The Globe and Mail, Canada’s national newspaper, recently ran a story about a CEO buying $1.2 million in a Canadian large-cap energy stock. That got me thinking about large-cap stocks south of the border.
Large-cap stocks continue outperforming smaller stocks in 2023: the S&P 500 is up 18.92% in 2023, 13.6 percentage points higher than the S&P MidCap 400, and 11 times better than the S&P SmallCap 600.
There’s no question larger stocks have dominated the rally in 2023. However, what is exciting is that the breadth of these gains appears to be widening, delivering gains to stocks other than the Magnificent 7.
For this article, I’ve chosen to select three large-cap stocks that CEOs are buying. Generally, insiders only buy if business is good and there is even better news on the horizon.
To qualify for inclusion, the CEO must have bought at least $500,000 of the large-cap stock, and its share price must be up for the year.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) has a market capitalization of $60.7 billion.
Its CEO, Seifi Ghasemi, bought 10,000 shares of his company’s stock on Nov. 8 at an average price of $252.34. Five days later, Ghasemi bought another 11,000 at an average price of $264.42.
The CEO’s total outlay was $5.43 million, bringing his APD share count to 670,673, worth nearly $185 million. He’s already made paper gains of more than $306,000 in less than two weeks.
Air Products reported Q3 2023 earnings on Nov. 7. It missed the top and bottom lines, although by small margins. Its shares fell by nearly 13% on the news. Ghasemi jumped in to take advantage of the double-digit drop in its share price. As recently as December 2022, its shares traded at all-time highs around $320.
Recently, I recommended APD as one of three hydrogen stocks poised for growth in 2024. I like it because its shares are relatively inexpensive at less than 21 times earnings, trading at its lowest P/E ratio since 2016.
No wonder the CEO piled on his APD stock.
Workday (WDAY)
CEO Carl Eschenbach’s Workday (NASDAQ:WDAY) stock purchase I’m referencing isn’t recent—he bought 8,676 shares of the human capital management (HCM) and financial management software company for $2.09 million on Aug. 29—however, it was significant, so it makes sense to include the purchases in the $62 billion market cap.
Workday stock is up more than 65% over the past year.
Unfortunately, because the purchases were part of a Rule 10b5-1 trading plan for the Eschenbach Family Trust established in 2014, he bought shares between $236.25 and $241.23. By early October, WDAY stock was down to $209. They’ve since recovered. As of the latest purchase by the trust, the CEO and his family own 647,403 shares of stock, including RSUs (restricted stock units) and PRSUs (performance-restricted stock units).
On Nov. 20, BofA analysts increased their target price on WDAY by $10 to $270, well above where it’s currently trading, while reiterating their “Buy” rating.
The analysts believe the company can continue to capture market share in the HCM and financial markets. Further, its 2027 margin target of 25% is conservative, with two years until the target date.
Fox Corp. (FOX, FOXA)
I couldn’t resist including Fox Corp. (NASDAQ:FOX, NASDAQ:FOXA) CEO Lachlan Murdoch—he’s been CEO of the media company since 2019—because his dad recently stepped down as Chairman of Fox, handing that title to his son.
In August, Murdoch acquired 141,367 Class A shares (FOXA) at $33.84 a share for a total outlay of $4.78 million. He then sold them to the LKM Family Trust, Murdoch’s family trust.
In the most recent quarterly report (Q1 2024), Fox reported revenues of $3.21 billion, $20 million higher than Q4 2023, with adjusted net income of $537 million, 19.9% lower than $670 million a year earlier.
Profits were lower due to higher costs related to the production of the Women’s World Cup over the summer in Australia and New Zealand and higher costs associated with the renewal of its TV contract with the NFL.
In the first quarter, it returned $385 million to shareholders for dividends (35%) and share repurchases (65%).
There is no question that analysts are not fans of Fox. Of the 28 that cover it, only seven rate it “Outperform” or “Buy,” with a median target price of $34, about 10% higher than where it’s currently trading. Throughout the past five years, FOXA stock has lost 27% of its value compared to a 73% gain for the S&P 500.
This one easily earns its spot on our list of large-cap stocks.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
