While the long-term outlook may predict a return to bullish conditions, for now investors have to contend with increased uncertainty and volatility. What they need is a sign, some signal to indicate stocks that are going to get through the current market environment.
Insider trades are a common favorite among the signals available to investors, and for good reason. Corporate insiders – really, just company officers, positioned at the upper levels of management or the Boards, with an ‘inside’ view of everything behind the company and the stock – don’t trade lightly. They’re responsible to their Boards and their shareholders for bringing in returns and profits, so when they start buying or selling their own company’s stock, investors should take note.
TipRanks’ Insiders’ Hot Stocks tool has the data sorting filters that make sense of the myriad insider stock moves. To get that process started, we’ve used the tool to look up a couple of Strong Buy stocks that are showing ‘informative Buys’ from insiders. To get an idea why, we can look at some of the latest info on the stocks, along with recent analyst commentary.
First off, we’ll look at a medical device company. CVRx works in the field of cardiovascular health, developing new devices for the long-term treatment of progressive heart failure. The Minneapolis-based company focuses on addressing unmet needs in cardiovascular disease, and its devices are designed to work in harness and harmony with the body’s natural systems.
CVRx’s flagship product is Barostim, a therapeutic technology suitable for patients who have had bad experiences with traditional medications. Barostim is an implanted device that stimulates baroreceptors – the nervous system’s natural sensors that help to regulate heart function, among other organs. The Barostim implant helps the heart to pump more efficiently, and staves off the progressive effects of chronic heart failure.
By the numbers, CVRx’s chief product has been successful. Some 67% percent of patients experience a significant improvement in symptoms, 78% report feeling better in conducting daily life activities, and 83% report an increased capacity for walking and exercise after 6 months of treatment.
Last summer, in June, CVRx entered the public markets through an IPO. The company put over 8 million shares on the market (a figure that includes the underwriters’ options) at an initial price of $18 each. The stock spiked on its first day of trading, and closed at $28. CVRx raised approximately $144.9 million in gross proceeds from the event.
Since going public, CVRx has reported three sets of quarterly financial results. Revenues, though still modest, have been increasing consistently, growing from $3.12 million in 2Q21 to $3.66 million in 4Q21. Earnings typically come in at a net loss – and in the most recent report, for 4Q, the company reported a deeper loss than expected, 52 cents per share against the forecast of 45 cents.
This stock is highly speculative, and the share value has been dropping since the IPO. CVRX is down 69% from its opening day closing price.
Nevertheless, insiders are buying up shares in this company. There have been three ‘informative buys’ in recent weeks. The most notable of these buys is the $835,531 purchase by Kirk Nielsen, Board member and 10%+ owner in the company. He picked up over 104,000 shares, and brought his total stake in the company to $12.59 million.
He’s not the only bullish on this company. Analyst Matt O’Brien, covering CVRx from Piper Sandler, takes an upbeat look at the stock, and notes several points post Q4 earnings: “First, the Q1 revenue guidance illustrates the continued COVID pressure on the business… Second, the company is seeing strong underlying interest in its Barostim technology…. We believe this speaks well to interest in the underlying technology and ultimate adoption in the coming quarters and years. Third and finally, yes, the OPEX spend is considerable, but the company has found areas that need investment, and they are making them. More specifically, the company has started to add market development reps to help with the selling process for Barostim….”
At the bottom line, O’Brien says of this stock, “Shares of CVRX, have been weak for the past couple of months (like several other recent new issues in med tech). As a result, the stock now trades at about one times our ’23 sales estimate and nearly existing cash, which we view as far too cheap for such a quality technology.”
In line with these comments, O’Brien gives CVRX shares an Overweight rating, and a $20 price target to imply a 131% one-year upside potential. (To watch O’Brien’s track record, click here.)
Wall Street appears to be agreement that this is a stock to buy. The Strong Buy consensus rating is supported by 4 positive reviews, making it unanimous. Shares are selling for $8.64, and their $20.33 average price target implies a 135% upside from that level. (See CVRx’s stock analysis at TipRanks.)
Cowen Group (COWN)
Next up, we have Cowen Group, an investment bank from New York City. Cowen’s services include broker-dealing and investment management, and the bank is known as a risk taker that is willing to take an early stance in potentially disruptive new areas. In the late 90s, Cowen Group backed the early dot.com tech firms, and in recent years, the company has invested heavily in the cannabis sector.
Cowen’s quarterly revenues and earnings tend to fluctuate, making it difficult to find a pattern – but the banking firm did report strong results for 4Q21, and record income and revenue for the full year 2021.
Looking first at Q4, Cowen’s total revenue came to $506 million, with a non-GAAP EPS of $2.77 based on net income of $86.7 million. Analysts had predicted an EPS of $1.95. The full year results showed $2.08 billion at the top line, a company record, and annual income of $8.85 per share.
In addition to solid financial results, Cowen also raised its quarterly dividend payment by 20%. The new common share dividend, at 12 cents, will be paid out in March. It annualizes to 48 cents per share and gives a modest yield of 1.7%. More important than the dividend, Cowen repurchased $159.8 million in stock, a record buyback for the company and a boon for investors.
On the insider front, company Board member Brett Barth bought 10,000 shares of COWN stock just this week, paying $287,700 for the block. This purchase bumped his total COWN holding to $3.235 million.
We’ll can check in again with Piper Sandler, where 5-star analyst Sumeet Mody sums up Cowen’s prospects post the 4Q earnings report. Mody writes, “The outlook for [long-term] earnings remains strong as its increasingly more diversified banking pipelines remain above last year’s level, despite realizing record banking revenues in 2021, while brokerage continues to run at a higher floor/ceiling and continues to take share.”
Mody’s comments back up his Overweight rating on this stock, while his $71 price target implies a 12-month upside potential of 145%. (To watch Mody’s track record, click here.)
Cowen Group has, to an extent, slipped under the radar a bit; it has only picked up 3 analyst reviews. All of those are positive, however, and give the stock its unanimous Strong Buy consensus rating. The shares are currently trading for $28.96 and the average price target of $60.33 suggests an upside of 108% this year. (See Cowen’s stock analysis 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.