Heyward Donigan, President and CEO at Rite Aid Corp (RAD), recently bought 14,350 shares. The buy increased his stake by 2.6 percent, and came to a total cost of $200,000.
This marks the first insider buy at the company in the past three years. In that timeframe, insiders, including both directors and corporate officers, have been sellers of shares, almost entirely at higher prices than where the stock trades today.
Overall, insiders own 2.7 percent of company shares.
Shares of the drugstore chain are down about 18 percent over the past year, and the company has been operating at a small loss.
The company generates massive cash flow, leading to shares looking particularly attractive in terms of their price to sales ratio. The company’s positioning and cash flows can likely move to profitability as the economy continues to recover.
Action to take: Investors may like shares as a rebound play. The stock has a tendency to jump higher on news like short-term earnings reports. However, shares don’t pay a dividend at this time.
For traders, the April $15 calls, last going for about $1.50, offer a leveraged return higher for a rebound in shares in the coming months. Traders can likely nab mid-to-high double-digit profits in the months ahead.
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 of the companies mentioned in this article.