🗞️ 6 Stocks That Had Major Insider Buys

Happy Sunday!

Here’s what’s on the docket for this edition of the FinChat Newsletter:

• Starbucks Poaches Chipotle’s CEO ☕️ 

• Could Google be Broken Up? 🧑‍💻 

• 6 Stocks with Big Recent Insider Buys 💼 

And more, let’s dive in!

News of the week

• ☕️ Starbucks Poaches Chipotle’s CEO: On Tuesday of this week, coffee giant Starbucks dropped news that drove a $30 billion swing in market value. Brian Niccol, the now former CEO of Chipotle that helped the fast casual restaurant chain emerge from its E. Coli crisis, is jumping ship and joining Starbucks as its new CEO.

  Starbucks has seen lackluster results as of late driven primarily by declines in customer traffic. This has spurred the interest of several notable activist investors including Elliott Investment Management and Starboard Value, who have been pushing for change. Starbucks stock jumped more than 20% following the news, while Chipotle’s stock sunk as much as 12% before recovering some of its losses.

• 🔍️ Could Google be Broken Up? Last week, in the antitrust case United States vs. Google, Judge Amit Mehta ruled that Google does in fact maintain an illegal monopoly in the search market.

  At the heart of the ruling was Google’s revenue sharing agreement that it has with Apple to be the default search engine on iPhones. These payments to Apple amounted to more than $20 billion in revenue in 2022, equal to roughly a quarter of Apple’s high margin services business. When discussing whether or not Apple considered alternative search engines, Apple’s Senior Vice President of Services stated “I don’t believe there’s a price in the world that Microsoft could offer us”.

  While the actual implications from this ruling still remain uncertain, there have been several proposals that could have major financial implications. One proposal included forcing Alphabet to divest certain businesses such as its mobile OS division Android.

Earnings Roundup:

• 🛒 Walmart: Walmart, the 2nd largest retailer by market cap behind Amazon, reported better than expected 2nd quarter results on Thursday. Despite many companies citing a weak consumer this quarter, Walmart delivered an impressive 4.3% comp store sales growth across its US stores, up from 3.7% growth a quarter ago.

  That also marks Walmart’s 40th consecutive quarter of positive comp store sales! Despite often being seen as a mature, slow growth retailer, Walmart’s earnings per share have grown at 13% since 2018.

  Walmart stock closed up 8% this week.

• 👷 Home Depot: The world’s largest home improvement retailer reported 2nd quarter results on Wednesday that topped analysts expectations. However, despite the slight beat, the outlook for the company continues to be dampened due to an interest rate driven slowdown in larger projects.

  Many people use loans or debt to finance big renovations, so the rise in interest rates has pushed many individuals to defer those efforts. This quarter Home Depot reported its 7th straight quarter of declining comp store sales, and Home Depot’s management team said it expects to see -3% to -4% comp sales for the full year, down from their previous guidance of -1%.

  Home Depot’s stock closed up 3.5% this week.

• 💳️ Adyen: Adyen is a leading digital payments processor globally. After being launched in 2006, Adyen has stolen market share from legacy payments providers by helping merchants accept digital and in-person transactions more efficiently.

  And this week, the payments disruptor delivered 1st half results for 2024 that were far better than analysts anticipated. Adyen processed €619 billion in payments volume, which was up 45% from the first half of 2023, and delivered €423 million in EBITDA — a 32% increase year-over-year.

  Additionally, the company looks like they’ll be slowing their increased expense growth that have been hampering profit margins as of late. After embarking on an accelerated hiring phase over the last year, Adyen’s management team stated that they expect to slow the pace of hiring as they move into next year. Adyen’s stock was up 20% this week.

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6 Stocks with Big Insider Buys

1.) Disney

Independent Director Calvin McDonald purchased $1 million worth of shares.

• Change in stake: +111%

• Market Cap: $155 Billion

• Stock is down 57% from highs

2.) ZoomInfo Technologies

CEO Henry Schuck purchased $12.7 million worth of shares.

• Change in stake: +14.5%

• Market Cap: $3.2 billion

• Stock is down 88% from highs

3.) Red Rock Resorts

Co-Founders Lorenzo and Frank Fertitta purchased $15.8 million worth of shares.

• Change in stake: +7.8%

• Market Cap: $3.2 billion

• Stock is down 14% from highs

4.) Custom Truck One Source

President of Sales Joe Ross purchased $335k worth of shares and the President of Rentals Thomas Rich purchased $101k worth of shares.

• Change in stake:

  • Joe Ross (+19%)

  • Thomas Rich (+13%)

• Market Cap: $990 million

• Stock is down 62% from highs

5.) Standard BioTools 

Independent Director Eli Casdin purchased $2.6 million worth of shares.

• Change in stake: +3%

• Market Cap: $605 million

• Stock is down 97% from highs

6.) Precigen

Executive Chairman Randal Kirk purchased $20 million worth of shares.

• Change in stake: +36%

• Market Cap: $308 million

• Stock is down 98% from highs

Meme of the week

At pretty much any point between 2013 and 2017, investors could have bought shares of Walmart at a forward price to earnings multiple in the low to mid teens.

Little did they know at the time that Walmart would go on to produce 40 consecutive quarters of positive comp sales across its US stores. This has helped drive a re-rating in the valuation as well. Today, Walmart trades a forward P/E of ~30x — more than double its average valuation from 10 years ago.