Elio Sceti, a director at The Kraft Heinz Co (KHC), recently picked up 90,000 shares. The buy is an initial stake in the firm, and the total purchase price of shares came out to $2.98 million.
Insiders have a mixed trading record at the company, as 3G Global Food Holdings makes regular sales of millions of shares each year to reduce their stake. However, directors have been large buyers of shares overall in the past few years as well.
The packaged food giant, best known for condiments, has underperformed the stock market in the past year. Trading at 14 times earnings, shares have still been impacted by losses earlier in the year that have weighed on profitability.
Nevertheless, with insider buying by directors, and given the stock’s defensive and underperforming nature, it looks like an attractive opportunity for investors given the overall market valuation.
Action to take: Investors may like shares here. Besides the prospective capital gains as the company returns to profitability, shares yield a hefty 4.7 percent here.
For traders, the current uptrend in shares looks sustainable. The April 2021 $32.50 call options are currently about $1 in-the-money. Trading at about $2.85, they offer high-double to low-triple digit returns based on the current upswing in shares.