One FTSE 100 stock I want to buy more of for my portfolio is InterContinental Hotels Group (LSE: IHG). It’s a leading hotels operator that owns many well-known brands including InterContinental, Holiday Inn, and Kimpton.
Is now a good time to buy a few more shares? I think it could be – the stock is down 17% from its 2024 highs and directors have been buying shares recently.
Multiple insider purchases
It’s often worth taking a closer look when directors are buying company stock. That’s because these ‘insiders’ have more information on their businesses than the rest of us.
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Meanwhile, insiders only buy stock for one reason – to make money. They’re not going to put their hard-earned cash into company shares if they believe the share price is heading lower.
Looking at recent regulatory filings from InterContinental, I can see that three directors have bought stock this month. Those who have invested in the company are:
- Chair Deanna Oppenheimer – 2,000 American Depository Receipts (ADRs) worth a total of $174k
- Non-executive director Byron Grote – 1,000 ADRs worth a total of $85k
- Non-executive director Sir Ron Kalifa – 679 regular shares worth a total of £60k
Combined, the three insiders have invested roughly £260k in the company.
Trading skill
Now, it’s worth pointing out that £260k worth of director buys isn’t huge. Sometimes, insiders spend millions on company stock.
However, what’s interesting here is that two of the insiders (Oppenheimer and Grote) made well-timed purchases last year. Both snapped up stock shortly before the InterContinental share price soared from £50 to £85.
Long-term growth potential
Looking beyond the director dealing, there’s a lot to like about this stock at the moment, in my view.
Recent half-year results were solid, with revenue rising 7% and adjusted earnings per share increasing 12%. On the back of this performance, the company increased its dividend by 10%.
Looking ahead, the firm said that it has a global pipeline of 330k rooms (representing 35% of its current size). So, there appears to be plenty of scope for growth here.
As for the valuation, it seems quite reasonable to me. After the recent share price weakness, the forward-looking P/E ratio here using the 2025 consensus earnings forecast is 18.8.
For a company with a high level of profitability and significant long-term growth potential (I expect it to benefit from the retirement of Baby Boomers), I see that as attractive.
Of course, a short-term downturn in consumer spending is a risk. Uncertainty here is one reason the stock has pulled back recently.
I can’t see this being a major problem for InterContinental as it tends to serve more affluent travellers. But it’s a risk factor I’m monitoring.
Should I buy?
Putting this all together, I’ve decided that I’m going to buy some more shares for my portfolio. The valuation is reasonable and I’m encouraged by the director dealing.
That said, I wouldn’t be surprised to see some more market volatility in the days and weeks ahead (especially with the geopolitical tension in the Middle East). So, I’m going to wait a bit (but not too long) and see if I can get an even better price.
