Insider buying has been solid in numerous stocks in 2024 with the overarching theme of deep value. The stocks on today’s list offer substantial value relative to their historical prices, and all have a catalyst to drive rebounds in 2024. In addition to insider support, these stocks also have the support of institutions and analysts, which see them rising at least 20% and, in some cases, more than 100%.
Bally’s insiders buy the market's bottom
Shares of Bally’s (NYSE: BALY) have been in a protracted downtrend as the company navigates the post-COVID world and invests in future growth. The stock price is down about 80% from its highs, trading near the pandemic low, and insiders are buying. Five insiders, including two directors, the CEO, a president, and an EVP, made purchases in November coincident with the market bottom. That bottom was sparked by the Q3 release, worse than expected but viewed as the bottom for the business.
Looking forward, advancements and new projects completed in 2023 are expected to drive business. The consensus estimate for 2024 is a return to growth and profitability that may underestimate the company’s rebound. Signs within the gaming industry, including record revenue for Bally’s resorts and casinos, suggest little impact from inflation and higher interest rates. Analysts have lowered their price targets for the stock significantly over the past year but still rate it a Hold and see it advancing at least 20% at the consensus.
Bally’s is a tightly held stock. The insiders own about 26%, including a +20% stake by its largest shareholder, Standard General LP. Institutions own 63% of the stock and have bought it on balance every quarter since the IPO except two.
Delcath Systems key product launches in January
Delcath Systems (NASDAQ: DCTH) is a liver-oriented oncology-focused biotech with a major launch in January. Its Hepzato Kit is a one-of-a-kind treatment for rare liver cancers and is expected to see rapid adoption once available. Regarding insiders, five insiders made a single purchase each in Q4 2023, extending a trend that has been in place for years. Insiders have regularly bought shares of this stock and have sold none in the last four years. Insiders own about 21% of the stock, and purchases were made by various insiders, including directors, the CEO, COO, SVPs and other c-suite executives.
Institutions own another 85% of the company, including major shareholder and board member Rosalind Advisors. The institutional activity made a noticeable ramp higher in Q3 following FDA approval of the Hepzato Kit, and volume increased again in Q4. The four analysts tracked by Insidertrades.com rate the stock a Buy, and all raised their price targets following the approval. The lowest target assumes a 225% upside, while the consensus is about 340%.
Perrigo Company: generic drug maker with top-shelf dividend
Perrigo Company (NYSE: PRGO) has been under pressure for years due to sluggish growth, but those days may be behind. A new CEO is on board and expected to drive a significant turnaround for the business. He bought shares in November, establishing skin in the game, and was followed by two EVPs and the CFO. Together, insiders own only 0.7% of the stock, compounded by a high 95% institutional holding and the fact that institutions have bought on balance every quarter in 2023.
One reason is Perrigo’s dividend. The company business may have languished, but had sufficient cash flow to sustain dividend payments and growth. This healthcare stock yields nearly 3.5%, trading at 12X earnings and a deep value relative to the analysts' estimates. The analysts rate this stock a Buy and see it advancing 15% at the low end of the expected range.
Analysts expect Perrigo to grow revenue by 5.5% in 2024 and to widen its margin significantly. Earnings are expected to grow by 20% and may underestimate the turnaround. Highlights from the Q3 results include the 5th consecutive quarter of adjusted margin improvement and the 3rd for GAAP, with efforts initiated by the former and new CEO yet to fully take hold. Among those efforts is the Supply Chain Reinvention Program, expected to drive significant gross margin improvement over the next 2.5 years.
