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The basic materials sector has been the worst-performing group YTD with a loss of 1.6%.

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In this article I will feature three basic materials stocks that have seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

1. Axiall Corporation (NYSE:AXLL) operates as an integrated chemicals and building products company in North America and Asia.

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Insider buying by insider (last 30 days)

  • Michael McGarry purchased 1,000 shares on May 24, and currently holds 5,263 shares or less than 0.1% of the company. Michael McGarry has served as a director since January 2013.
  • William Mansfield purchased 5,000 shares on May 10, and currently controls 6,820 shares or less than 0.1% of the company. William Mansfield has served as a director since September 2012.
  • Stephen Macadam purchased 1,000 shares on May 10, and currently holds 13,742 shares or less than 0.1% of the company. Stephen Macadam has served as a director since September 2009.

Insider buying by calendar month

Here is a table of Axiall's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
May 20137,0000
April 201300
March 2013014,737
February 2013091,400
January 201300

The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on May 7, with the following highlights:

Revenue$1.1 billion
Net loss$3.5 million
Cash$69.2 million
Debt$1.6 billion

Competition

Axiall's competitors include The Dow Chemical Company (NYSE:DOW). Here is a table comparing these two companies.

CompanyAXLLDOW
Market Cap:3.01B41.55B
Employees:6,00053,444
Qtrly Rev Growth (yoy):0.23-0.02
Revenue:3.53B56.45B
Gross Margin:0.150.17
EBITDA:403.89M6.92B
Operating Margin:0.080.07
Net Income:81.54M966.00M
EPS:1.990.81
P/E:21.6342.25
PEG (5 yr expected):1.382.09
P/S:0.850.73

Axiall's P/S ratio is in line with its direct competitor's

My analysis

There have been three different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has an insider ownership of 0.83%. There are six analyst buy ratings, three neutral ratings and zero sell ratings with an average target price of $55.56. The stock is trading at a P/E ratio of 21.63 and a forward P/E ratio of 8.45. The company has a book value of $33.84 per share and the stock has a dividend yield of 0.74%. The stock could be a good pick at the book value.

2. ARC Resources (OTCPK:AETUF) engages in the acquisition, development, exploration, and production of oil and gas in western Canada.

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Insider buying by insider (last 35 days)

  • Timothy Hearn purchased 4,000 shares on May 17, and currently holds 51,400 shares or less than 0.1% of the company. Timothy Hearn serves as a director of the company.
  • Herbert Pinder purchased 762 shares on May 3, and currently holds 4,540 shares or less than 0.1% of the company. Herbert Pinder serves as a director of the company.
  • Myron Stadnyk purchased 30,766 shares on May 16-17, and currently controls 226,533 shares or less than 0.1% of the company. Myron Stadnyk is President and Chief Executive Officer of ARC Resources.

Insider buying by calendar month

Here is a table of ARC Resources' insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
May 201335,5650
April 20138020
March 201326,18150,000
February 20138700
January 20139030

The month of May has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on May 1, with the following highlights:

Funds from operations$202.4 million
Net income$46.9 million
Net debt$855.1 million
Production95,472 boepd

Outlook

ARC expects 2013 full year production to average between 93,000 and 97,000 boe per day. 2014 production is expected to be approximately 110,000 boe per day.

Competition

There are numerous companies in the oil and gas industry, who are competing with ARC Resources for the acquisitions of properties, properties with exploitation and development opportunities and undeveloped land. As a result of such competition, it may be more difficult for ARC Resources to acquire reserves on beneficial terms. Many of these other oil and gas companies have significantly greater financial and other resources than ARC Resources.

My analysis

There have been three different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. There are 10 analyst buy ratings, eight neutral ratings and one sell rating with an average target price of $29.13. The company is paying $0.10 monthly dividends which gives the stock a dividend yield of 4.3%. The company's proved plus probable reserves are 607 mmboe. The 200 -day moving average is currently at $24.67, which could be a good entry point for the stock.

3. Ithaca Energy (OTCPK:IACAF) engages in the exploration, development, and production of oil and gas in the United Kingdoms Continental Shelf.

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Insider buying by insider (last 30 days)

  • Graham Forbes purchased 3,660 shares on May 23, and currently holds 68,305 shares or less than 0.1% of the company. Graham Forbes is Chief Financial Officer.
  • Iain McKendrick purchased 3,660 shares on May 23, and currently holds 209,125 shares or less than 0.1% of the company. Iain McKendrick is Chief Executive Officer.
  • Kristopher Miks purchased 840 shares on May 15, and currently holds 1,940 shares or less than 0.1% of the company. Kristopher Miks is a senior officer of the company.
  • Nicholas Muir purchased 3,660 shares on May 23, and currently holds 3,660 shares or less than 0.1% of the company. Nicholas Muir is Chief Technical Officer of the company.
  • Michael Travis purchased 3,660 shares on May 23, and currently holds 3,660 shares or less than 0.1% of the company. Michael Travis is Chief Production Officer of the company.
  • John Woods purchased 3,660 shares on May 23, and currently holds 135,105 shares or less than 0.1% of the company. John Woods is Chief Development Officer.

Insider buying by calendar month

Here is a table of Ithaca Energy's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
May 201319,1400
April 2013280,0000
March 201300
February 201300
January 201300

There have been 299,149 shares purchased and zero shares sold by the insiders this year.

Financials

The company reported the first-quarter financial results on May 13, with the following highlights:

Revenue$59.8 million
Net income$3.5 million
Cash$65.6 million
Debt$47.3 million
Oil production6,475 boepd

Outlook

The company's outlook for 2013-2015 is as follows:

201320142015
Production14-16 kboe/d21-25 kboe/d23-27 kboe/d
Cash flow per share$1.3$2.1$2.3

Competition

The oil and natural gas industry is intensely competitive. There is strong competition for the discovery and acquisition of properties considered to have commercial potential as well as for the contracting of equipment and the recruitment and retention of skilled personnel. Ithaca competes with a substantial number of other companies, many of whom have greater financial resources. Many such companies not only explore for and produce oil, natural gas and NGLs, but also carry on refining operations and market petroleum and other products on a world-wide basis. There is also competition between the petroleum industry and other industries supplying energy and fuel to industrial, commercial and individual customers.

My analysis

There have been six different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. There are seven analyst buy ratings, two neutral ratings and zero sell ratings with an average target price of $3.03. The stock is trading at a P/E ratio of 5.75 and the company has a book value of $2.35 per share. I believe the stock could be a good pick below the book value.

Source: 3 Basic Materials Stocks With Recent Intensive Insider Buying