2 Under Followed Small Caps With Significant Insider Buying

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 |  Includes: CSCD, LAWS
by: Bret Jensen

"Every morning, I get up and look through the 'Forbes' list of the richest people in America. If I'm not there, I go to work" - Robert Orben

Sunday I was getting a little research done before the NFL gameday started. Going through this week's Barron's, I found a couple of interesting small caps that have had some significant insider buying over the last few weeks. For investors looking for some underfollowed equities they can buy along with these insiders, they are worth considering.

Lawson Products (NASDAQ:LAWS) distributes products and services to the industrial, commercial, institutional, and governmental maintenance, repair, and operations marketplace in the United States and Canada.

4 Reasons LAWS offers solid value at just over $9.50 a share:

1. Several insiders have made insider buys over the last few months, including a $5mm buy ten days ago.

2. The stock yields 5% and has doubled its dividend payout over the last three years after it had to be cut drastically during the financial crisis.

3. After posting a large loss this fiscal year, Lawson is expected to post a profit of 80 cents a share by analysts in FY2013.

4. More importantly, consensus earnings estimates have risen significantly FY2013 in last two months and the company is expected to post sales growth of a few percent next year after suffering a sales decline of approximately 7% this fiscal year.

Cascade Microtech (NASDAQ:CSCD) develops and manufactures wafer probing solutions for the electrical measurement and testing of high performance semiconductor chips.

4 reasons CSCD has upside from $5.50 a share:

1. A director just bought $700K worth of new shares in the last few weeks. It was the first insider buy since May.

2. The company has a solid balance sheet with over 25% of its market capitalization in net cash.

3. Consensus earnings estimates for FY2013 have risen some 6% in the last month and the stock sells for just over 10x forward earnings. It also has beat earnings estimates three out of the last four quarters (the other quarter was in-line)

4. The company is expected to grow earnings by some 40% in FY2013 on the back of a projected 8% sales increase.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in LAWS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.