Insiders Pour Millions into These 2 Stocks — Here’s Why You Should Pay Attention

Say ‘insider trading,’ and most people will start thinking of shady backroom deals, or perhaps Martha Stewart’s conviction for trading based on non-public advice and information. But the truth is much simpler, and much more common – and quite legal.

In fact, insider trading in this legal form refers to corporate officers – members of the C-suite or Boards of Directors – who are required by federal law to disclose their transactions. These individuals are deeply familiar with the inner workings of their company and are tasked with driving profitability. Because of this, their trading activity can offer a valuable window into how they see the company’s future.

That’s why academic research going back to the 1960s has repeatedly shown that tracking insider trades can be a smart strategy for investors. While insiders may sell for personal or routine reasons, they typically only make significant purchases when they have strong conviction that the stock is poised to rise, making insider buying one of the market’s most reliable signals.

The Insiders’ Hot Stocks tool from TipRanks highlights those major inside buys. Using it, we’ve identified two recent trades that are flashing a neon signal. Insiders are pouring millions of dollars into these two stocks – and that kind of buying doesn’t happen lightly. Let’s take a closer look.

Topgolf Callaway Brands (MODG)

Golf is on an upswing lately, with the game growing more popular. As many as 47 million Americans are playing the game, setting up increased demand for golf-specific equipment in the sporting goods niche. The first stock we’ll look at here, Topgolf Callaway Brands, is a leader in the field, providing a wide range of top-quality golf clubs and golf balls, as well as such all-important accessories as golf bags. The company markets its products under a portfolio of recognized brand names, including both Topgolf and Callaway.

The company has a market cap of $1.4 billion, a reflection of both the popularity of the game and the firm’s success in meeting customer demand. In each of the past five years, more than 3 million beginners have started golfing, and as of last year, some 28% of active golfers in the US were women. These trends bode well for Topgolf Callaway, as indicators that the business rests on solid footing for the present.

Golf equipment, however, is not the end-all, be-all for this company. Two out of three new golfers have first experienced the game off the course – and under the Topgolf brand, the company offers a variety of golf-themed entertainment venues, with game simulators and a social atmosphere.

In mid-May, the company released its financial results for 1Q25, and beat expectations at both the top and bottom lines. Revenue was reported as $1.09 billion for the quarter. While down 4.4% year-over-year, it was $10 million better than had been anticipated. The company ran a profit in Q1, of 11 cents per share in non-GAAP measures, beating the forecast by 17 cents per share.

We should note that, earlier this month, the company completed a strategic divestment, with the sale of its Jack Wolfskin brand to ANTA Sports. The sale was closed for $290 million, and is billed as a move to allow Topgolf Callaway to focus on strategic priorities. This is not the only strategic divestment the company is making; last year, the firm announced that it was planning to spin off the Topgolf entertainment brand, which would effectively split the company into two independent entities, one focused on golf equipment and the other on entertainment. The Topgolf spin-off is planned for 2H25.

Turning to the insiders, we find that Adebayo Ogunlesi, of the Board of Directors, has been buying large blocks of MODG this month. His recent purchases total 845,284 shares, for which he paid $5.54 million. His new purchases in the stock are worth over $6.68 million at current share prices.

For Jefferies analyst Randal Konik, who covers Topgolf Callaway, the key to this stock is the upcoming spin-off and the core Callaway brand’s ability to continue reaping gains from industry tailwinds. He writes of MODG, “TG continues to experience weaker SVS trends resulting in the FY top-line outlook being lowered. However, consolidated outlook expectations remain intact. We continue to see value in the core-Callaway biz post-TG separation… The Topgolf spin-off is expected to be completed later this year, while Callaway continues to benefit from industry consolidation and demographic tailwinds driving pricing and participation.”

To this end, Konik puts a Buy rating on MODG stock, and his $10 price target implies a one-year gain of 29% for the shares. (To watch Konik’s track record, click here)

That’s the bullish view. The Street generally puts a Hold consensus rating here, based on 7 reviews that include 2 Buys, 4 Holds, and 1 Sell. The shares are priced at $7.74 and the $8.17 average target price suggests that the stock will gain 5.5% in the next 12 months. (See MODG stock forecast)

AppFolio (APPF)

Next up is a tech company, with a focus on the real estate industry. AppFolio offers users a software-as-a-service platform designed to meet the needs of property owners and managers. The company’s chief products are the Property Manager and Investment Manager platforms, which, as their names suggest, cover the management and investment sides of the real estate industry.

In the management side, the company’s platform is highly scalable, to meet property portfolios of all sizes, and uses AI to enhance property managers’ services with creative automation. AppFolio’s platform can handle everything that a property manager needs, from one central location – communications, accounting, reporting, and maintenance, all can be coordinated through the platform. On the investment side, users can monitor investment and property values, raise and track capital, generate reports and manage taxes, and even track and manage relationships with investors.

All of this makes AppFolio the leading tech provider in the real estate industry. The company has been in the business since 2006, and has accumulated nearly two decades of experience that it puts to use for its customers. AppFolio generated $794 million in revenue during calendar and fiscal year 2024, a total that was up 28% from the prior year.

AppFolio kept its growth streak alive in the first quarter, posting a 16% year-over-year revenue increase to $218 million. While that figure came in about $2.4 million shy of expectations, the shortfall was modest. On the bottom line, the company delivered non-GAAP EPS of $1.21 – just a penny below the Street’s forecast.

Two of this company’s Directors have made notable stock purchases this month. The first, Timothy Bliss, bought 22,000 shares for a total of $4.78 million, and the second, Robert Casey III, picked up 4,000 shares for just over $870K. The two Directors’ purchases are worth $4.99 million and $908,080 at current valuations.

APPF stock has caught the attention of D.A. Davidson analyst Will Jellison, who believes that the company’s position as a quality software firm with a sound niche should be attractive to investors.

“We are maintaining our BUY rating on AppFolio following 1Q25 results which demonstrated sustained targeted investments for growth, especially in the resident experience, reiterated expectations for 2025 revenue and margin, and significant share repurchases. We continue to find AppFolio a top quartile software asset, given its multiple growth drivers and relative defensiveness in the current environment, and value it accordingly,” Jellison noted.

That Buy rating is complemented by a $275 price target that implies an upside for the coming year of 22%. (To watch Jellison’s track record, click here)

The Street has given APPF a Moderate Buy consensus rating, based on 6 recent analyst recommendations that break down to 3 Buys, 2 Holds, and 1 Sell. The stock’s $225.57 trading price and $237.67 average target price together point toward a modest one-year gain of 5%. (See APPF stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.