Are 2024's Top Insider Buys a Good Bet for 2025?

Insider activity is robust in 2024 and signals higher share prices for most. The question is if the leading insider buys are suitable for investors in 2025. This is a look at the leading insider buys tracked by InsiderTrades.com, ranking them by the dollar value invested, number of shares purchased, number of insiders buying, and volume of transactions. 

Lucid Group Is the Most Bought Stock by Insiders in 2024

Lucid Group LCID was the most bought stock by insiders in 2024, ranked first for the dollar value invested and the number of shares purchased. However, Lucid Group’s insider activity is limited to a single investor, the Saudi PIF. The PIF owns about 60% of the company and has increased its holding in tandem with dilution to maintain the balance. At 60%, it is the primary shareholder and board director, wielding considerable control and poised to profit significantly should Lucid's stock price climb.

Many want to know whether Lucid's stock price will climb in 2025. Based on the outlook for EV sales, competition, and the path to profitability, the answer is likely to be now. The company has yet to produce profits and is not expected to do so this decade. The likely scenario is that Lucid, seeking partnerships within the industry, will either consolidate with another EV startup or continue struggling. A major OEM can buy out Lucid, but even so, in that case, the target is the technology and not the finished product or production line. Lucid’s advantages include battery and power-train expertise that delivers longer range and more power than competitors. 

Institutions other than the PIF also buy the stock in 2024. However, the balance of activity turned bearish in Q4 and will likely cap gains without a change. Analysts' support in 2024 is also sketchy. The analysts pegged the stock as a hold and forecast it advancing about 35% at the consensus target, but the revision trend is negative and is weighing on the market. The recent revisions suggest the stock is fairly overvalued at nearly $2.50 and likely to continue trending sideways within the established trading range. 

Small-Cap Stock Tileshop Insiders Are Most Active in 2024

Tileshop TTSH insiders are the most active in 2024, ranking first for the number of transactions. However, as with Lucid, the activity is centered on a single entity, not a corporate officer. Tileshop stock is being scooped up by Fund 1 Investments, which now owns nearly 20% of the outstanding shares. It, along with insiders and private investors, a total of four owners, own more than 50% of the stock, making it one of the most closely held issues on Wall Street. Institutions, hedge funds, and private equity, which own nearly all the rest of the shares, are also buying in 2024 and have been supporting the price action.

Tileshop is struggling with a business contraction in 2024 but may revert to growth in 2025. Easing financial headwinds should broaden economic activity, including the housing market, and drive demand for Tileshop products. Until then, this small-cap stock is in a solid financial position with cash and assets rising, liability steady, low total leverage under 2x equity, and equity increasing. 

Vestis Insiders Are Buying This Takeover Target

Vestis VSTS was the uniform arm of Aramark, spun off in an IPO in 2023. Today, it is one of a few smaller uniform service companies competing in a rapidly consolidating environment. It competes with Cintas, which is roughly four times larger, and UniFirst, which is of more equal size. Among the opportunities for it in 2025 is a merger or takeover that may include either major competitors or private equity. The company has already garnered several takeover bids, so a bidding war may ensue. 

Meanwhile, Vestis insiders are scooping up the stock. It is ranked first for the number of insiders buying, which is nine. Insiders include four directors, the CEO, the CFO, and two EVPs alongside one major shareholder, Corvex Management. Corvex Management is a hedge fund specializing in undervalued companies needing change. 

Regarding the value, Vestis is not a cheap stock relative to the broad market, trading at 20x earnings. Still, it presents value compared to UniFirst and a deep value compared to Cintas’ 45x valuation. Assuming that Vestis can capture the cash flow and produce the capital return outlook of Unifirst and Cintas, its share price could rise by a high triple-digit to quadruple-digit amount over the next five to ten years. That is, of course, if it isn’t taken over or private. 

The article "Are 2024's Top Insider Buys a Good Bet for 2025? " first appeared on MarketBeat.