Last week’s major selloff could be the start of some extended selling. The last couple of times Wall Street tumbled like last week’s double-legged drop-off, prices went lower before recovering. With the possibility of lower prices in the days/weeks ahead, we are going to take a little different approach.
We are going to build a watchlist of insider buys with purpose names, companies we’ll hold in our back pocket until the tape turns to green once again. As usual, we will start with insider activity from the previous week in our review, but we will also revisit some buys of interest from earlier emails.
While we might be hesitant to add money to the stock market in the immediate term, don’t let us change your mind if you feel differently and are comfortable adding positions during the current climate.
Our watchlist starts with two companies.
FuelCell Energy, Inc. (FCEL) Chief Executive Officer (CEO) Jason Few bought 11,000 shares of the clean energy company’s shares at $17.99, a total outlay of $197,890. (1) This is an interesting buy on a lot of levels.
Not so long ago, the company said they were borderline unable to pay their debts. (2)
The share price was a lot cheaper in early November ($3 and change).
It is the only open market action ever by CEO Few.
It’s easy to understand where the CEO’s confidence comes from. The Biden Administration has big, Green plans to the tune of $2 trillion dollars. Wall Street has a positive topline view as well. A half-dozen analysts covering FCEL project 26.6% sales growth this year and accelerating to 36% in 2022. (4) However, they don’t see the company turning a profit anytime soon.
Outlook: Unquestionably, green stocks will be in focus for at least the next two years with President Joe Biden, a small Democrat majority in the House of Representatives and Vice President Kamala Harris the tie-breaking vote in the Senate. FuelCell Energy, Inc. (FCEL) could be a policy beneficiary; however, FCEL is a highly volatile stock and is only appropriate for investors with the highest risk tolerance.
Our second watchlist insider stock is on the other end of the spectrum. Perhaps the two highest ranking executives at Intel Corporation (INTC) bought some of the chipmaker’s stock last week. CEO Robert H. Swan and Chief Financial Officer (CFO) George Davis combined to buy more than $2 million in INTC stock between $55.34 and $55.57. (5)
The duo appears to be value hunting as the Intel inside company’s shares slipped recently. The stock was approaching 52-week highs as they were about to report earnings. Despite a solid report and better than expected guidance, Wall Street hit sell and pushed shares lower. The slide was attributed to conference call confusion. (6)
CEO Swan and CFO Davis weren’t confused, they stepped into the market and bought on weakness. It wasn’t the first buy for Swan, it was his fourth since August 2019. BIG BUYS ALERT: However, it was his biggest at $1.5 million and more than the combined $1.26 million for the previous three combined. (7) Meanwhile, Davis is a two-time buyer and like Swan, parted with more money this time around, $503,317 versus $249,431. (8)
Outlook: Intel Corporation (INTC) is a blue-chip, tech stock as they come. It’s not everyday that established company insiders buy in chunks, like CEO Swan and CFO Davis. It’s been our experience that a company that slips following a good earnings reports eventually rebounds. Investors looking to add a blue-chip technology stock like INTC, might consider waiting for the current market weakness to subside before entering.
1 – https://www.secform4.com/insider-trading/886128.htm
2 – https://www.sec.gov/Archives/edgar/data/886128/000156459019024900/fcel-8k_20190711.htm?
3 – https://finance.yahoo.com/news/biden-green-energy-boom-could-220000792.html
4 – https://finance.yahoo.com/quote/FCEL/analysis?p=FCEL
5 – https://www.secform4.com/insider-trading/1218363.htm
6 – https://finance.yahoo.com/news/intel-stock-may-undervalued-25-035121000.html
7 – https://www.secform4.com/insider-trading/1218363.htm
8 – https://www.secform4.com/insider-trading/1379532.htm