As usual, I have been going through the top 20 insider purchase list in Barron's that came out this weekend. It appears that insider buying activity in the high yield sectors that have been hit recently by the rise of interest rates continues to accelerate.
Given this, I think it is again time to take a quick look at a couple of intriguing high yielders that have had recent insider buying. Today we will look at a couple of high income selections from the energy sector.
PBF Energy (PBF) is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The company owns three refineries in the Eastern part of the United States with a combined throughput capacity of ~540,000 barrels a day. Like most refiners, the stock has been hit hard by the convergence of Brent and WTI oil prices and is down nearly 50% from its highs earlier in the year.
An insider picked up over $700K in new shares recently. It was the first insider purchase since the company came public late in 2012 and could be a sign that at least one insider feels the recent sell-off has been overdone.
The shares yield a robust 5.4% and are not expensive at just over 7x the current consensus EPS forecast for 2014. The stock also sports a five year projected PEG of under 1 (.97), which is unusual for a high yielder. Finally, PBF looks like it is forming a technical bottom over the past few months (See Chart).
Inergy Midstream, L.P. (NRGM) develops, acquires, owns, and operates midstream energy assets. It operates through three segments: Storage and Transportation, Salt, and Crude. Its main businesses are transporting & storing crude oil and natural gas. The company became a public entity in late 2011.
Two insiders bought over $650K of shares two weeks ago. These were the first insider purchases since August of last year and come after a ~12% decline in the stock mainly as a result of an announcement of 1mm share offering of new shares.
The shares provide a juicy distribution yield of over seven percent (7.1%) and the company has incrementally raised its distribution payout several times in its brief time as a public concern. NRGM is a revenue growth story with revenues tracking to a ~50% gain this fiscal year with analysts expecting that to accelerate to more than a 60% increase in FY2014. Finally, the shares do appear to have some longer term technical support just below current levels.