Buying low and selling high may sound too basic to support a stock portfolio, but it has been and always will be a sure way to build profits. The only real trick to it – and it’s admittedly a tough trick to learn – is finding when a stock is at or near the bottom, to buy in.
Plenty of stocks fall in price, that’s nothing new in the market. But most times, there’s a good reason, and it’s usually based in fundamental unsoundness. Successful investors will learn some way to sort this chaff from the grains, and focus on the stocks that are truly primed for gains as they climb out of their doldrums.
One strategy for finding discounted stocks that are ready to boom is to follow the corporate insiders. These are company officers with positions of responsibility – high-ranking execs or Board members, mainly – who are accountable to shareholders and Boards of Directors for their company’s success and profits. And by the nature of their management positions, they are frequently in position to know if their company has hidden stock catalysts in store.
Their inside knowledge gives them a step up, so to keep the playing field level the regulatory agencies require corporate insiders to publish their stock trading activating in their own companies – and investors can access that public record, to find out which stocks are show signs of strong insider buying. These buys can be highly informative, especially when stock’s share price is down.
The Insiders’ Hot Stocks tool at TipRanks brings these trades to the retail investor’s fingertips, letting the public in on a variety of insider trading strategies backed by the latest data. We’ve used the tool to pull up details on two stocks that are showing just such informative buys after extended periods of share depreciation. These stocks retain their Buy ratings, however, along with triple-digit upside potential.
Cardiff Oncology (CRDF)
We’ll start with Cardiff Oncology, one of the Street’s many biopharma stocks. Cardiff is a clinical stage medical company with a focus on the development and commercialization of new medications options for cancer patients whose disease has grown resistant to current treatments. This turn for the worse in disease progression is a common occurrence, and doctors and patients currently have few options when established medication courses start to fail.
Cardiff has one drug candidate, onvansertib, and three ongoing clinical trials. Onvansertib is described as an “oral and highly-selective inhibitor of Polo-like Kinase 1 (PLK1),” and is under investigation as a treatment for KRAS-mutated metastatic colorectal cancer (mCRC), metastatic pancreatic ductal adenocarcinoma (PDAC), and Zytiga-resistant metastatic castration-resistant prostate cancer (mCRPC). These are dangerous cancers with high unmet medical needs; Cardiff is working to fill that gap.
The company’s three clinical trials, one for each potential indication of onvansertib, are at the Phase 1b/2 stages, and are continuing to demonstrate both safety and clinical benefits of the drug candidate. On the mCRPC and PDAC tracks, the company expects to release data in the first half of next year; the mCRC track, however, is more advanced. Data released from that Phase 1b/2 trials showed that 42% of patients treated achieved a partial response, a rate significantly higher than the 5% to 13% of patients showing a similar response with current chemotherapies.
Despite the positive outlook for the company’s clinical trials, with important catalysts on the near horizon, CRDF shares have fallen 63% so far this year.
On the insider front, sentiment on CRDF was swung strongly positive by the purchase, earlier this month, of 30,000-share blocs by two company officers, Gary Pace of the Board of Directors and James Levine, EVP and CFO. Their purchases, made 9 days apart, were for $202,500 and $194,000, respectively.
Getting over to the Wall Street view, H.C. Wainwright analyst Ram Selvaraju tells investors to keep an eye on CRDF following its latest Onvansertib Phase 1b/2 data in mCRC.
“Although we acknowledge the relatively small sample size, we find these results encouraging because the onvansertib combo response rate and mPFS to date appear to be much higher than the 5-15% ORR and 4.5-5.5 month mPFS typically seen with FOLFIRI +/- Avastin in a similar patient population. After taking these results into account, as well as the recent pullback in Cardiff’s stock, we believe the current stock price presents an attractive entry point for investors,” Selvaraju opined.
To this end, Selvaraju puts a Buy rating on CRDF shares along with a $26 price target. The analyst, therefore, expects the stock to climb 290% over the next 12 months. (To watch Selvaraju’s track record, click here)
While there are only three recent analyst reviews on this stock, they are unanimous that it is a Buy proposition, making for a Strong Buy consensus rating. The shares are priced at $6.55 and the average price target – $26 – matches Selvaraju’s for a 290% one-year upside. (See CRDF stock analysis on TipRanks)
Accelerate Diagnostics (AXDX)
We’ll round out our look at insider buys with Accelerate Diagnostics, a lab services company aiming to improve the speed and accuracy of medical blood work. The Delaware-based company is an in vitro diagnostics provider offering solutions to the identification of drug resistant organisms and hospital-acquired infections. Accelerate offers medical providers several fast and accurate platforms: the Pheno system, the PhenoTest BC kit, and the Accelerate ARC module.
The company’s platforms use parallel computing and machine learnings to stay ahead of the curve and offer customers (medical practices and physicians) test results made possible through microbiology and analytical chemistry, and powered by AI, parallel computing, and machine learning.
In mid-September, the company announced FDA clearance of improvements to the Accelerate Pheno system. The improvements expand the platform’s antimicrobial susceptibility testing (AST) menu when testing for bloodborne infections.
In the second quarter of this year, Accelerate reported a 33% gain in net sales, from $2.1 million to $2.8 million, year-over-year. The company ran a net loss of $21.7 million, or 36 cents per share, a loss in-line with previous reported quarters.
AXDX shares have fallen steadily from their peak in February of this year, and the stock is down 44% in the last 12 months.
Turing to the insider share purchases, we find four informative buys from director Jack Shuler. Shuler is a major investor in Accelerate, and owns more than 10% of the company. His recent stock purchases totaled over $2.3 million, for 429,531 shares.
Looking at the stock for Craig-Hallum, analyst Alexander Nowak writes: “Utilization was up in the quarter and labs are reopening to conversations about antimicrobial infections… Q2 was partially disrupted by the Delta variant as hospitals somewhat shift attention though barring prolonged setbacks, management remained optimistic in its mid-2021 inflection… While recovery conditions remain fluid as new COVID variants emerge, there is a sense that AXDX is ‘almost there’ in its recovery story. With data showing Pheno can improve antimicrobial infection care and golive/organizational strategies revamped, we still think AXDX is poised to revolutionize the microbiology lab.”
Based on the above, Nowak rates AXDX a Buy and his $15 price target indicates confidence in a 157% upside for the next 12 months. (To watch Nowak’s track record, click here)
Looking at the consensus breakdown, 2 Buys and 1 Hold add up to a Moderate Buy analyst consensus. The average target of $12 implies an upside of 106% from the current trading price of $5.83. (See AXDX stock analysis 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.