DGL share price jumps 20% in 2 days after founder fills his boots

DGL shares have been rebounding strongly in the last couple of days.

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Key points

  • DGL shares leap 8.26% to $1.77 during early afternoon trade
  • The company announced that its founder, Simon Henry, has made another sizeable purchase
  • Earlier this week, DGL shares were trading at 52-week lows

The DGL Group Ltd (ASX: DGL) share price is on the move again today.

After hitting a 52-week low of $1.45 yesterday, the chemical company's shares surged 11.99% to finish at $1.635.

However, the rally hasn't stopped with the share up another 8.26% rise today to $1.77.

This means DGL shares have now risen by 20% over the last couple of days.

DGL founder takes advantage of share price weakness

Investors appear to be in unison with the company's founder, taking advantage of the recent DGL share price weakness.

On 2 September, the company's founder Simon Henry boosted his holdings in DGL after the share tanked around 50% in the days prior.

According to the release, Henry acquired 318,000 DGL shares through an on-market trade at an average price of $1.573 per share.

This equates to just over half a million dollars, with Henry now owning roughly 151.24 million DGL shares.

The last time Henry bought DGL shares was in mid-March of this year, spending $1.4 million to buy 500,000 shares.

It seems that Henry believes that DGL shares are grossly undervalued despite the company delivering a strong full-year result.

Clearly, the market had been expecting more from DGL regardless of booking an underlying net profit after tax (NPAT) of $33.6 million, up 197% on FY2021.

DGL share price snapshot

With DGL shares down 43.5% in 2022, they are now trading at lows not seen since July 2021.

If momentum can hold, the share could reach back up to the $2.50 mark based on the next resistance level.

On valuation grounds, DGL presides a market capitalisation of $458.2 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DGL Group Limited. The Motley Fool Australia has recommended DGL Group Limited. 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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