After experiencing consistent growth for two years, the stock markets have recently experienced a sharp decline, causing anxiety among investors. Worries about a potential economic slowdown, President Trump’s aggressive tariff strategies, and the impending risk of trade wars with significant trading partners have heightened concerns. Given this uncertainty, it is understandable that market reactions have become erratic.
However, some industry insiders perceive this current climate as a chance to invest, seizing the moment to buy shares at lower prices. These insiders are typically executives or members of the Board of Directors, who possess valuable insights into the anticipated performance of their companies’ stocks. It is justifiable for them to act on this information, and their publicly disclosed trading patterns serve as useful guidance for retail investors.
It’s important to recognize that insiders usually buy shares for a single reason: they expect the stock’s value to rise. Given the current low prices, if a company’s fundamentals remain robust, it stands to reason that its shares may rebound, making them an appealing purchase.
With this perspective in mind, we utilized the TipRanks Insiders’ Hot Stocks tool to identify two stocks that have recently declined but are witnessing significant insider buying activity. Let us explore the details.
TKO Group Holdings (TKO)
Regardless of opinions about it, professional wrestling and ultimate fighting definitely attract television audiences. Over the years, both have gained substantial popularity, culminating in a merger in 2023.
In September 2023, the Endeavor sports and entertainment group, owner of the UFC, merged with WWE (World Wrestling Entertainment), resulting in the formation of TKO Group Holdings, a deal valued at $21 billion. UFC acquired a 51% interest in TKO, while WWE retained a 49% stake. TKO currently boasts a market capitalization of nearly $24 billion. The company manages various properties, including its UFC and WWE franchises, the PBR bull riding, a global sports marketing agency IMG, and has partnered with On Location, a leader in experiential hospitality. Each year, TKO organizes over 500 live events and attracts more than three million fans, with viewership spanning 210 countries.
Since merging UFC and WWE, TKO’s management has effectively integrated the two franchises while maintaining the unique features of each, resulting in approximately $100 million in net operating savings, indicating operational efficiency.
Financial performance has been impressive, with TKO reporting fourth quarter revenues of $642.2 million, a 4.6% increase year-over-year that exceeded expectations by $38.22 million. The company also achieved quarterly earnings of 28 cents per share, a significant improvement over a net loss of 16 cents per share in the previous quarter. TKO anticipates revenue between $2.93 billion and $3.00 billion in 2025.
Despite these strong results, the stock has declined 17.5% from its peak in February. Recently, insider Jonathan Kraft from the Board of Directors purchased significant amounts of stock, acquiring 23,500 shares for over $3.52 million in the first week of March.
Jefferies analyst Randal Konik emphasizes the importance of TKO’s UFC franchise, stating that UFC’s upcoming media rights deal is crucial for investors. He anticipates a lucrative deal, projecting substantial income growth, and believes shares are undervalued compared to peers. He rates TKO a Buy with a price target of $220, indicating a potential 51% upside in the next year. The stock has garnered 13 recent analyst reviews, with an 11-to-2 buy-to-hold ratio, translating to a Strong Buy consensus rating. Currently priced at $139.62, its average target price of $178.36 indicates a projected gain of 22.5% over the coming year.
New Fortress Energy (NFE)
Next on our list is New Fortress Energy, a company specializing in liquefied natural gas (LNG). New Fortress positions itself as a global energy infrastructure leader, dedicated to facilitating the transition to clean energy through integrated logistics that ensure the swift and efficient delivery of LNG. Operations are primarily focused in the Caribbean and Gulf of Mexico, alongside facilities in South America and the UK. The company operates an extensive network of liquefaction facilities and LNG import-export terminals and runs 29 transport ships operating in ten regions.
In its most recent earnings update for fourth quarter 2024, New Fortress recorded a revenue of $679 million, down over 10% year-over-year, yet exceeding estimates by $65.76 million. The reported earnings of 13 cents per share reflected an 8-cent increase from the previous quarter, surpassing projections by 7 cents. However, the stock has declined 34% year-to-date amid investor concerns over debt levels. One insider, Board member Wesley Edens, has responded by acquiring 300,000 shares for $2.66 million in March, bringing his total stake to over $526 million in value.
Analyst Benjamin Nolan from Stifel acknowledges New Fortress’s debt challenges but sees potential for recovery, especially from the anticipated sale of its Jamaica business, which he estimates could yield about $1 billion. With approximately $1 billion in cash on hand, Nolan believes there is no immediate liquidity crisis, and he rates NFE a Buy with a $16 price target, suggesting a possible 60% upside in the next 12 months. The energy company holds a Moderate Buy consensus rating based on four recent analyst reviews, with a split of two Buys and two Holds. Currently priced at $9.99, the stock’s average price target of $13.25 indicates a potential upside of 32.5% over the next year.
For more investment ideas regarding stocks with attractive valuations, check out TipRanks’ Best Stocks to Buy, which consolidates all of TipRanks’ insights into equities.
Disclaimer: The views expressed in this article are those of the featured analysts and are intended for informational purposes only. It is crucial to conduct your own analysis prior to making any investment decisions.
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