As we enter the last month of the first quarter, investors are still unsure what strategy one should use as the economy cannot give us a clear direction. One strategy that has shown over time though to be effective in beating the market, regardless of the economy, is tracking insider buying. The premise is simple in that insiders are just like the rest of the public in how they desire to make more money and as a result when these people purchase shares we can join them on the way higher. The following are stocks that have recently had notable insider buying of at least $100,000 and seemed poised to move higher as the fundamentals and/or future prospects look compelling. As another caveat, please only consider this as a starting point in your investment research as these are only the opinions of the blogger:
Applied Micro Circuit (AMCC) provides semiconductor solutions and for a variety of business markets. This survivor of the dot com collapse the past decade will most likely never see its $500+ all-time high, but has been performing real well the past six months. Major shareholder Christopher Zepf sees the upward trajectory continuing filing an SEC Form 4 on March 4 showing the purchase of 22,500 shares equating to $180,000 worth of stock. The company operationally has done well beating analyst estimates in three of the last four quarters. Moreover, I like the pristine, debt-free balance sheet with approximately $1.25 in net cash. The company has a lot of red ink, which is discouraging, but analysts' expect the company to become profitable again at the end of their Fiscal Year. I think with the strong insider buying, pristine balance sheet, and strong earnings beats, AMCC is worth a look.
DaVita Healthcare Partners (DVA) is a health Services Company focused on providing kidney dialysis and renal related treatment. The stock has been on a tear up approximately 50% and sitting at a new 52-week high above $124. Major shareholder and legendary firm Berkshire Hathaway continues to see great value in the stock buying 164,947 shares collectively from February 28-March 4, equating to almost $20 million worth of stock. Operationally, the company has done real well exceeding consensus estimates in three of the last four quarters. The company, despite its recent run-up, still looks fairly priced at a 22x trailing and 15x forward P/E. Moreover, trading at a 1.2x price to expected growth is not expensive when the company is performing so well as it has done. Lastly with strong returns on equity in excess of 17% and the company still expected to grow a healthy 13.5% per annum over the next five years, I think DaVita is worth a look.
Opko Health (OPK) is a biopharmaceutical company based out of Miami, Florida, and has worldwide operations primarily in the United States, Mexico, and Chile. With anemic annual revenues at approximately $37 million and financial statements filled with red ink, one would understandably question how the stock is at another 52-week high at $7.4. Simply put, investors see a promising future with Chairman, CEO, and major shareholder Dr. Frost as the right man at the helm. Moreover, Dr. Frost scooped up another 20,000 shares on March 1, equating to approximately $140,000 worth of stock. This stock is simply not for the conservative investor as it pays no dividend and has no earnings, but can continue to generate big gains if things stay on track and it can get some favorable reviews from the FDA.
Sears Holding (SHLD) is one of the largest retailers with annual revenues at approximately $40 billion and operating approximately 4,000 stores in the United States and Canada collectively. The stock has been volatile and recently not performing well with the stock just barely above its $38.40 52-week low. Major shareholder and new CEO Edward Lampert sees it going higher though buying 1,239,056 shares at $44.36 equating to a massive $55 million worth of stock. I have personally followed this stock closely over the years and have to say it is real confusing whether it should be viewed as a retailer or real estate play or a future holding company for billionaire investor Mr. Lampert, much like Mr. Buffett did with Berkshire decades ago. Nonetheless, one can clearly see that it has lost investors considerable money over the last five years and the company continues to show no signs of being able to stem the downfall or differentiate itself from Wal-Mart (WMT), Target (TGT), Amazon (AMZN) and other competitors. This definitely piques my interest on such a sizable buy as he recently did here, so I'm going to be watching this stock more closely.
Sizable equipment manufacturer Terex (TEX) makes everything from light towers to tower cranes. The stock has done well the past six months going up approximately 100% and sitting right near its $35.76 52-week high. Board director Paula Cholmondeley sees it continuing to go higher by filing an SEC Form 4 on March 1 showing the purchase of 3,539 shares on February 28, at $33.1 equating to almost $120,000 worth of stock. The company operationally had been doing well thrashing consensus analysts' estimates in the previous three quarters, but coming up sizeably short in the most recent quarter. Nonetheless, the company is trading at a reasonable 9x forward P/E and just half price to sales. Moreover, analysts are expecting a healthy growth rate per annum near 10% for the next five years and I think that will happen as the economy improves.