In a casino, if you play long enough, the House always wins; this is just a matter of probabilities and available resources. It’s different in the stock market, even though there is a tendency to refer to stock investing as a game. Smart investors don’t have to ‘beat the house’ to come out ahead; this is not a zero-sum game. Rather, it’s a game of strategy.
Successful investors will look for some edge, an ‘in’ that will lead them toward winning investments. This search naturally leads some investors to the corporate insiders – company officers and board members whose positions give them an inside track on the background that will impact stock prices. To the great good fortune of the investing public, the regulatory authorities require that inside traders regularly publish the stock transactions they make in the companies they run.
This generates a wealth of information from the SEC, and TipRanks makes it easy for investors to use the raw data, with the Insiders’ Hot Stocks tool. This tool features a variety of filters letting investors search stocks by trading strategies, making sense of a difficult data set.
We’ve used the data to pinpoint a pair of stocks showing two clear signals for investors: A Strong Buy analyst consensus rating, and a recent ‘informative buy’ from a company insider.
Fiserv, Inc. (FISV)
We will start with Fiserv, a financial tech company providing services to banks, credit unions, securities brokers, finance companies, and retailers. The company’s products include payment services, account and billing solutions, customer management and online banking, risk compliance tools, and data analytics. In short, Fiserv is a full-service fintech, with customers in a wide range of sectors, including banks, government, healthcare, insurance, telecom, and utilities.
After seeing revenues slide in 1H20, Fiserv bounced back in the second half. The top line came in at $3.79 billion for Q3 and $3.83 billion for Q4; full-year revenues for 2020 reached $13.9 billion. While these were considered solid numbers, and beat expectations, the coronavirus impact was felt in year-over-year declines. Earnings, however, fared better. Fiserv registered a profit of $4.42 per share in 2020, for a 12% increase over the prior year.
On the insider front, the ‘informative buy’ here was made by Denis O’Leary, Director and Chairman of the Board at Fiserv. O’Leary spent $1.01 million on 9,100 shares of FISV.
Turning to the analyst community, Mizuho’s Dan Dolev believes the company has a lot going for it and a bright future.
“Following marked organic outperformance vs. peers in 2020, we view FISV on track to impress again in 2021, with strong growth across the board… Investors often think of FISV as a legacy operator with fewer analytic capabilities than next-gen firms. This is not true, in our view… FISV deploys advanced analytics to measure every client interaction, investing in automation to improve engagement. While ‘the journey never ends,’ FISV is already seeing strong success in these efforts, seeing just low-single-digit senior level attrition,” Dolev commented.
In line with his optimistic approach, Dolev rates FISV a Buy, and his $160 price target implies a 38% upside for the year ahead. (To watch Dolev’s track record, click here)
Overall, there are no fewer than 19 reviews on file for Fiserv, and they break down 17 to 2 in favor of Buys versus Holds. This indicates a broad view on Wall Street that the stock is a buying proposition, and makes the consensus rating a Strong Buy. Shares are priced at $115.80, and their $134 average price target suggests room for ~16% growth on the one-year time horizon. (See FISV stock analysis on TipRanks)
Biohaven Pharmaceutical Holding (BHVN)
From fintech we move to the pharmaceutical sector. Biohaven focuses on neurological and neuropsychiatric diseases, and has a pipeline with therapies in various stages of development, and one treatment which has already gained FDA approval.
Last year, Biohaven’s NURTEC was given the go ahead for the acute treatment of migraine in adults and has been performing well since its launch. The treatment has another upcoming catalyst on the horizon. The FDA has accepted an sNDA (supplemental new drug application) for the prevention of migraine and a PDUFA date is expected in the second quarter.
Turning to the insider trades, on March 2, John Childs, one of the company’s Directors, paid $851,370 for a bloc of 10,000 shares.
His display of confidence gets the backing of H.C. Wainwright’s Douglas Tsao. The 5-star analyst anticipates the US approval of NURTEC in preventative migraine followed by an immediate launch. Tsao is also impressed by NURTEC’s “continued linear growth.”
“Despite being on the market for only about one year, NURTEC continues to take share from triptans and even mAbs used in preventative treatment, though the share is still relatively small, suggesting plenty of room for growth,” Tsao said. “Importantly, neurologist and patient attitudes towards Nurtec are overwhelmingly positive, with 58% of patients satisfied compared to just 37% on Ubrelvy, again suggesting robust growth potential based on the drug’s best-in-class attributes.”
Accordingly, Tsao has a Buy rating on BHVN shares, to go alongside a $111 price target. This figure implies a 43% upside from current levels. (To watch Tsao’s track record, click here)
Biohaven also has plenty of support amongst Tsao’s colleagues. The analyst consensus rates the stock a Strong Buy, based on 8 Buys and 1 Hold. At $103.13, the average price target implies gains of 33% over the next 12 months. (See BHVN 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.