Hot stocks come in two forms: those that are hot to buy and those that are hot to sell. Today, we’re looking at four midcap stocks the insiders are buying and whether or not the stocks are good for investors. It is certain that insider buying is a good thing and points to solid business and potential for investor gains, but that doesn’t mean the market agrees. If the analysts or institutions have soured, the odds are high that new lows will be reached before any rebound will form.
Envista Holdings is the top midcap bought by insiders in Q4
Envista Holdings Corporation (NYSE: NVST) is a small dental supply company with international business. It operates in two segments that provide systems, software, supplies and services to dentists, doctors, clinics and hospitals. Its insider buying consists of four purchases by four insiders, including the CEO and a senior VP. Their purchases are the first insider activity in several quarters, the last being sales in Q1. Together, insiders own a small 1.2% of the stock; based on the analysts and institutional activity, they will probably get another chance to buy at a lower price soon.
Analysts are Holding the stock, but their sentiment and price target have fallen since last year. The Hold rating is down from Moderate Buy, and the consensus, which implies a 40% upside, is down more than 30%. As for the institutions, they started selling the stock in Q2 2023, and the sales pace ramped up into Q4, hitting an all-time high. That fact and the chart pattern suggest the market will move down to the $10 to $15 range.
Curtiss-Wright insiders buy in January
Curtiss-Wright Corporation (NYSE: CW) is an industrial components manufacturer with business in the defense, aerospace and power industries. It had three insiders make purchases in the first week of 2024, setting it up for more gains this year. The insider holdings are small, less than 1%, but compounded by a high 80% institutional holding, and the institutions have been buying. Institutional activity slowed sequentially throughout 2024 but was net-bullish each quarter, and that trend was sustained into the first week of 2024.
Analysts are also bullish on this stock. They rate it at Buy, up compared to last year, and the price target is favorable. The lowest price target tracked by Insidertrades.com assumes a 5% upside, while the consensus, trending higher, assumes a 10% upside. Curtiss-Wright is expected to post growth in Q4 and 2024 to include substantial margin improvement.
First Financial Bankshares, serving the Texas markets
First Financial Bankshares, Inc. (NASDAQ: FFIN) is a small regional banking operation centered in Texas. The company had three insiders make three purchases in Q4, bringing the total of consecutive quarters in which insiders only bought shares to eight. The insiders own about 4% of the company; purchases are mostly by directors but include most of the senior management team.
However, analysts rate this stock at Hold and have lowered their price targets, and institutions started to sell in Q4. The institutional activity is robustly bullish for FY2023, but the shift in Q4 is worrisome. Add in the analysts' consensus rating decline, and this stock may find itself range-bound in 2024. There is a dividend to offset the risk of range-bound trading. The stock pays about 2.5% at this level, and the distribution is expected to grow over time.
Topgolf Calloway Brands set up to advance in 2024
Shares of Topgolf Calloway Brands (NYSE: MODG) are trading near historic lows and show signs of a bottom. The move lower was driven in part by the analysts who rate the stock a Moderate Buy but trimmed their targets by 30% in 2023. The market is bouncing from critical support now and has insider buying to help it. The insider activity was active and mixed in 2023, with net activity being bearish but turning bullish at the end of the year. Three insiders, including two directors and the CEO, bought stock in Q4, bringing the total insider holdings to roughly 12%. Institutional activity is also bullish; they own about 82% of the company and bought on balance for the last three quarters of 2023.
