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Keeping in mind that insiders often buy their company’s stock during times when it is undervalued, we decided to look at stocks with low Price/Free Cash Flow ratios that have experienced significant insider buying over the past six months.

To compile this list we looked at companies with market caps above $300M that are trading with a Price to Free Cash Flow ratio below five (i.e. P/FCF < 5). We then collected data on insider transactions, and came up with ten stocks that have seen a relatively significant increase in shares owned by insiders.

In other words, free cash flow makes up more than 20% of each company's overall valuation, and insiders appear to be very excited about the company’s future prospects.

Insider data sourced from Yahoo! Finance, short float and performance data sourced from Finviz.



List sorted by the increase in insider ownership.

1. Central Pacific Financial Corp. (NYSE:CPF): Regional Bank. Market cap of $594.15M. P/FCF at 2.71. Over the last six months insiders bought 7,500 shares, an increase of 42.6% in insider ownership. The stock is currently stuck in a downtrend, trading -7.95% below its SMA20, -29.71% below its SMA50, and -35.15% below its SMA200. The stock has performed poorly over the last month, losing 34.77%.

2. PharMerica Corporation (NYSE:PMC): Drug Stores Industry. Market cap of $329.13M. P/FCF at 3.84. Over the last six months insiders bought 97,500 shares, an increase of 41.7% in insider ownership. Relatively low correlation to the market (beta = 0.59), which may be appealing to risk averse investors. The stock is a short squeeze candidate, with a short float at 11.13% (equivalent to 9.12 days of average volume). The stock has lost 39.89% over the last year.

3. CNO Financial Group, Inc. (NYSE:CNO): Accident & Health Insurance Industry. Market cap of $1.78B. P/FCF at 2.42. Over the last six months insiders bought 411,050 shares, an increase of 10.4% in insider ownership. This is a risky stock that is significantly more volatile than the overall market (beta = 2.54). PEG ratio at 0.66. The stock is a short squeeze candidate, with a short float at 7.74% (equivalent to 9.97 days of average volume). The stock has had a good month, gaining 11.32%.

4. Sonic Automotive Inc. (NYSE:SAH): Auto Dealerships Industry. Market cap of $691.55M. P/FCF at 4.07. Over the last six months insiders bought 518,313 shares, an increase of 7.8% in insider ownership. The stock is a short squeeze candidate, with a short float at 13.89% (equivalent to 8.28 days of average volume). The stock has performed poorly over the last month, losing 11.67%.

5. GenCorp Inc. (NYSE:GY): Aerospace/Defense Industry. Market cap of $329.49M. P/FCF at 2.51. Over the last six months insiders bought 553,424 shares, an increase of 6.2% in insider ownership. The stock is a short squeeze candidate, with a short float at 11.9% (equivalent to 12.73 days of average volume). The stock has gained 20.09% over the last year.

6. Dr Pepper Snapple Group, Inc. (NYSE:DPS): Beverages Industry. Market cap of $8.44B. P/FCF at 4.03. Over the last six months insiders bought 10,198 shares, an increase of 6.2% in insider ownership. The stock has gained 6.62% over the last year.

7. Susquehanna Bancshares, Inc. (NASDAQ:SUSQ): Regional Banks. Market cap of $1.16B. P/FCF at 3.58. Over the last six months insiders bought 73,633 shares, an increase of 5.4% in insider ownership. The stock is a short squeeze candidate, with a short float at 8.8% (equivalent to 10.7 days of average volume). The stock has performed poorly over the last month, losing 10.47%.

8. Synovus Financial Corp. (NYSE:SNV): Regional Bank. Market cap of $2.0B. P/FCF at 2.42. Over the last six months insiders bought 522,100 shares, an increase of 4.9% in insider ownership. The stock is a short squeeze candidate, with a short float at 11.11% (equivalent to 7.63 days of average volume). The stock has lost 27.97% over the last year.

9. Transatlantic Holdings Inc. (NYSE:TRH): Property & Casualty Insurance Industry. Market cap of $2.92B. P/FCF at 2.89. Over the last six months insiders bought 4,500 shares, an increase of 2.4% in insider ownership. PEG ratio at 0.68. The stock has lost 9.16% over the last year.

10. Citizens Republic Bancorp, Inc (NASDAQ:CRBC)
: Regional Bank. Market cap of $345.50M. P/FCF at 1.87. Over the last six months insiders bought 64,042 shares, an increase of 2.2% in insider ownership. This is a risky stock that is significantly more volatile than the overall market (beta = 2.07). The stock has lost 6.45% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 10 Stocks With Low P/FCF Ratios, Experiencing Insider Buying