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:
Marsh & McLennan Companies (MMC) is a world-wide diversified insurance services firm. The stock has performed well as it sits at a new 52-week high of $37.97. Nevertheless, board director Lloyd Yates sees the stock continuing to move higher by raising his ownership stake over 50% on March 22 purchasing 4,000 shares at $37.32 equating to approximately $150,000 worth of stock. Operationally, the company has done well beating consensus estimates in three of the last four quarters. Additionally, management has been adept at allocating capital shown by its exemplary 19%+ return on equity and not too shabby 7% return on assets. Lastly, the company has an attractive 2.5% dividend yield that looks poised to grow as it currently is only paying a 42% payout ratio. I think the stock is worth a look and if looking to diversify, American International Group (AIG) is nice stock to consider.
AIG is a worldwide behemoth with operations around the globe and an annual revenue base exceeding $65 billion. Moreover, the company recently announced that the government has sold the last of its once approximate 80% ownership stake. This is bullish in that now the company is both less limited in what it can do and helps shed the negative publicity that created. The stock is sitting near its $39.90 52-week high, however, it is still showing some cheap valuations. At barely over .5x price to book, .75x enterprise value to revenue, and 3x enterprise value to EBITDA, the general public seems to still keep discounting the stock. Moreover, the company has absolutely smashed consensus earnings estimates in each of the last four quarters further demonstrating that the company is back on track. Lastly, a dividend looks likely to be reinstated in the near future as both the company's operations are continuing to grow its free cash flow and the government has shed its ties with the stock.
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 a rather small trailing twelve month revenue base of $47 million and the company continuing to burn cash, one would understandably question how the stock is at another 52-week high near $8. However, investors see an exciting pipeline in the works with Chairman, CEO, and major shareholder Dr. Frost as the right man in charge. Moreover, Dr. Frost is scooped up another 31,600 shares on March 25 equating to approximately $238,000 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 they can get some favorable reviews from the FDA. If looking for a more conservative investment in this industry, Pfizer (PFE) is worth considering.
Pfizer is a Dow 30 component and for good reason as it has over the decades grown into a company with annual revenues exceeding $58 billion and a massive market capitalization over $200 billion. While the company sits at a new 52-week high near $29, it still has some attractive valuations. A 14.5x trailing and 12x forward P/E certainly cannot be described as pricey. Moreover, the company sports very healthy profit margins of 25% and operating margins of 33%. Lastly, and perhaps most importantly, the company yield a very attractive and consistently growing 3.4% dividend yield.
Agco (AGCO) offers a variety of agricultural equipment and chemicals around the globe. The stock has recently come off its $55.15 52-week high creating a potential buying opportunity. Board director Mallika Srinivasan seems to think that is the case buying a massive 172,833 shares at an average price of $50.91 on March 22 equating to $8.8 million worth of stock. The company has performed well, exceeding consensus earnings estimates in three of the last four quarters. The stock has some attractive valuations at a 9.5x trailing and 8.5x forward P/E. Lastly, trading at just half its enterprise value to revenue while churning over 15% returns on equity leads me to believe that Agco should move higher in the near future.