Once a week I like to take a look to see which shares have experienced meaningful insider buying.

This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

AMA Group Ltd (ASX: AMA)

One of this smash repair company’s non-executive directors has taken advantage of a significant pullback in the AMA Group share price to purchase shares. According to a change of director’s interest notice, Non-Executive Director Simon Moore picked up 1,125,000 shares through an on-market trade on 5 June. Mr Moore paid a total of $744,412.50 for the shares, which equates to an average of ~66.2 cents per share.

AMA Group’s shares fell heavily earlier this year after the release of a very disappointing half year result. Despite posting a 32% increase in half year revenue, the company delivered a loss after tax of $11 million. This compares to a profit of $10 million in the prior corresponding period. Judging by the sizeable purchase, it appears as though this director is confident that the worst is behind the company now.

Wesfarmers Ltd (ASX: WES)

According to another a change of director’s interest notice, one of this conglomerate’s non-executive directors has been topping up their holding. The notice reveals that Sharon Warburton bought 4,600 shares through an on-market trade on 9 June. Warburton paid an average of $41.75 per share, which equates to a total consideration of $192,050.

The director’s buy price was a discount of approximately 12% to Wesfarmers’ 52-week high of $47.42. It appears as though they see value at this level, especially given the strong performance of its Bunnings and Officeworks businesses during the pandemic.  

More reading

• ASX 200: improved consumer sentiment to near pre COVID-19 levels
• 3 quality ASX dividend shares to solve your income needs
• 2 top ASX dividend shares you can buy right now
• Is the Wesfarmers share price good value?
• Why I think Wesfarmers is the best ASX blue chip

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One of the simplest and potentially most effective ways of building your wealth is to invest with a long term view.

This is because buying and holding shares lets investors benefit fully from the power of compounding.

But which shares should you buy? I believe the three ASX shares listed below could generate strong returns for investors over the long term. Here’s why I would buy them today:

Altium Limited (ASX: ALU)

The first buy and hold option to look at is Altium. It is a printed circuit board (PCB) design software provider which I believe has significant potential. This is due to the growing demand for sophisticated electronic design automation software such as Altium Designer because of the Internet of Things boom. This year management is aiming to reach 50,000 software subscriptions. It then wants to double this to 100,000 by FY 2025. Given the quality of its product and favourable industry tailwinds, I believe Altium will achieve this.

Bubs Australia Ltd (ASX: BUB)

Another buy and hold option to consider is Bubs. It is a goat’s milk-focused infant formula and baby food company which has been growing at a strong rate over the last few years. Pleasingly, I believe this strong form can continue for some time to come. Especially given increasing demand in China and its supply agreements with Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) supermarkets. Another positive is that it has recently expanded its offering into cow’s milk infant formula. Given the size of this side of the infant formula market, it could be a big contributor to its future growth.

Nearmap Ltd (ASX: NEA)

A final buy and hold option to consider is Nearmap. It is a leading aerial imagery technology and location data company that allows businesses to instantly access high resolution aerial imagery and integrated geospatial tools. Last month Nearmap revealed that it is on course to achieve annualised contract value of $103 million to $107 million in FY 2020. This is still only a fraction of the global aerial imagery market, which is estimated to be worth US$10.1 billion. I believe its quality offering, which is being boosted by the release of an AI product, puts the company in a position to capture a growing slice of this market over the next decade.

More reading

• ASX shares I’d buy if this decline is a second COVID-19 crash
• Tech shares! Should we even invest in anything else?
• Have $1,000? You should pick one of these 8 ASX shares
• How the A2 Milk and Bubs share prices have performed during the pandemic
• 2 ASX shares I’d buy if the ASX crashes again

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium, BUBS AUST FPO, and Nearmap Ltd. The Motley Fool Australia has recommended BUBS AUST FPO and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (Index:^AXJO) is clawing its way back from the abyss, but any bounce could be an opportunity to sell shares that have just been hit by broker downgrades.

The top 200 benchmark is trading 1.7% lower in after lunch trade but that’s only around half of what it lost this morning.

The sharp sell-off was triggered by fears of a second wave of COVID-19 infections in the US and I think any pullback is an opportunity to buy as I don’t see the market returning to its March bear market low.

But not all popular stocks should be on your watchlist, not according to some leading brokers who just downgraded these two ASX shares to “sell”.

Paying more than full price

One that got its recommendation cut by Credit Suisse is JB Hi-Fi Limited (ASX: JBH). The broker lowered its rating on the electrical and white goods retailer to “underperform” from “neutral” today even after management’s positive trading update.

But Credit Suisse is urging investors to take the opportunity to take profit after JB Hi-Fi sales benefited from stay and work at home restrictions to curtail the pandemic.

While the retailer is seen as a quality stock given managements propensity to under promise and overdeliver, the broker pointed out that it’s trading on a significant premium to peers like Harvey Norman Holdings Limited (ASX: HVN) and its own historical multiples.

The broker also believes that FY21 earnings are “very likely” to be lower despite the tailwinds and it sees its sell recommendation on the stock as a relatively low risk call.

Credit Suisse’s 12-month price target on the stock is $34.52 a share.

Wings clipped

Meanwhile the Webjet Limited (ASX: WEB) share price crashed 6.8% ahead of the close to $3.90 after Morgan Stanley downgraded the stock to “underweight” from “equal weight”.

The broker made the cut as it pointed out six reasons why it preferred Corporate Travel Management Ltd (ASX: CTD) over the online travel agent.

For one, Corporate Travel looks to be better priced than Webjet based on market cap and enterprise value.

The corporate travel group’s cash burn is also lower than Webjet and its exposure to the collapse Virgin Australia airline is smaller.

Further, CTD’s earnings are expected to recovery quicker than Webjet’s as more of its bookings are for domestic travel.

Morgan Stanley also prefers CTD for its direct relationship with its business customers while Webjet is used more as a price comparison service.

Lastly, the broker thinks CTD is better placed to acquire a bargain. The group has access to capital and a long list of potential takeover targets.

Morgan Stanley’s price target on Webjet is $3.30 a share.

More reading

• What would I rather buy today: TPG or Telstra shares?
• Brokers name 3 ASX shares to buy right now
• Tech shares! Should we even invest in anything else?
• Keep a watch on these 3 ASX trends next week
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans

Motley Fool contributor Brendon Lau owns shares of Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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