Deciding the best stocks to invest in amid the volatility and fear mongering of late can be challenging. Traditional metrics used to asses the value of publicly traded companies seem outdated against the capricious nature of the market. Stocks that appear positioned for major gains one day can fall the next, but as some investors attempt to identify the new indicators, many of the big wigs have already begun to buy. Once a C-level executive increases their stake in the company it can be understood that some optimism is brewing internally. While it’s not fool proof, it generally indicates they may have access to information that would indicate an upcoming impetus that would help drive a stock higher.
Considering the mixed economic information being released of late, following the lead of a major insider could be a good short-term strategy. Below are two companies that have seen considerable insider activity of late.
Nvidia (NVDA)- Director A. Brooke Seawell at the chip maker Nvidia recently increased his holdings in the company by 30-plus percent. In the first week of October, Seawell, who hadn’t bought new shares of the company in seven years began a buying spree, adding 100,000 shares to his existing holdings for $1,191,000 or $11.91 per share.
Since Seawell’s buy, shares of the company have ascended over 17 percent in trading, lifting the company from recent lows. Shares of the semi-conductor maker, in spite of the recent increased are still at the low end of its 52-week range, which is between $10.38 -$26.17.
Nvidia, like many other semiconductors took a dive with the broader market. Sell-offs within in tech subsector peaked during the nuclear disaster in Japan and many companies have yet to recover in spite of assurances of their long-term health. With a market capitalization is $8.39 billion and a price-to-earnings ratio (PE) of 16.34, the company looks appealing and Seawell’s decision to increase his holdings appears to be substantiated. Additionally, an upcoming quarterly earnings report, scheduled for November 11, could help shares of the company continue to ascend, perhaps inspiring the massive buy up.
Avis Budget (CAR)- Shares of the car rental company, Avis Budget Group have been moving slowly in recent trading, or they were until eight insider at the company began snapping up shares. The executives collectively added 90,000 shares for a total of $815,526, or an average of $9.06 each in the first week of October.
Among the buyers was Avis Chief Executive, Ronald Nelson who purchased 50,000 shares for $449,315. Nelson had not expanded his holding in the company in four years. This marks Nelson's first transaction at the vehicle renter in nearly four years. Following his latest move, Nelson holds 322,897 shares of Avis.
In tandem with Nelson’s buy, Robert F. Salerno, the Vice Chairman at the company purchased 10,000 shares for $91,000 bringing his total holding to 146.654. The company’s preside in Europe the Middle East and Africa added 1,500 shares for $13,600. Several other heads at Avis began purchasing shares on the basis that long-term value is being created by strategic initiatives currently being implemented at the company. The likelihood, based on speculation alone, is that the consensus purchase of the stock means there is a positive announcement coming in the near future.
Shares of company have rebounded around 16 percent since last week’s buying spree. Avis has hit its 52-week lows prior to the insider buying. Avis executives seem confident in the direction of the company and its ability to regain strength following the recent equity sell offs.
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