Insider buying can be an encouraging signal for potential investors.
Insiders at food producers started the new year with share purchases.
As earnings season begins, the buy windows for many insiders will close.
Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit. So insider buying can be an encouraging signal for potential investors, particularly with markets near all-time highs and during periods of uncertainty.
The following are a couple of significant insider purchases reported since the beginning of the year.
A director at Lamb Weston Holdings Inc (NYSE: LW) purchased 18,000 shares of this Idaho-based frozen potato products maker last week. At an average of $92.01 per share, that totaled more than $1.65 million. Note that the CFO and several other executives have been selling shares this month.
Lamb Weston posted a positive earnings surprise and raised its guidance early this month. Shares were last seen trading at $90.44 a share, above the director's purchase price. The stock is up more than 7% year-to-date, and the consensus analyst recommendation remains to buy the shares.
A Conagra Brands Inc (NYSE: CAG) director stepped up to the buy window as the year began and picked up 14,450 shares of this packaged food producer. That followed the director's 25,550-share purchase on Dec. 31. At $33.935 to $34 each, both transactions totaled nearly $1.36 million.
The maker of Birds Eye, Chef Boyardee and many other products posted better-than-expected quarterly results in December but also lowered fiscal 2020 guidance. The stock closed most recently at $31.83 a share, below the above purchase prices. Analysts currently anticipate the share price will go to $34.93.
At the time of this writing, the author had no position in the mentioned equities.
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