Robert Gamgort, CEO of Keurig Dr Pepper (KDP), recently added 171,821 shares. The buy increased his holding by 4 percent, and came to a total purchase price of $5 million.
He was joined by the company’s CFO, who bought 85,910 shares, at a cost of about $2.5 million, and increased his stake by 65 percent. Insiders were also active buyers throughout last year, with nearly two dozen buys and just a small handful of sales.
Overall, Keurig Dr Pepper insiders own 32 percent of shares.
The beverage giant is down 16 percent over the past year, substantially underperforming the S&P 500, which is up 27 percent over the same period.
However, shares trade at 15 times forward earnings, which also surged 53 percent last year, even as revenues rose by just 2 percent. That shows the company is becoming more profitable, and remains cheap.
Action to take: Investors may want to buy a starting stake here. Another tranche can be bought if shares drop further.
The drop in shares has pushed KDP’s dividend yield to about 3 percent, and KDP has a history of raising its payout over time.
For traders, shares are near their 52-week low, and look set to bounce in the coming weeks. The July $32 calls, last trading for about $0.55, could see high double-digit returns from here.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.