We recently compiled a list of the 10 Large-Cap Stocks with Insider Buying in 2025. In this article, we are going to take a look at where Ferguson Enterprises Inc. (NYSE:FERG) stands against the other large-cap stocks.
Insider buying is one of the strongest indirect signals that analysts and successful investors often use to assess whether a stock is undervalued or not. The intuition behind this stems from the fact that high-ranked insiders such as named executive officers and directors possess confidential information that may give greater visibility into the company’s future and growth trajectory. Insiders leverage such information as real-time data on sales and orders, and discussions with key clients, suppliers and other stakeholders, to form a better understanding of the company’s valuation. For instance, insiders often show net selling of their own company stock at peak valuations, just days or weeks before a major market correction happens; and vice versa, insiders often show net buying at or near market bottoms, days or weeks before the stock price starts to increase. This is clearly not a coincidence most of the time. Also, many successful investors emphasized the idea that insider buying is often a stronger signal than selling. Here is what Peter Lynch, one of the greatest ever, said on this topic:
“Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
With the US stock market having experienced a very strong bull market for the last 2 years, insider buying has become increasingly muted, with insider selling starting to prevail, especially in apparently overbought sectors like technology. This trend suggests that executives and institutional investors may see limited upside in certain high-flying stocks, prompting them to lock in gains. However, a significant portion of those strong returns have been driven only by a handful of companies, often called the “Magnificent 8”, which experienced an uplift from AI and other megatrends. At the same time, on an equal-weight basis, the US stock market has had a more modest performance. Some sectors like healthcare are at or near multi-year lows on a relative basis, driven by a combination of headwinds as well as a lack of tailwinds to the same extent as the technology leaders. The key takeaway for investors is that regardless of what point in the cycle we are, or how long into a bull market we are, both buying and selling opportunities will exist.
ALSO READ: 10 Technology Stocks with Insider Buying in 2024
The US stock market is still near its early 2025 all-time high and exhibits peak concentration and net insider selling. We believe that at such extreme points, when high valuation concerns are widely spread in the news, the signals provided by insiders buying their own company stocks are more valuable than ever. Their actions can indicate where genuine value exists beneath the broader market’s surface, highlighting sectors or individual companies that may be overlooked or undervalued. Insider buying in such an environment suggests confidence in a company’s long-term fundamentals, despite broader market uncertainties or short-term volatility. Investors who pay close attention to these signals may uncover opportunities in sectors that have lagged behind, offering potential for strong future returns as market conditions evolve. Last but not least, large-cap companies are usually widely followed and exhibit more price efficiency; consequently, insider buying signals in these stocks are even more relevant in our opinion.
Our Methodology
We used Insider Monkey’s insider trading stock screener to find large-cap stocks with at least two insiders buying shares worth at least $100,000 in the last six months. We believe that multiple insiders buying significant amounts of stock represents a higher chance that insiders have high confidence in the company. For all the companies, we also include the number of hedge funds tracked by Insider Monkey, as of Q4 2024, that own the stock. The stocks are ranked in ascending order of their hedge fund holdings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A busy warehouse stocked with a variety of industrial plumbing parts.
Ferguson Enterprises Inc. (NYSE:FERG)
Number of Hedge Fund Holders: 72
Ferguson Enterprises Inc. (NYSE:FERG) is a leading distributor of plumbing, HVAC, and industrial products in the United States and Canada. The company supplies a broad range of materials, including plumbing fixtures, pipes, valves, fittings, appliances, and lighting, catering to residential, commercial, and industrial markets. FERG operates an extensive network of branches, regional distribution centers, and master distribution centers, ensuring efficient product delivery. In the industrial sector, it provides customized pipes, valves and fitting solutions, in-house project management, and contracting services to optimize operational performance and safety for its clients.
Ferguson Enterprises Inc. (NYSE:FERG) delivered Q1 2025 sales of $7.8 billion, representing nearly 1% growth despite market headwinds and approximately 2% deflation. The company achieved an adjusted operating profit of $706 million with a 9.1% adjusted operating margin, while adjusted diluted earnings per share declined 7.5% to $2.45. The company demonstrated resilience through volume growth of approximately 3%, with organic volume up approximately 2%, though this was offset by modest overall price deflation of around 2%. Notable performance came from the HVAC segment, which grew by 10%, while Waterworks revenues increased by 3%, demonstrating success in strategic growth initiatives.
Ferguson Enterprises Inc. (NYSE:FERG) maintained a strong balance sheet with 1.2x net debt to adjusted EBITDA and continued its capital allocation strategy through investments in organic growth, acquisitions, and shareholder returns, including a 5% dividend increase and $256 million in share repurchases. Looking forward, FERG expects net sales growth in the low single-digit range, with markets being down low single digits, while maintaining market outperformance of approximately 300 to 400 basis points. The company remains well-positioned to capitalize on structural tailwinds in the underbuilt and aging US housing market, nonresidential large capital projects, and growing demand for plumbing and HVAC specialized professionals, which is further reinforced by significant insider buying in the last six months.
Overall FERG ranks 1st on our list of the large-cap stocks with insider buying in 2025. While we acknowledge the potential of FERG 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 timeframe. If you are looking for an AI stock that is more promising than FERG 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.
