It can be useful for investors to keep an eye on 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 directors.
If they are buying, it could be a sign that they are confident in the direction the company is heading and see value in its shares.
One ASX share that has reported meaningful insider buying this week is Domino's Pizza Enterprises Ltd (ASX: DMP).
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Insider buys Domino's shares
With the pizza chain operator's shares down 30% over the past 12 months, it seems that one of its directors believes this has created a buying opportunity.
According to a change of director's interest notice released yesterday morning, Domino's non-executive director Uschi Schreiber has added to her position with a couple of on-market trades this month.
The release reveals that on 1 October, Schreiber picked up 1,000 Domino's shares for an average of $34.40 per share. She then followed this up the next day with the purchase of 600 shares through an on-market trade on 2 October for an average of $34.50 per share.
Combined, Schreiber paid a total of $55,100 for the 1,600 Domino's shares. This brought her total holding to 4,600 shares.
Should you invest?
The team at Goldman Sachs thinks that investors should be following in Schreiber's footsteps by buying the company's shares.
The broker recently put a buy rating and $40.00 price target on Domino's shares. This implies potential upside of 11.4% for investors over the next 12 months.
In addition, its analysts are forecasting dividend yields of 3.3% in FY 2025 and 4% in FY 2026. The former boosts the total potential 12-month return just under 15%.
Commenting on its bullish view of the stock, the broker said:
We have a Buy rating on the stock, as we believe management's focus on franchisee profitability through closure of 80/20-30 locations in Japan/France will help to material improve the quality of the network and help franchisee profitability.
With COGs inflation moderating and the company focusing on execution of quality stores, we expect that store growth will be restored following a digestion period.
DMP is trading at an undemanding PE valuation relative to its LT average and as such we believe the stock now offers an attractive entry point.
Overall, it appears to believe this could make Domino's a great option for investors right now.
