Do you track trading signals from smart money buying and selling trends? Institutions trade large volumes of stock at a time. Given the large volume, the trade can make the stock move significantly both on the upside, and the downside. Hence, for individual investors, trades made by institutional investors can be very meaningful.
For a closer look at stocks currently favored by smart money institutional investors, we ran a screen.
We wanted to look at the healthcare sector because it's a non-cyclical sector, which generates stable demand even in difficult economic times. We began by screening the healthcare sector for stocks that appear undervalued relative to earnings growth, with PEG below 1.
We then screened for those with bullish sentiment from institutional buying, with net positive purchases in the quarter representing at least 5% of share float. This indicates "smart money" investors are bullish on these names' prospects.
For an interactive version of this chart, click on the image below. Average analyst ratings sourced from Zacks Investment Research.
Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.
1. Abiomed Inc. (NASDAQ:ABMD): Engages in the research, development, and sale of medical devices that provide circulatory support to acute heart failure patients across the continuum of care in heart recovery. Market cap at $531.97M, most recent closing price at $13.53. Net institutional purchases in the current quarter at 2.4M shares, which represents about 6.91% of the company's float of 34.72M shares. PEG at 0.99. As of September 29th, 2012, the top 2 holders of the stock are Primecap Management (12.6%), and Wellington Management (12%)
2. Select Medical Holdings Corporation (NYSE:SEM): Select Medical Holdings Corporation, through its subsidiary, Select Medical Corporation, operates specialty hospitals and outpatient rehabilitation clinics in the United States. Market cap at $1.34B, most recent closing price at $9.50. Net institutional purchases in the current quarter at 3.9M shares, which represents about 11.14% of the company's float of 35.02M shares. PEG at 0.85. As of September 29th, 2012, the top 2 holders of the stock are T. Rowe Price (3.7%), and California State Teachers Retirement System (2.22%)
3. USANA Health Sciences Inc. (NYSE:USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide. Market cap at $563.49M, most recent closing price at $37. Net institutional purchases in the current quarter at 1.4M shares, which represents about 21.94% of the company's float of 6.38M shares. PEG at 0.57. As of September 29th, 2012, the top 2 holders of the stock are FMR, LLC (12%), and LSV Asset Management (3.4%).
*Institutional data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.