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TipRanks

3 Stocks Flashing Signs of Strong Insider Buying

Sometimes, following a leader makes the best investment strategy. And corporate insiders have long been popular leaders to follow. Their combination of responsibility to their stockholders and access to ‘under the hood’ information on their companies gives their personal investment choices an air of authority.The most important thing about these insiders is that whatever else they do, they are expected to shepherd their companies to profitability. Shareholders want a return on investment, Boards of Directors want accountability, and company officers are held to both standards. So, when they start buying up their own company’s stock, it’s a sign that investors should investigate further.Government regulators, in an effort to level the informational playing field, have required that insiders regularly publish their stock transactions, making it a simple matter for investors to follow them. Even better, TipRanks collates the information in the Insiders’ Hot Stocks page, and provide tools and data filters to easily browse through raw data. We’ve picked three stocks with recent informative buys to show how the data works for you.Del Taco Restaurants (TACO)We’ll start with the popular Del Taco, the California-based taco chain. Del Taco boasts a $344 million market cap, over 600 restaurants, and a loyal fan base, giving it a solid foundation in the fast-food franchise market. Most of the company’s locations are west of the Mississippi, but the company has been making inroads to the eastern US.Like many brick-and-mortar, traffic-dependent businesses, Del Taco has had a hard year. The coronavirus crisis had dampened traffic, social and economic lockdown policies have reduced income streams. The company has started to recover, however. After heavy net losses early in the year, EPS has returned to positive numbers, and revenue in Q3, $120 million, was up more than 15% sequentially. The share price, which fell by two-thirds at the height of the economic crisis last winter, has regained its losses. TACO is now trading up 17% for the year.The insiders are bullish on the stock. The most recent purchase, helping tip the sentiment needle into positive territory, is from Board member Eileen Aptman, who bought up 88,952 shares, shelling out over $650,000. Wedbush analyst Nick Setyan covers Del Taco, and he rates the shares an Outperform (i.e. Buy). His $13 shows the extent of his confidence, indicating room for 40% upside growth. (To watch Setyan’s track record click here)Backing his stance, Setyan wrote, “We believe TACO’s current valuation is predicated on an overly pessimistic assessment of its medium- to long-term fundamentals in a post-COVID QSR environment… Even with what we believe are conservative comp, unit growth, and margin assumptions through 2022, we estimate 12% EPS growth in 2022. We estimate 1% of incremental comp would equate to $0.04-0.06 in incremental EPS…