After being dormant for several months, volatility has come back into the market in a big way over the last week. I expect the increased level of anxiety in the markets to continue for a bit given what is going on in Europe as well as the poor state of domestic politics. Another bad sign for the markets is that corporate insiders are selling at an aggressive pace that has not been seen for some time. Selling for tax reasons is no longer as plausible an excuse as it was before the end of 2012. I believe we are in the midst of a 5% to 8% decline that will have the market giving up most if not all of its 2013's gains before it runs its course.
I have kept a good portion of my portfolio in cash after doing some selling during the rally in late January. I will be looking to take advantage of any sell-off to pick up or add to my positions in equities with solid valuations. A good place to look for these bargains is to look through stocks that still have insider buying. Here are three equities that have had recent insider buying on my list.
Corning Incorporated (GLW) produces and sells specialty glasses, ceramics, and related materials worldwide.
4 reasons GLW is a bargain at just over $12 a share:
- A director purchased almost $400K worth of new stock in Mid-February. Insiders have now bought 200,000 shares over the past six months.
- The stock pays a solid 2.9% dividend and has raised its payouts by an approximate 12% CAGR over the past five years.
- GLW is selling near the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
- The company has a robust balance sheet with over $2.5B in net cash on the books (around 15% of market capitalization). The stock sells at 8x forward earnings subtracting net cash.
Inphi Corporation (IPHI) provides high-speed analog semiconductor solutions for the communications and computing markets worldwide
4 reasons that IMPI is valued price at under $10 a share:
- A director purchased over $250K in stock in three transactions in February. This follows three directors buying shares in November.
- Approximately 45% of the company's current market capitalization is represented by the net cash on its balance sheet.
- Analysts expect revenue growth of around 7% in 2013, but expect over 25% growth in FY2014.
- The stock looks like it bottomed at $8 a share recently and has moved up since then. It just got tagged as a stock under $10 ready to break out.
Echo Global Logistics (ECHO) provides technology-enabled transportation and supply chain management services in the United States.
4 reasons ECHO is a good growth play at $18 a share:
- An insider just picked up over $1.5mm in new shares over four transactions in February. They were the first insider buys in over a year.
- Analysts expect revenue growth north of 25% this year and almost 20% in FY2014. The stock sports a five year projected PEG of under 1 (.71).
- Earnings are increasing at a rapid pace. The company made just 62 cents in FY2012 but analysts expect the company to post earnings of 86 cents a share in FY2013 and over a $1.10 in FY2014.
- 10% of the company's market capitalization is in net cash on the balance sheet and the stock is selling at just over 50% of annual revenues.
Disclosure: I am long GLW.