling 262,710 shares of the company – these are currently worth more than $2.8 million. This purchase activity came less than a week after another series of purchasing 70,134 shares.
In his recent note on Enovix, Cantor Fitzgerald analyst Derek Soderberg puts the Gen-2 approval front and center in his outlook for the company’s prospects, writing, “[We] believe the design approval of Gen2 marks a major milestone for Enovix. The result of this, we believe, lowers execution risk and should contribute to investor confidence in the story. We continue to believe that Enovix is a highly disruptive company with a multi-year technology leadership position to take share of the sizable, growing market for lithium-ion batteries. Our confidence is building in the story, following the announcement of Gen2 design approval…”
These comments come along with an Overweight (Buy) rating, and a $25 price target that implies a robust upside potential of 123% for the year ahead. (To watch Soderberg’s track record, click here.)
While Enovix remains a highly speculative company, Wall Street is bullish on it. All 9 of the recent analyst reviews are positive, for a unanimous Strong Buy consensus rating, and the average price target of $22 suggests a 96% upside potential from the current trading price of $11.22. (See Enovix’s stock forecast at TipRanks.)
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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.