Downturns can bring a lot of pain, but they can also bring on plenty of opportunities, as lower stock prices start making costs of entry more attractive. Before taking advantage of these opportunities, however, investors need to find a recognizable signal that will set them apart.
One popular signal to follow is the insider buying, the trades made by high-ranking company officers whose positions give them the ‘inside’ track on their company’s likely prospects – and therefore, of the stock’s prospects.
These officers hold high positions, and they are responsible for bringing in profits for both shareholders and company Boards, and for ensuring future stock performance. Having that responsibility, and having their inside info, doesn’t stop them from trading their own company shares – and to level that playing field, Federal regulators require that the insiders regularly publish their trading activity. Retail investors can follow those trades through the Insiders’ Hot Stocks data tool at TipRanks.
We’ve opened up the database, to get a head start on following the insiders. Using the inside trading tool, we’ve pulled the details on two stocks with recent hefty trades from the corporate officers. These aren’t the garden variety trades, either, these are multi-million dollar stock moves, the kind that can shift the needle on sentiment – and send the clear signal that retail investors like to have. It also doesn’t hurt that both stocks are admired by the analyst community, enough so to earn a “Strong Buy” consensus rating.
Day One Biopharmaceuticals (DAWN)
We’ll start with Day One Biopharma, a small-cap player in the medical research biopharma scene. This clinical-stage research company differentiates itself by focusing on the development of new treatment for childhood cancers, especially genetically defined pediatric cancers. This is a field with plenty of openings, as the last 25 years have seen only 12 new pediatric oncology drugs approved.