We recently published a list of 10 Mid-Cap Stocks Insiders Are Buying Recently. In this article, we are going to take a look at where Maximus, Inc. (NYSE:MMS) stands against other mid-cap stocks insiders are buying recently.
Why is it important to keep track of insider trading activity? Insiders, meaning people in high positions, such as executives and directors, have valuable insights into the company’s strategic moves, plans and initiatives. When, for example, a CEO invests their own capital in company stocks, it can indicate strong confidence in the company’s future results.
It is important to note that behind insider selling can be various other motives, that’s why insider trading activity should be assessed within the broader context of the company’s fundamentals, industry trends, and overall market conditions. Many insider purchases don’t necessarily mean the company will be successful. That’s why due diligence before any investment is of crucial importance. Investors should also take into account and carefully analyze underlying reasons for insider transactions. However, insider trading activity in combination with other relevant factors can offer precious insights into a company’s capabilities, helping investors make more informed investment decisions.
To come up with the 10 mid-cap stocks insiders are buying recently, we only considered stocks with a market capitalization of between $2 to $10 billion. We first used Insider Monkey’s insider trading stock screener and looked for stocks with at least two insiders buying over the last three months.
With each stock we note the number of recent insider purchases and the company’s current market capitalization. But why is it important to follow insider activity? Our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds, focusing on insider trading and stock picks from hedge fund investor newsletters and conferences. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer service representative standing by a computer screen in the contact center.
Maximus, Inc. (NYSE:MMS)
Number of Insiders Recently Buying: 5
Market Capitalization: $4.259B
Maximus, Inc. (NYSE:MMS), a provider of government services, specializing in health and human services programs is yet another dividend paying player on this list of mid-caps stocks with significant insider holdings. The company has a forward dividend yield of 1.59% and a payout ratio of 19.22%.
In November and December, five insiders acquired approximately $754,000 worth of Maximus (NYSE:MMS) shares at a price of $72.26 per share. The stock is currently trading at $75.79, but over the last six months it dropped 13.84%.
This suggests that insiders have used the November and December drop in price to buy shares. Why did the stock drop? In November, the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) notified Maximus (NYSE:MMS) they had canceled the Contact Center Operations (CCO) 1-800-MEDICARE and Federal Marketplace solicitation which covered the same scope of work Maximus currently performs under contract today through option periods available until 2031. This way, the company lost the new bidding opportunity. It looks like insiders thought that the bad news is priced in and that may be the reason why they bought the stock.
Meanwhile, year-to-date the stock is up 1.53%, following January dividends of $0.30 per share and the news of winning contracts to continue medical disability exam services for veterans.
Overall, MMS ranks 6th on our list of mid-cap stocks insiders are buying recently. While we acknowledge the potential of MMS, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MMS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.