Insider buying is often a telling sign of future price action and never more so when the shares are up. It’s not uncommon for an insider to buy a stock when it's down simply to show confidence in the business, regardless of risk, but why add money when a stock is rising if you already have skin in the game? Because it can rise higher, which is what we are looking at today—three stocks on the move that can move higher in 2024 that insiders are buying.
First Citizens BancShares has a Solid Family to Back it Up
First Citizens BancShares (NASDAQ: FCNCA) is the holding company for First Citizens Bank, a North Carolina institution that benefited from the 2023 banking collapse. It won the bid for SVB assets, doubling its effective base and amplifying its earnings power. The company was growing at a solid double-digit figure ahead of the acquisition and has been growing at a triple-digit pace since.
Insider activity has been mixed over the past year with ample selling, but there was a change in Q1 2024. Selling dried up and was replaced by purchases carrying more than average weight. Three insiders made a single purchase, but these three are related. They include CEO Frank B. Holding Jr. and two of his sisters, who collectively own nearly 20% of the company.
Institutions own about 62% of the bank and are buying on balance in Q1 2024. Significant shareholders include Vanguard and BlackRock, along with numerous private money managers. The analyst community is also bullish on this stock, rating it at Moderate Buy and leading the market with price target revisions. The latest targets have the stock trading near $1800 or about 12% upside from current levels.
Compass Diversified Execs Buy at a One-Year High
Compass Diversified (NYSE: CODI) share prices rebounded late in 2023 and set a fresh one-year high early in 2024, just before insiders started to buy. Insiders include the CEO, COO and chief of a subsidiary, each making at least one purchase. Insider holdings are relatively small at 2.5% of the stock, but the purchases are noteworthy given the stock price action.
Institutions own about 50% of the stock, and their activity is also noteworthy. Institutions have been buying this venture capital firm on balance for two years, and activity spiked in Q1 2024 to set a new high. Analysts view the stock as a Moderate Buy and trading at fair value near current levels.
Compass Diversified pays a solid dividend yielding 4%, so holding isn’t without reward. The payout is 33% of earnings, so reliable with an outlook for possible growth. The company is expected to post mid-single-digit top-line growth this year and next with a widening margin. Cash flow is solid, aiding balance sheet improvements and the dividend. Shareholder equity improved by 11% in 2023 and may rise another double-digit percentage in 2024.
Gates Industrial Corporation Nears Two-Year High
Gates Industrial Corporation (NYSE: GTES) manufactures power transmission components and markets them worldwide. Its insiders are buying the stock even as major holders are selling. Purchases by several directors and the CEO are not enough to offset sales by Blackstone Inc. and Omaha Aggregator, but it doesn’t matter; the price action is moving to new highs anyway. The company is pivoting back to growth and widening margin, attracting the attention of analysts.
There aren’t many analysts covering this stock, but they are bullish. The nine tracked by Marketbeat.com peg the stock at Moderate Buy and see it trading about 15% higher than where it is today. The consensus sentiment and price target are trending higher and may lead this market to a new three-year high by the end of this calendar year. The freshest target is the highest issued by a major analyst: $21, an all-time high, and a 50% upside.
