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December 2, 2024 (Maple Hill Syndicate) Chief executives probably know their companies better than anyone else. So when the boss is buying his own company's stock, it's wise to pay attention.
Here are four stocks I think deserve a look. In each case, the chief executive officer (CEO) has made a significant purchase in the past few weeks. Two are large-capitalization companies, one a mid-cap, and one a small-cap.
Centene
Centene Corp. (NYSE:CNC) is the largest in the bunch, with a market value of $30 billion. Based in St. Louis, Missouri, Centene is a managed care company that focuses heavily on Medicaid patients.
Medicaid is a series of state programs that serve poor and disabled people. The cost is shared between the states and the federal government, with Uncle Sam picking up 61% to 85% of the tab.
Will President-elect Trump's Department of Government Efficiency try to slash Medicaid spending? If so, it would be tough on Centene.
Apparently, Sarah London, Centene's CEO, doesn't expect a harsh outcome. She spent about $250,000 to add to her holdings in November. Andrew Lynn Asher, the chief financial officer, spend about $1 million to add to his.
Twenty Wall Street analysts cover Centene. Ten say to buy the stock, and ten others give it a tepid hold rating, which is as close to sell as most analysts ever get.
My recommendation is to consider Centene, mostly because the shares are cheap by all of my favorite measures. They sell for only 10 times earnings, 0.2 times revenue and 1.1 times book value (corporate net worth per share).
Markel Group
Markel Group Inc. (NYSE:MKL), with headquarters in Allen, Virginia, is a specialty insurer. Among its offerings are professional liability insurance, reinsurance and equine insurance.
Thomas Gayner, the CEO, spent about $155,000 in early November to add to his holdings.
Markel has shown a profit in 13 of the past 15 years. Profitability has usually been unimpressive until recently. In the past four quarters the company earned 19% on stockholders' equity. I consider 15% or more to be a good return.
Markel's market value is about $23 million. The stock sells for only eight times earnings my kind of multiple. However analysts expect earnings to fall in 2025.
HighPeak Energy
In a September column, I noted that Jack Hightower, the CEO of HighPeak Energy Inc. (NASDAQ:HPK) had recently bought $2.8 million of his own company's stock. Since then, he has paid about $1.8 million for additional shares.
I think Hightower's buys deserve attention because he has a record of successfully founding, growing, and selling mid-sized energy companies.