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The basic materials sector was the top performing group in one week performance, with a 1.3% gain during the one week period ending December 14.

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Based on this observation I screened for companies in the basic materials sector where at least two insiders made a buy transaction during the last 30 days. In this article I will feature three basic materials stocks that I found. None of these three stocks had any insider selling during the last 30 days. The stocks that meet these two criteria tend to outperform the market during the next 6 months.

1. NuStar GP Holdings (NYSE:NSH) owns general partner and limited partner interests in NuStar Energy (NYSE:NS), one of the nation's largest asphalt refiners and marketers and operators of petroleum product terminals and petroleum liquids pipelines.

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Insider buys

  • William Greehey purchased 340,100 shares on November 12 - December 12 and currently holds 7,880,677 shares of the company. NuStar GP Holdings has 42,586,483 shares outstanding which makes William Greehey a 18.5% owner of NuStar GP Holdings. William Greehey also serves as a director of the company.
  • Steven Blank purchased 2,000 shares on November 12 and currently holds 48,961 shares or less than 0.1% of the company. Steven Blank is Executive Vice President, Chief Financial Officer and Treasurer of the company.

Financials

The company reported the third-quarter financial results on October 25 with the following highlights:

Net income$19.2 million
Cash$2.7 million
Debt$21.0 million

Competition

NuStar GP Holdings' competitors include BP (NYSE:BP) and Kinder Morgan (NYSE:KMI). Here is a table comparing these companies.

CompanyNSHBPKMIIndustry (Oil & Gas Pipelines) (average)
Market Cap:1.21B131.43B34.96B4.44B
Employees:1,50883,4008,1201.17K
Qtrly Rev Growth (yoy):-0.52-0.050.350.18
Revenue:1.05M371.81B9.15B2.11B
Gross Margin:1.000.140.510.28
EBITDA:N/A37.48B3.83B405.80M
Operating Margin:-2.190.060.280.09
Net Income:16.03M17.65B1.07BN/A
EPS:0.385.530.171.17
P/E:75.687.49196.0521.90
PEG (5 yr expected):8.394.101.612.94
P/S:1,151.240.353.831.72
Dividend %7.645.224.27N/A

NuStar GP Holdings' dividend yield is the highest among these three companies.

My analysis

The stock has a $15 price target from the Point and Figure chart. There have been nine insider buy transactions and there have not been any insider sell transactions this year. There are 0 analyst buy ratings, one neutral rating and one sell rating for the company currently. The stock is trading at a P/E ratio of 75.68 and a forward P/E ratio of 17.83. The stock has a 7.64% dividend yield. I have a neutral bias for the stock currently based on the mixed fundamental and technical picture.

2. ZaZa Energy Corporation (NASDAQ:ZAZA) is a publicly traded exploration and production company with primary assets in the Eagle Ford and Eaglebine resource plays in Texas.

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Insider buys

  • Todd Brooks purchased 196,850 shares on December 11-13 and currently holds 196,850 shares or 0.2% of the company. Todd Brooks is Executive Director, President and Chief Executive Officer of the company.
  • Ian Fay purchased 25,000 shares on December 11 and currently holds 75,000 shares or less than 0.1% of the company. Ian Fay is Chief Financial Officer of the company.
  • Scott Gaille purchased 5,000 shares on December 11 and currently holds 105,000 shares or 0.1% of the company. Scott Gaille is Chief Compliance Officer of the company.
  • Haag Sherman purchased 25,000 shares on December 11 and currently holds 25,000 shares or less than 0.1% of the company. Haag Sherman serves as a director of the company.

Financials

The company reported the third-quarter financial results on November 13, with the following highlights:

Revenue$207.2 million
Net income$133.8 million
Cash$24.6 million
Debt$94.1 million

On November 14, 2012, ZaZa announced that it had entered into a definitive share purchase agreement with Vermilion Energy (VEMTF.PK), which would acquire 100% of the shares of ZaZa Energy France SAS for a total purchase price of $85.8 million.

ZaZa received a letter of non-objection from the French Minister of Energy and Minister of Economy and Finance on December 10, 2012 approving the transfer of the shares of ZaZa Energy France to Vermilion. ZaZa remains on track to close the transaction with Vermilion prior to year-end 2012 and intends to use a portion of the proceeds from the disposition to pay down part of its remaining senior secured notes and fund its drilling program across its Eaglebine and Eagle Ford plays.

My analysis

The stock has doubled from the bottom made in November. There have been four insider buy transactions and there have not been any insider sell transactions during the past 6 months. There are 0 analyst buy ratings, one neutral rating and 0 sell ratings with a average price target of $4.50. I have a cautiously bullish bias for the stock currently based on the insider trading activity.

3. Western Gas Equity Partners (NYSE:WGP) is a Delaware master limited partnership formed by Anadarko (NYSE:APC) to own Western Gas Partners' (NYSE:WES) general partner, all of WES's incentive distribution rights, and a substantial limited partner interest in WES. Through its ownership of WES's general partner, WGP manages and controls WES. The incentive distribution rights entitle WGP to increasing percentages, up to a maximum level of 48.0%, of any incremental cash distributed by WES as certain target distribution levels are reached with respect to any quarter.

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Insider buys

  • Danny Rea purchased 40,000 shares on December 6 pursuant to the initial public offering. Danny Rea currently holds 40,000 shares or less than 0.1% of the company. Danny Rea is Senior Vice President and Chief Operating Officer of the company.
  • Robert Gwin purchased 200,000 shares on December 6 pursuant to the initial public offering. Robert Gwin currently holds 200,000 shares or 0.1% of the company. Robert Gwin serves as a director of the company.
  • Donald Sinclair purchased 239,500 shares on December 6 pursuant to the initial public offering. Donald Sinclair currently holds 239,500 shares or 0.1% of the company. Donald Sinclair is President and CEO of the company.
  • Philip Peacock purchased 7,500 shares on December 6 pursuant to the initial public offering. Philip Peacock currently holds 7,500 shares or less than 0.1% of the company. Philip Peacock is Vice President, General Counsel & Corporation Secretary.
  • Benjamin Fink purchased 12,500 shares on December 6 pursuant to the initial public offering. Benjamin Fink currently holds 12,500 shares or less than 0.1% of the company. Benjamin Fink is Senior Vice President, CFO, and Treasurer.
  • Charles Meloy purchased 5,000 shares on December 6 pursuant to the initial public offering. Charles Meloy currently holds 5,000 shares or less than 0.1% of the company. Charles Meloy serves as a director of the company.
  • Robert Reeves purchased 9,000 shares on December 6 pursuant to the initial public offering. Robert Reeves currently holds 9,000 shares or less than 0.1% of the company. Robert Reeves serves as a director of the company.
  • David Tudor purchased 2,000 shares on December 6 pursuant to the initial public offering. David Tudor currently holds 2,000 shares or less than 0.1% of the company. David Tudor serves as a director of the company.
  • R Walker purchased 5,000 shares on December 6 pursuant to the initial public offering. R Walker currently holds 5,000 shares or less than 0.1% of the company. R Walker serves as a director of the company.

Financials

The company reported the nine months, ended September 30, financial results with the following highlights:

Revenue$636.6 million
Net income$64.7 million
Total equity$2.0 billion
Quarterly dividend$0.165 per share

My analysis

The stock started trading on December 7. There have been nine insider buy transactions and there have not been any insider sell transactions since the IPO. The stock has a 2.4% dividend yield. I have a cautiously bullish bias for the stock currently based on the insider trading activity.

Source: 3 Basic Materials Stocks With Recent Insider Buying