We recently compiled a list of the 10 Large-Cap Stocks Insiders Are Selling Recently. In this article, we are going to take a look at where Automatic Data Processing, Inc. (NASDAQ:ADP) stands against the other large-cap stocks. We previously covered 10 Large-Cap Stocks Insiders Are Buying Recently.
Why should investors track insider moves? Is it a bad sign for the company when insiders sell their shares? Not necessarily; just like insider buying activity doesn’t always mean the stock is heading for growth. Both insider selling and buying can be driven by various motives, it’s important to consider these moves within the broader context of the company’s fundamentals, industry trends, and overall market conditions.
However, insiders or people in high positions within a company—such as executives and directors, often have precious insights into the company’s strategy, plans, next moves and initiatives. Sometimes, for example, when a CEO or CFO invests their own money to acquire company shares, it can signal strong confidence in the company’s potential.
Similarly, when insiders are selling their shares, it can sometimes mean that the management is losing confidence. On the other hand, it also happens that large shareholders just want to trim their holdings to more appropriate position sizes based on the risk/reward. Insiders can also decide to sell their shares due to personal financial reasons that have nothing to do with the company.
This means that both insider selling and buying can be driven by various motives, and therefore, any insider trading activity should be carefully analyzed only with other factors. That’s why due diligence before any investment is of the utmost importance. However, insider trading activity in combination with other relevant determinants can offer valuable insights into a company’s capabilities, helping investors make more informed investment decisions.
To identify the 10 large-cap stocks insiders are selling recently, we considered only stocks with a market capitalization of more than $10 billion. We first used Insider Monkey’s insider trading stock screener and looked for stocks with at least two insiders selling over the last two months.
With each stock we note the number of recent insider sales and the company’s current market capitalization. But why is it important to follow insider activity? Our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds, focusing on insider trading and stock picks from hedge fund investor newsletters and conferences. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
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Automatic Data Processing, Inc. (NASDAQ:ADP)
Number of Insiders Selling: 9
Market Capitalization: $125.711B
The sixth large-cap stock insiders are selling recently is Automatic Data Processing, a management services company. Operating in 140 countries, the company offers payroll processing, tax administration, and human capital management services. In the US, it handles payroll for one in six workers and a total of 16 million employees worldwide. It has a 75-year-long history and has been named the 2024 Fortune World’s Most Admired Companies list for 18 consecutive years.
In January, nine insiders sold a total of $11.79 million worth of Automatic Data Processing shares at an average price of $291.51 per share. The stock gained 4.46% since the beginning of the year, and it is now trading at $305.78 per share. Over the past 12 months, the company’s stock gained 22.28%.
As per data from StockAnalysis, the consensus rating on Automatic Data Processing stock is “Hold.” The 12-month stock price forecast is $293.55, representing a decrease of 4% from the latest price.
For the second quarter of fiscal 2023, the company disclosed revenue of $5.05 billion, up 8% from the same period last year. For fiscal year 2025, the company projects revenue growth of 6% to 7%. In January, the company’s board of directors declared a regular quarterly dividend of $1.54 per share. Automatic Data Processing is also one of the 15 Best Dividend Stocks To Buy and Hold.
Over the last five years, the stock returned 68.71%, and its price volatility has been lower than the market average.
Overall ADP ranks 6th on our list of the large-cap stocks insiders are selling recently. While we acknowledge the potential of ADP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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