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Strong Insider Buying Puts the Spotlight on These 2 Stocks
Stock Analysis & Ideas

Strong Insider Buying Puts the Spotlight on These 2 Stocks

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In the midst of a volatile macro environment, strong insider buying could be considered a positive signal. This article focuses on one stock from the real estate sector, which makes up 23.8% of the insider’s portfolio, and another from the banking sector, with a total loan origination of $464.2 million and deposits of $18.3 billion.

TipRanks Insiders’ Hot Stocks tool could help investors identify stocks that have seen strong insider trading activity recently. Using this tool, we have identified two stocks about which insiders are positive, and Wall Street analysts have a Moderate Buy.

According to a Financial Times report from earlier this year which cited VerityData, stock buying among corporate insiders for companies in the S&P 500 (SPX) was the strongest since March 2020 in the period from May 1 to May 24, 2022.

The report also quoted David Giroux, portfolio manager at T. Rowe Price, as stating that strong insider buying could potentially be a signal that the market had hit a bottom. Moreover, strong insider buying may also signal that corporate insiders believe that the company’s shares could rise.

RE/MAX Holdings (NYSE: RMAX)

RE/MAX Holdings, founded in 1973, is a franchisor of real estate brokerages under the RE/MAX brand, while mortgage brokerages in the United States are franchised under the Motto Mortgage brand. Currently, the company has 140,000 agents and is present in over 110 countries.

The company is expected to announce its Q2 results on August 4.

RMAX delivered better-than-expected results in Q1 as revenues increased 25.9% year-over-year to $91 million. Adjusted earnings came in at $0.51 per diluted share in Q1 versus $0.46 in the same period a year ago.

Steve Joyce, RE/MAX Holdings’ CEO commented, “Double-digit organic revenue growth in our core operations and continued strong performance from our acquisition of the RE/MAX INTEGRA North American regions contributed to our first quarter better-than-expected results.”

Joyce pointed out that multiple factors were responsible for the company’s organic growth, including “higher attendance at our recent annual agent convention, rising home prices, and our expanding mortgage business.”

RMAX has projected its Q2 revenues to range between $91 million and $94 million, while adjusted EBITDA is projected to be in a range of $32.5 million to $35 million.

Wall Street analysts are cautiously optimistic about the stock with a Moderate Buy consensus rating based on two Buys and one Hold. The average RMAX price target of $29 implies an upside potential of 17.2% at current levels.

Corporate Insiders are also lapping up the stock. Late last month, Adam K. Peterson, a managing director of The Magnolia Group, in a series of transactions, bought around 120,356 shares in the price range from $21.94 to $24.08 per share.

Currently, RMAX shares comprise 23.8% of Peterson’s portfolio with a success rate of 100% and an average profit of 5.8%.

Besides Peterson, corporate insiders have bought RMAX shares worth $2.8 million in the past three months and are positive about the stock.

Columbia Banking System (NASDAQ: COLB)

Columbia Banking System, headquartered in Tacoma, Washington, is the holding company of Columbia Bank, a full-service bank with a Washington state charter. Columbia provides commercial banking services to different entities, including small and medium-sized businesses and individuals, including professionals. The Bank has around 150 banking offices in the states of Washington, Oregon, Idaho, and California.

The bank delivered robust results in Q1 with a net interest income of $146.2 million, an increase of $22.2 million from the same period a year earlier. At the end of Q1, Columbia Bank’s total deposits stood at $18.3 billion, with 48% noninterest-bearing deposits and the remaining 52% interest-bearing.

Chris Merrywell, Columbia’s EVP and COO commented, “We have been successful in retaining existing and attracting new bankers in all of our markets, which generated loan production of $464.2 million, a new non-PPP first-quarter record. This, combined with increased account retention, translated into excellent loan and deposit growth during the first quarter, which typically is our seasonally lowest.”

Considering the strong results, Wall Street analysts are also cautiously optimistic about the stock with a Moderate Buy consensus rating based on one Buy and two Holds. The average COLB price target of $35 implies an upside potential of 19.5% at current levels.

In the past few days, COLB’s senior executives have been buying into the stock and have together bought shares worth $37,782. In the last three months alone, corporate insiders have bought shares worth $170,100 and are very positive about the stock.

Bottom Line

Considering corporate insiders’ positive sentiment about both stocks and analysts’ cautiously optimistic stance, it seems worthwhile for investors to consider these two stocks amid the current volatile environment.

Notably, TipRanks’ insider transactions reflect commendable annualized returns of approximately 11% in the past 13 years and 18.6% by top-ranked insiders.

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