Every investor – from the most experienced legends of Wall Street to the most amateur of retail traders – keeps a close eye on the market, looking for some sign or signal to indicate just the right trades.
Following the corporate insiders is one way to find an advantage. These are the company officers whose positions put them ‘in-the-know’ on their companies’ inner workings.
That knowledge gives these bigwigs an inside track when it comes to trading their own stocks – and to keep the trading floor fair, governmental regulators require insiders to publish their trades in a timely manner, as a way of avoiding their having an undue advantage.
Investors can follow those trades on TipRanks, using the Insiders’ Hot Stocks tool. We’ve done a bit of searching to get the story started, and found two stocks that are both Strong Buys, according to the analyst community, and are also showing million-dollar insider trades.
Energy Transfer (ET)
We’ll start with a high-yield dividend stock in the energy midstream segment. By any measure – market cap, size of network, amount of product moved – Energy Transfer is one of the largest midstream companies operating in the US. The company boasts one of the continent’s largest arrays of pipelines and other transport assets, in a network running from the Mid-Atlantic coast to the Great Lakes into the Mississippi Valley and on down to the company’s main area of operations, Texas-Oklahoma-Arkansas-Louisiana and along the Gulf Coast into Florida, including offshore pipelines from Louisiana.
Energy Transfer has benefited from rising prices for oil and gas, and the company’s 1Q22 revenue came to $20.49 billion, the highest in the past two years, up 20.5% year-over-year, and the third quarter in a row to show a sequential gain. Earnings gave a mixed story; the diluted EPS of 37 cents beat the 30-cent forecast but came in far below the $1.21 recorded in the year-ago quarter.
This calendar year also marks ET’s first year operating after completing its acquisition of Enable Midstream. That move, worth approximately $7.2 billion, was completed in December in a mostly stock transaction. A $10 million cash payment was delivered to Enable’s general partner.
Since the merger, Energy Transfer has had control of Enable’s pipeline network, which was folded into ET’s existing network, bringing the total to nearly 120,000 miles.
Energy Transfer’s revenues and expansion have also given the company confidence in raising its common share dividend payment. In the most recent declaration, for 2Q22, the payment was set at 20 cents per common share, up more than 30% year-over-year, and the second quarter in a row to show an increase. The 80-cent annualized payment yields a strong 7.7%.
Turning to the insider trades, we find that the most recent ‘informative buy’ came from Board of Directors member Richard Brannon, who last week picked up 137,680 shares, paying a total of $1.33 million.
Raymond James 5-star analyst Justin Jenkins is also impressed with this company, and takes a bullish line when he writes: “We see this as a compelling opportunity for entry into ownership of one of the better positioned MLPs to capitalize on the current environment, in our view. Operating leverage in the form of potential merger synergies are only accelerating after the ENBL acquisition and alongside higher commodity prices. With financial risks far lessened – and investors likely more comfortable with the near-term fundamentals — the focus should shift to ET’s relatively favorable positioning for 2022 and beyond.”
Bringing thoughts into numbers, Jenkins gives ET shares a $15 price target, indicating potential for ~45% upside this year. Jenkins rates the stock a Strong Buy. (To watch Jenkins’ track record, click here)
Wall Street generally would seem to believe that investors cannot go wrong by going in on ET, as shown by the 8 recent positive reviews on the stock. These give the stock a unanimous Strong Buy consensus rating. The shares are selling for $10.36 and their $15.50 average target implies ~50% one-year upside. (See ET stock forecast on TipRanks)
Gossamer Bio (GOSS)
Next up, Gossamer Bio, is a clinical stage biopharmaceutical research firm, working on the discovery, development, and eventual commercialization of new therapeutic agents for the treatment of disease conditions in immunology, inflammation, and oncology. Gossamer currently has two clinical trials underway, a third drug candidate in the late discovery stages, and several additional discovery tracks just getting started.
The company’s leading drug candidate is GB002, or seralutinib. This drug is being tested as a treatment for pulmonary arterial hypertension, or high blood pressure in the arteries that take deoxygenated blood to the lungs. Seralutinib is the subject of the Phase 2 TORREY study, in which patient enrollment has recently been completed. Top line results from this study are expected for release in 4Q22.
The company’s second clinical-stage drug candidate is GB5121, an orally dosed penetrant BTK inhibitor under testing in the treatment of primary CNS lymphoma. Gossamer is currently initiating a Phase 1b/2 study of GB5121.
Finally, the most advanced discovery-stage drug candidate, GB7208, is on the cusp of starting clinical trials. This is another orally dosed penetrant BTK inhibitor, and the company is preparing to test it as a treatment for neuroinflammatory diseases. Initiation of a Phase 1 clinical trial is tentatively set for 1H23, pending pre-clinical results and the data release from the seralutinib studies.
On the insider front, we find that there have been several recent buys from company officers. Three of these were in the $50K to $100K range – but the fourth caught our attention. Faheem Hasnain, President of Gossamer, picked up 138,696 shares of GOSS last week, paying $1 million.
Gossamer has its fans among the analysts as well. Covering this stock for SVB, analyst Joseph Schwartz outlines a bullish view for Gossamer’s future.
“The upcoming PAH readout informed our choice of GOSS as a top pick for 2022 based on our view that the event has a high probability of success as it is partially de-risked by prior clinical data from seralutinib… Although there are various approved therapies for PAH, high unmet need remains for therapies that can improve outcomes and longevity in a more tolerable, patient-friendly manner. We believe seralutinib’s inhaled route of administration will enhance tolerability, and we are particularly encouraged by management’s commentary on Ph.2 retention/open-label extension (OLE) continuation rates,” Schwartz opined.
To this end, Schwartz puts an Outperform (i.e. Buy) rating on the stock, and his $15 target implies it has an upside of ~25% to look forward to. (To watch Schwartz’s track record, click here)
Overall, Wall Street is generally sanguine about Gossamer’s forward path. With 5 Buys and no Holds or Sells, the word on the Street is that GOSS is a Strong Buy. The shares are trading for $12.02 and their $15.25 average target suggests ~27% upside in the next 12 months. (See Gossamer stock forecast on 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.
