1 Utilities Company And 1 Services Company With Recent Intensive Insider Buying

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 |  Includes: INGXF, SHOS
by: Markus Aarnio

There was intensive insider buying in Rainy River Resources (OTC:RRFFF) in April, when the stock was trading between $2 and $3. The stock is currently trading at $3.55 or 80.2% above the low made in April.

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With this episode in mind, I screened for stocks, which have seen recent intensive insider buying. 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%.

In this article, I will feature two stocks that have seen intensive insider buying during the last 30 days.

1. Sears Hometown and Outlet Stores (NASDAQ:SHOS) engages in the retail sale of home appliances, hardware, tools, and lawn and garden equipment in the United States.

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Insider buying by insider (last 30 days)

  • James Gooch purchased 2,000 shares on June 13 and currently holds 2,000 shares or less than 0.1% of the company. James Gooch serves as a director of the company.
  • William Harker purchased 500 shares on June 13-14 and currently holds 1,726 shares or less than 0.1% of the company. William Harker serves as a director of the company.
  • Bruce Johnson purchased 3,000 shares on June 10 and currently holds 37,528 shares or 0.2% of the company. Bruce Johnson is CEO and President of the company.

Insider buying by calendar month

Here is a table of Sears Hometown and Outlet Stores' insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
June 2013 5,500 0
May 2013 0 0
April 2013 0 0
March 2013 4,672 0
February 2013 0 0
January 2013 0 0
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The month of June has seen the most insider buying this year.

Financials

The company reported the first quarter, which ended May 4, financial results on June 7 with the following highlights:

Revenue $601.1 million
Net income $15.0 million
Cash $27.5 million
Debt $49.1 million
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Competition

Sears Hometown and Outlet Stores' competitors include Best Buy (NYSE:BBY), The Home Depot (NYSE:HD) and Sears Holdings Corporation (NASDAQ:SHLD). Here is a table comparing these companies.

Company SHOS BBY HD SHLD
Market Cap: 1.04B 9.54B 112.76B 5.01B
Employees: 1,875 165,000 340,000 274,000
Qtrly Rev Growth (yoy): -0.03 -0.10 0.07 -0.09
Revenue: 2.43B 48.19B 76.07B 39.04B
Gross Margin: 0.25 0.23 0.35 0.26
EBITDA: 100.06M 1.92B 9.99B -183.00M
Operating Margin: 0.04 0.02 0.11 -0.03
Net Income: 54.48M -555.27M 4.73B -1.40B
EPS: 2.36 -2.13 3.15 -13.20
P/E: 19.06 N/A 24.50 N/A
PEG (5 yr expected): N/A 3.15 1.48 0.07
P/S: 0.43 0.20 1.48 0.13
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Sears Hometown and Outlet Stores has the lowest P/E ratio among these four companies.

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 insider ownership of 0.30%. The stock is trading at a P/E ratio of 19.06 and the company has a book value of $25.16 per share. The stock dipped after the latest earnings and that is when the insiders started buying the shares. I believe the stock could be a good pick from the current level based on the intensive insider buying.

2. Innergex Renewable Energy (OTC:INGXF) operates as an independent renewable power producer.

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Insider buying by insider (last 30 days)

  • Michel Letellier purchased 1,500 shares on June 13 and currently holds 1,500 shares or less than 0.1% of the company. Michel Letellier is President and Chief Executive Officer of the company.
  • Jean Perron purchased 5,000 shares on June 6 and currently holds 111,378 shares or 0.1% of the company. Jean Perron is Chief Financial Officer and Senior Vice President of the company.
  • Nathalie Théberge purchased 500 shares on June 6 and currently holds 939 shares or less than 0.1% of the company. Nathalie Théberge is a senior officer of the company.

Insider buying by calendar month

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

Month Insider buying / shares Insider selling / shares
June 2013 7,000 0
May 2013 0 0
April 2013 4,000 0
March 2013 900 76,877
February 2013 0 0
January 2013 2,000 0
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The month of June has seen the most insider buying this year.

Financials

The company reported the first quarter financial results on May 14 with the following highlights:

Revenue $35.7 million
Net loss $0.2 million
Cash $25.2 million
Debt $1.4 billion
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Outlook

The company has seven projects scheduled to begin commercial operation between 2013 and 2016. Construction is ongoing at three of the projects and is expected to begin on the remaining four projects in 2013.

Competition

Innergex Renewable Energy operates mainly in the Canadian power sector, which is affected by the supply of and demand for power in the provinces in which it operates being Québec, British Columbia and Ontario, the availability of transmission lines and overall economic conditions in Canada and the United States. Within this sector, Innergex Renewable Energy faces competition from large utilities, other independent power producers and other institutions such as investment management funds. Innergex Renewable Energy depends upon the sale of its power to provincially owned utilities through long-term PPAs, which are generally obtained through a Request for Proposals process or an acquisition, which can attract proposals from many of Innergex Renewable Energy's competitors. Innergex Renewable Energy manages the risk posed by such competitive conditions through its annual and ongoing strategic planning process. In addition, Innergex Renewable Energy's geographically diverse portfolio of projects, its strategy of focusing on low-impact renewable projects, its proven track record and the experience of its management team mitigate this risk.

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 eight analyst buy ratings, three neutral ratings and zero sell ratings with an average target price of $11.25. The stock is trading at a forward P/E ratio of 71.00 and the stock has a dividend yield of 6.30%. The company has a book value of $4.68 per share. I have a cautiously bullish bias for the stock currently based on the company outlook and the intensive insider buying.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.