Insider buying in Heico Corporation (NYSE:HEI), Chart Industries Inc (NYSE:GTLS), and Mercer International Inc (NASDAQ:MERC) points to higher prices for their shares. While in differing industries, the companies all have a positive outlook, cash flow, and analysts' support to aid the rise. The question is how much upside is possible and how long it may take to be realized.
1. HEICO Corporation Insiders Revert to Buying
After two years of selling, insiders at HEICO Corporation have switched gears. Four insiders, including two directors, the CEO, and a president, began buying in September, each making a single purchase by the end of October. The buying is noteworthy because insiders own 8% of the shares and have been primarily selling for the last two years. The purchases don’t offset the last two years' sales but signal a change in the outlook that coincides with three acquisitions.
The company acquired three specialty component manufacturers to complement and expand its aerospace and defense operations portfolio. The moves are expected to sustain the company’s robust revenue and earnings growth trajectory, although growth is still expected to slow in 2025. The latest results include growth sustained in the high 30% range and accelerated bottom-line results, so the acquisitions are significant developments. As it is, the analysts are forecasting a tepid 10% growth in 2025 but may be underestimating the impact of acquisitions.
Analysts rate this stock with a consensus of Moderate Buy and show a reasonably high conviction with 73% or eight of eleven rating at Buy or higher. The price target of $270 is about 10% above recent support levels and 15% above critical support and is rising with revisions. The revision trend since summer includes numerous boosted price targets leading to the high-end range.
2. Chart Industries Has Mapped a Route to Growth
Chart Industries is an industrial manufacturer serving the natural gas market. Its insiders bought in September, which is noteworthy because there was no activity since 2023 before it. The purchases are by two directors, the CEO, and a VP, bringing their holdings up to nearly 1.0%. 1.0% isn’t much, but the institutions own most of the rest and buy on balance. Institutions bought this stock on balance three of four quarters in 2024, including in Q4, providing a tailwind for the market.
Analysts also provide a tailwind for this market. The 12 tracked by InsiderTrades.com show relative conviction in the Moderate Buy rating, with 75% of them rating at hold. The price target is also favorable, implying a 25% upside from the $150 level and rising with revisions. The latest targets lead to the high-end range near $200, suggesting a 30% to 35% upside is possible. Among the risks is short interest. The short interest rate is high at 17% and has been rising since June due to execution risk and leverage. However, the company is reducing its leverage and may spark short-covering with its Q4 report in February 2025.
3. Mercer International: Insiders Buy Into Sustained Forest Products Company
Mercer International is a diversified forest products company focused on sustainable operations and green energy. The company’s products range from wood pulp for paper and cardboard to manufactured building materials for the retail market, including green power generation. Green power is generated from biomass from their manufacturing processes and is central to the long-term plan. And the insiders are buying. For the first time in over two years, insiders are trading shares and buying. Insiders buying include a director, the CEO, the CFO, and a VP, bringing their total up to over 4%. The last activity before this was insider sales in Q3 2022.
The analysts are optimistic and are lifting sentiment for Mercer in 2024. The four analysts tracked by InsiderTrades.com show a high conviction if low coverage, with 100% pegging the stock at Hold. The price target is the critical detail, nearly 50% above recent lows and trending higher with revisions. The low price target is also significant, implying a 7% upside from the $6.50 level.
