Every investor wants an ‘in,’ some hint that will tell exactly what a stock is going to do, and when. The kind of signal that will cut through the market’s noise, and makes sense of the deluge of raw data that every company generates. Multiply that data by 10,000 publicly traded stocks, and you’ll have some idea of just how daunting the markets can be.
It’s tempting to follow an expert: a Wall Street analyst, or a trading guru. They all have important contributions to make. But here, we’ll take a look at some corporate insiders. These are names you likely haven’t heard, because they have a lower profile. They are company officers, with close insight to their own companies and business niches.
Insiders know what’s in store for their companies, based on their positions of corporate responsibility – responsibility to Directors and shareholders, for bringing in profits and returns. Which makes their trades a sound place to start looking for solid buys.
Taking this into consideration, our attention turned to three stocks with recent informative insider buys. Running the tickers through the Investing Insights platform, we found out that all three score a ‘Perfect 10’ smart score. Let’s take a closer look.
Nicolet Bankshares (NCBS)
We’ll start with Nicolet Bankshares (NASDAQ:NCBS), a small-cap regional bank holding company based in Wisconsin. The subsidiary company, Nicolet National Bank, operates 30 branches in Wisconsin and Upper Michigan, offering a full range of personal and business banking solutions, ranging from checking accounts and savings deposits to mortgages, wealth management, and retirement services.
The company has seen sound revenue and earnings through the last 5 quarters, which continued in its latest quarterly statement. Nicolet reported EPS of $1.77 per share in 2Q21, based on $18.2 million in net earnings. The net was up 34% year-over-year, with the EPS gaining 38% – and beating consensus by over 8%. Revenue also came in ahead of the Street’s forecast, increasing by 13.8% from the same period a year ago to reach $55.75 million, a $19.62 million beat. The company finished the first half of the year with $4.6 billion in total assets, of which $792 million was cash or cash equivalents.
Management boasts that Nicolet has the most active acquisition record among Wisconsin banks – and in 1H21, the company made two relevant announcements. First, in April, Nicolet reached a firm agreement to acquire Mackinac Financial (NASDAQ:MFNC), a regional bank with $1.5 billion in assets. The deal will close in 3Q21, pending shareholder approval; regulatory approval has already been obtained.
Second, Nicolet entered an agreement to acquire County Bancorp (NASDAQ:ICBK), a major agricultural lender in Wisconsin. County will also bring $1.5 billion in assets to the company, and the merger is expected to close in 4Q21. Both companies are now seeking shareholder and regulatory approval.
Turning to the insiders, we find that the company’s CFO, Hubert Moore, and a Board member, Robert Weyers, have both made informative buys in recent days. Moore spent over $510,000 buying up 7,000 shares, while Weyers’ buy was smaller, $253,000 for 3,500 shares.
Writing for Maxim (NASDAQ:MXIM), 5-star analyst Michael Diana sees the company’s acquisition activity as key.
“We believe that NCBS deserves a premium due to its record of making accretive acquisitions, the most recent of which was announced last month…. Since 2016, NCBS has acquired Baylake Corp, First Menasha Bancshares, and Choice Bancorp to become the leading independent bank in the demographically attractive areas of Green Bay and the Fox Valley. Its recently-announced acquisitions of MFNC [Mackinac] and ICBK [County] should continue NCBS’ streak of successful acquisitions, in our view,” Diana wrote.
Diana gives the stock a Buy rating and $94 price target that suggests room for 30% share appreciation in the year ahead.
This small-cap banking company has picked up 3 recent reviews from Wall Street – and they all agree that it’s a stock to Buy, making the consensus a unanimous Strong Buy. The shares are priced at $72.33 and their $89.33 average price target implies a 23.5% one-year upside potential. (See NCBS stock analysis )
Geo Group (GEO)
Let’s change pace, and move from banking to real estate. Geo Group (NYSE:GEO) specializes in secure facilities and community reentry centers – in short, prisons and mental health facilities. The company works in all phases of the real estate end – from design and development to financing and operation of the facilities, and provides rehabilitation, post-release support, and electronic monitoring, and community-based services. The company is based in Florida and operates in North America, the UK, Australia, and South Africa.
Geo Group reported $576.4 million in Q1 revenues this year, down 4% year-over-year. While the top line was down, earnings were up. EPS came in at 41 cents, nearly double the 21 cents reported in the year-ago quarter.
In recent months, Geo Group has seen some negative headlines, including a non-renewal of contract by the US Marshall’s service for detention facilities in Queens, New York. The Queens facility non-renewal involves the loss of $19 million in annual revenue. On the positive side, Geo Group continues to operate holding centers for Immigration and Customs Enforcement. The company is careful to state that it does not operate ICE facilities involved in the detention of minors.
On the insider front, we see a clear case of confidence. CEO George Zoley spent $1.123 million to pick up 166,664 GEO shares in mid-June.
5-star analyst Joe Gomes, in his coverage of GEO for Noble Capital, sees the company on firm footing, despite the contract loss.
“We continue to expect GEO to see an ongoing recovery from COVID impacts throughout the year. Management’s guidance includes the impact of the loss of the BOP contracts, but only the loss of the USMS Queens facility. These negatives are partly offset by activation of ICE (NYSE:ICE) facilities in late 2020 which should achieve normalized operations over the course of 2021,” Gomes opined.
The analyst summed up, “GEO shares present a favorable risk/reward opportunity in our view. While COVID and the political rhetoric remain headwinds, we believe the Company’s real estate assets and high quality contracts eventually will be properly valued.”
To this end, Gomes gives GEO shares an Outperform (i.e. Buy) rating along with a $15 price target. Investors could be sitting on gains of ~100%, should Gomes’ forecast play out as anticipated.
Overall, the two most recent reviews of GEO are a Buy and a Hold, making the analyst consensus view a Moderate Buy. The stock is priced at $7.52, and its $11.63 price target implies a 55% growth potential in the next 12 months. (See GEO stock analysis)
IMARA (IMRA)
Last but not least is Imara (NASDAQ:IMRA), a clinical stage biopharmaceutical firm, engaged in research on Hemoglobinopathies. Specifically, the company has a drug candidate in the pipeline as a treatment for sickle cell disease and beta thalassemia. These are two blood disorders – both sets of related diseases – that cause anemic symptoms; sickle cell disease is a genetic disorder that causes misshapen red blood cells and can lead to serious quality-of-life issues and shortened life span, while beta thalassemia is a hemoglobin disorder, also inherited, that reduces the blood’s ability to carry oxygen. Neither set of diseases currently has a fully effective treatment.
The chief drug candidate in IMARA’s pipeline, IMR-687, is a selective and potent small molecule that inhibits PDE9. PDE9, in turn, plays a part in lowering levels of cGMP in blood-disorder patients, with associated inflammation, reduced blood flow, and other symptoms. Blocking PDE9 has been associated with reactivation of fetal hemoglobin – with consequent reduction of symptoms.
In June, IMARA reported final data from a Phase 2a clinical trial of IMR-687 in sickle cell disease which showed a significantly lower annualized rate of vaso-occlusive (blood flow blocking) crises (VOCs) in patients. New patients started on the drug also showed a longer time to the first VOC. IMR-687 was also well-tolerated by patients, both as a monotherapy and in combination with hydroxyurea.
In insider trades, the key transaction from an investor perspective was made at the end of July by Board member Mark Chin. Chin bought 1.333 million shares for nearly $8 million. Chin’s stake in the company now totals over $13.5 million.
Leerink analyst Joseph Schwartz is bullish on IMRA, and takes the long-term view when assessing the company’s prospects.
“Although IMRA shares have been under pressure this year, we believe encouraging Ph.2a VOC data should give the stock some lift today ahead of Ph.2b interim data expected in 2H21… Ahead of interim Ph.2b ARDENT and FORTE data in 2H21, we reiterate our OP rating on IMRA,” Schwartz wrote.
The analyst added, “We currently estimate gross peak sales of ~$2.8B (2035E), and ~$290M (2035E) for IMR-687 in SCD and β-thalassemia, respectively. We account for clinical and regulatory risks in our probability of success (PoS) estimates, which range from 60%/40% in SCD (US/EU) to 40%/20% in βthalassemia (US/EU).”
To this end, Schwartz gives IMRA shares a $42 price target – indicating true confidence, and an impressive 661% upside potential from the current share price.
Overall, IMRA has received two recent Buy recommendations from the analysts, for a Moderate Buy consensus rating. (See IMRA stock analysis)
To find more ideas for stocks trading at attractive valuations, visit Investing Insights.