Profitable investing is all about making the right choices and finding the stocks to build a portfolio that will generate positive returns no matter what. The challenge now can be summed up in the range of headwinds weighing on the markets. Investors must contend with high inflation and the prospect of higher interest rates going forward as Fed Chairman Powell indicated the central bank’s priority will be to tame it.
But that doesn’t mean there aren’t opportunities for search in the current environment; one way to find them is by taking cues from insiders—the corporate officers who are responsible for ensuring the company’s profits as well as board-mandated stock performance and shareholder oversight.
Using Insiders Hot Stocks Tool, we found two stocks that offer investors strong upside potential, according to Wall Street analysts — and have also attracted heavy insider buying. Let’s see why insiders think now is the right time to pounce.
Cassava Science (SAVA)
We’ll start with Cassava Sciences, a clinical biopharmaceutical company focused on the discovery and treatment of Alzheimer’s disease. Cassava has one lead drug candidate, simufilam, which is in phase 3 clinical trials, as well as a diagnostic product, SavaDx, designed to detect Alzheimer’s through a simple blood draw.
Cassava has faced some idiosyncratic headwinds recently, due to a regulatory investigation into allegations of manipulation of simufilam clinical trial data. Last month, however, the company was completely cleared of those accusations in a study published by the peer-reviewed Journal of Alzheimer’s Disease Prevention (JPAD).
The JAPD review wasn’t the only good news for Cassava recently. The company said that simufilam now has more than 400 patients enrolled in two phase 3 clinical trials, and that interim data from the first 100 patients who completed the open-label study show that simufilam is safe and well-tolerated. Also of note, 63% of patients in this open-label study showed significant improvement in cognitive tests. An additional 21% of patients showed a cognitive decline of less than 5 points. The company expects the open-ended study to be completed by 4Q22.
In his review of this stock, analyst HC Wainwright Vernon Bernardino points to the JPAD review and continues: “We note that similarly in December 2021, the Journal of Neuroscience (JN) also investigated and found no evidence of data manipulation by Cassava in a 2005 article published in JN. Finally, in November 2021, JN also investigated and found no evidence of data manipulation for simufilam in a JN report published in July 2012. We see these critical reviews as positive for cassava, as they confirm that allegations of manipulation of data are incorrect and remove the negative overhang that has reduced cassava stocks. Importantly, they confirm that simufilam has a positive effect on AD biomarkers. We trust the conclusions of these journals and support the ongoing clinical trial of simufilam in AD…”
On the SavaDx track, Cassava continues to evaluate an investigational product in the antibody-based detection of the filamin A protein. While Cassava’s Dx testing continues in conjunction with third parties, simufilam is the higher priority program.
Turning to internal transactions, we find that there have been two major domestic purchases in the past month. The company has an overall “very positive” sentiment from insiders, and these two informative purchases start from shares worth more than $800,000. At that level, Board member Richard Barry spent $860,223 to acquire 36,159 shares. Stepping up, another company director, Sanford Robertson, bought 100,000 shares for $2.069 million.
Bernardino seems to be echoing insiders’ sentiments. The analyst has a Buy rating on SAVA and his price target of $124 suggests a one-year gain of a whopping 402%. (To watch Bernardino’s record, Press here)
Overall, Cassava received 4 analyst reviews, including 3 buys and 1 sell, for a moderate consensus rating of buy. Shares are priced at $24.68 and their average target price of $69 suggests ~180% upside potential over the next year. (Check out the SAVA stock forecast at TipRanks)
MGM Resorts (MGM)
For the second promotion, we will shift our focus from biopharmaceuticals to entertainment and leisure. MGM Resorts is one of the legendary names on the Vegas Strip, but it also operates resort locations in New Jersey, Massachusetts, Maryland, Mississippi and Michigan. The company’s attractions include resort hotels, full-service casinos, spas and salons, and more. In total, the company has 32 resort and gaming locations.
In the most recent quarter, 2Q12, the company brought in $3.3 billion in revenue, up 44% from the $2.3 billion reported in the year-ago quarter. That led to net income of $1.8 billion, far higher than the $105 million reported in 2Q11, though it included a gain related to the deconsolidation of MGM Growth Properties. That net income gave diluted earnings per share of $4.20, slightly above the diluted earnings of 14 cents reported a year earlier. MGM Resorts ended the second quarter with $5.78 billion in cash and liquid assets, a 22% gain from the end of December 2021.
Latest information internal Trade comes from one of the company’s board members, Janet Swartz. Swartz bought 14,230 shares for which he spent $498,762. This brings her total current holdings in MGM to $1.56 million.
analyst David Katz, covering MGM for Jefferies, wrote of the company and the stock: “The better-than-expected results reflect strong Strip performance and regional resilience and should prompt a positive reaction. With a strong fundamental setup, we expect strength in Las Vegas for the rest of the year. More importantly, with relatively flat rate and rent escalators, we expect productive FCF to continue, supporting current shareholder returns and allowing the company to pursue inorganic growth.”
Katz’s comments lead him to give MGM stock a Buy rating, and his price target, set at $56, indicates confidence in a one-year upside potential of 70%. (To watch Katz’s record, Press here)
This big name stock has 12 recent analyst reviews split 9 to 3 in favor of Buy over Hold for a strong consensus rating of Buy. Shares are priced at $32.86, and their average price target of $52.58 suggests upside of 60% over the next 12 months. (Check out the MGM stock forecast at TipRanks)
To find good stock trading ideas at attractive valuations, visit TipRanks’ The best stocks to buya recently launched tool that brings together all of TipRanks equity insights.
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.