- The Barron's top insider buys and sells list is a good starting point for new investment ideas as well as to see what in the market is attracting insider interest.
- This week Financials received the most insider buying with 9 of the 20 names on the list in the financial or credit markets.
- Two of these high yield plays with insider activity look attractive and are profiled below.
As my regular readers know I peruse the top 20 insider buys and sells list in Barron's every weekend. This is a good starting point for possible investment ideas. It also gives a good overview on where in the market insider buying and selling is concentrated.
This week, it appears that financials which have been under pressure recently have started to attract some insider attention and new purchases. Nine of the top 20 stocks in this week's list were in the financial or credit markets.
Two of the more attractive plays with high yields are highlighted below.
The GEO Group, Inc. (NYSE:GEO) is the world's leading provider of correctional, detention, and community reentry services with 98 facilities, approximately 77,500 beds around the globe. The company's facilities are located in the United States, United Kingdom, Australia, and South Africa.
The company easily beat bottom line estimates (71 cents a share versus 55 cents a share consensus) when it last reported quarterly results in late April. It was the third straight quarter the company easily beat estimates. Revenues also came in over expectations. The company also seems to attracting buying interest from an insider. An officer bought just over $1.7mm in new shares near the end of May. The same officer bought over $2mm in shares earlier in the month.
The company is also well liked by analysts. The six analysts who cover the shares have a $42 a share median price target on the stock, significantly above the current trading level of ~$34 a share. Price targets are in a tight range of $39 to $45 a share. After bumping up its payout by 3.6% recently, GEO yields an impressive 6.7% at current price levels. Both revenues and earnings should grow incrementally year-over-year in 2014 and the stock has a very reasonable five year projected PEG (1.26) for such a high yield play.
Main Street Capital Corporation (NYSE:MAIN) is a principal investment firm that provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors.
Myriad insiders have been making small and frequent purchases of this stock throughout this year. Near the end of May, a director made the biggest transaction so far this year when he bought nearly $500K in new shares.
Main Street is showing good growth with consensus calling for ~20% year-over-year revenue gains for both FY2014 & FY2015. Main Street pays an annual 6.4% dividend yield with payouts monthly and is valued at a very reasonable 14 times forward earnings, a discount to the overall market multiple. Raymond James upgraded the shares to "Outperform" in early May.