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  5. ACO.X: These four stocks that I have an equal weighting in came to my attention because of the insider buying. [ATCO Ltd. Class I Non-voting Shares]
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Investment Q&A

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Q: These four stocks that I have an equal weighting in came to my attention because of the insider buying. Could you please comment on if this insider buying and overall ownership is significant and rank them from best to worst based on that information only. Then please rank them on which would have the best overall return based on dividends and capital gains for the next 3 years from best to worst and explain why (the pros) for the one you ranked first overall and why(the cons) why you ranked the fourth stock last.

And lastly is there any of the four you just wouldn’t buy today. Thank you.

Asked by James on September 14, 2022
5i Research Answer:

Insiders have been net buyers for ATCO over the past several months and insiders own roughly 27%. Insiders of CAS have also been net buyers over the past few months, but over the past couple of weeks has seen some selling. Insider ownership is 22% for CAS. There has been significant insider buying for LUN over the past few months, with very little selling. Insiders own ~13%. OTEX has seen very little insider activity over the past several months and insiders own ~2%. Based on this information alone, we would rank as follows (from highest to lowest): ACO, LUN, CAS, and OTEX.  

We would rank as follows (from highest to lowest) based on dividends and capital gains: OTEX, ACO, LUN, and CAS. OTEX, being in the tech industry, we feel has the highest potential for growth and offers an attractive dividend even compared to these utilities and materials companies. CAS is ranked last due to it being the smallest of the four companies, demonstrating the weakest net income growth of the four companies and has not shown good top-line growth over the years. 

All are reasonably valued, but CAS has not demonstrated great revenue or net profit growth, although it does pay a decent yield. If we had to choose one company to not purchase, we would not be buyers of CAS.