TE Connectivity: Insider Sales Mask a Golden Opportunity in a Growth Stock

In the realm of investing, few actions unsettle shareholders more than insider sales. When corporate executives sell shares of their own company, it often sparks speculation about hidden troubles. Yet, in the case of TE Connectivity (NYSE: TEL), recent insider transactions—particularly by CFO Heath A. Mitts and other officers—appear less a red flag and more a disciplined wealth-management tactic, executed under the safe harbor of prearranged Rule 10b5-1 trading plans. Against a backdrop of robust financial results, a bullish analyst upgrade, and secular tailwinds in electric vehicles (EVs) and industrial sensors, the stock’s recent dip following these sales presents a compelling entry point for long-term investors.

The Insider Transactions: A Plan, Not a Panic

On May 9, 2025, CFO Mitts sold 37,844 shares of TEL at an average price of $153.33, netting $5.8 million. Crucially, this transaction was executed under a Rule 10b5-1 plan established months prior, shielding it from allegations of insider trading. Mitts retained 45,503 shares post-sale, underscoring his continued confidence in TEL’s long-term prospects. Similarly, Aaron Kyle Stucki, President of Transportation Solutions, sold 5,000 shares on May 12 via a plan adopted in November 2024, while also exercising 5,000 stock options at a strike price of $66.74. These moves align with regulatory updates that clarify permissible trading practices, such as accommodating tax obligations and limit-order adjustments, ensuring compliance even as market conditions evolve.

While insiders may sell for personal financial goals—such as diversification or estate planning—their actions should not be conflated with skepticism about TEL’s outlook. In Stucki’s case, his net ownership increased after exercising options, a signal that his stakes remain aligned with shareholder interests.

The Bull Case: Strong Fundamentals and Undervalued Valuation

TE Connectivity’s Q2 2025 results deliver a stark rebuttal to any bearish narrative. The company reported $4.1 billion in revenue, a 4% year-over-year increase, and adjusted EPS of $2.10, crushing analyst estimates of $1.96. Management also raised third-quarter guidance to $2.06 EPS on $4.3 billion revenue, both above Street expectations. These numbers reflect TEL’s dominance in high-growth markets:
- EV Connectivity: TEL’s sensors and wiring systems are critical to EVs, a market projected to hit $1.4 trillion by 2030.
- Industrial Automation: Sensors and connectivity solutions for smart factories are driving double-digit growth in this segment.
- 5G and Data Centers: TEL’s fiber-optic and high-speed data products are foundational to global digital infrastructure.

HSBC’s recent Buy rating upgrade cites TEL’s undervaluation relative to its 5-year average P/E of 22, with the stock trading at just 17x forward earnings. This discount is puzzling given TEL’s 14-year dividend growth streak and $900 million debt-reduction plan, which bolster its financial resilience.

Why the Near-Term Risks Are Overblown

Critics may argue that insider selling signals unease about near-term headwinds, such as supply chain disruptions or macroeconomic slowdowns. Yet TEL’s diversified end markets—spanning automotive, energy, healthcare, and communications—act as a natural hedge. The company’s $48 billion market cap also reflects institutional ownership (70% held by funds), reducing volatility from individual transactions.

Moreover, the SEC’s updated 10b5-1 rules, which now permit more flexible tax-coverage sales and limit-order adjustments, have normalized such transactions. The fact that Stucki’s sale was tied to a plan from November 2024—well before Q2 results were known—reinforces that these are premeditated, not reactive, decisions.

The Investment Thesis: Buy the Dip, Own the Future

At current levels near its 52-week high of $165, TEL may seem pricey, but its PEG ratio of 1.2—a metric balancing growth and valuation—suggests it’s still within a reasonable range. With 2025 revenue growth expected at 5-7% and EPS expanding by double digits, the stock could climb to $185 within 12 months, unlocking a 14% upside.

The key takeaway: insider selling under 10b5-1 plans is not a sell signal. For investors seeking exposure to the EV revolution, industrial digitization, and reliable dividends, TEL’s recent pullback offers a rare opportunity to buy a $50 billion industrial giant at a discount to its growth potential.

In conclusion, while insider sales always warrant scrutiny, TEL’s fundamentals—bolstered by strong execution, a bullish analyst call, and secular tailwinds—are too robust to ignore. This is a stock to buy now, not shy away from.

This article is for informational purposes only. Readers should conduct their own due diligence before making investment decisions.