Insider purchases can provide valuable clues about a stock’s potential. Insiders only buy company stock for one reason – they expect it to go up.
In this article, we are going to highlight some interesting insider buying at Avnet Inc (AVT:US). Avnet is a technology company that connects electronic component and computer product manufacturers and software developers with a customer base of original equipment manufacturers, electronic manufacturing services providers, independent software vendors, and value-added resellers. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $3.1 billion.
Avnet Inc: insider buying
Our records show that on 3 December, Avnet board member Oleg Khaykin purchased 9,000 AVT shares at a price of $32.28 per share. This transaction – which was Khaykin’s first since he joined the board in 2018 – cost the insider $290,520.
This insider purchase is worth highlighting for a few reasons. Firstly, Khaykin has significant experience in the tech industry. Currently, he is President and CEO of Viavi Solutions Inc – a network testing company. Previously, he served as President and CEO of International Rectifier before its acquisition by Infineon AG in 2015. During his tenure, he successfully transformed the company into the world leader in power semiconductors.
Secondly, it is a relatively large purchase. The size of the purchase suggests that Khaykin is quite confident that the stock is set to rise.
Better-than-expected Q1 revenue
Avnet shares have underperformed in 2020 due to Covid-19. Year to date, the stock is down more than 20%. Yet first-quarter results, posted in late October, showed that the company is recovering from Covid-19 disruption. Sales for the quarter came in at $4.7 billion – up from $4.2 billion in the previous quarter and $4.6 billion in Q1 2019 – driven by improving demand across Asia. Meanwhile, adjusted operating income was up 52% on the previous quarter.
Looking ahead, the company said that its diversified revenue streams should help it deliver on its 2021 fiscal year goals of achieving improved top-line growth and greater operating margin, and generating an adequate return on capital.
In light of this improved performance, we see the insider buying here as bullish.