Ronald Nelson, a director at Hanesbrands Inc. (HBI), recently bought 50,000 shares. The buy increased his holdings by over 30 percent and came to a total cost of just over $636,000.
Insider trends show that this is the first buy from company insiders since August 2019. Insiders have bene sellers so far this year, with a sale in August and one in October. Shares of the company recently sank nearly 20 percent following reasonable earnings but a poor outlook.
Overall, shares are down about 14 percent in the past year, underperforming the average stock by about 30 percent. Earnings are down 44 percent, but the company has managed to earn a profit, trading at about 9 times forward earnings.
Action to take: Given the insider sales at higher prices and now the insider buy following a large drop, this looks like a reasonable stock to buy now. Add in the company’s valuation and 4.6 percent dividend yield, and investors may want to look at this as a holding for the next year or longer.
For traders, shares look oversold in the short-term following the earnings drop, and appear poised to head higher in the coming weeks. The January 2021 $15 calls, trading for around $0.30, are an inexpensive way to bet on that trend. On a strong rally in shares, the calls should provide a mid-to-high double-digit return. The low price minimizes the risk in case shares stay range-bound.