What makes the stocks below very interesting is that these companies have recently reported substantial insider buying. The fact that insiders are buying these names could be a sign that there is still significant upside potential in these names.
Some of these companies are trading near their 52-week lows, which might mean bargain prices as well as the possibility for further weakness, so I would buy only in stages. Some of the insider buying (in Central European Distribution Corp. (NASDAQ:CEDC), Howard Hughes Corporation (NYSE:HHC) and Casella Waste Systems (NASDAQ:CWST)) is so new, it was just reported Thursday (April 14, 2011). I have provided links for each stock which verifies the insider buying filed with the SEC below. Here are the stocks:
SkyPeople Fruit Juice, Inc., (NASDAQ:SPU) is trading around $3.65. SkyPeople is based in China and makes a variety of fruit juice beverages. These shares have traded in a range between $3.40 to $7.39 in the last 52 weeks. The 50 day moving average is $4.42 and the 200 day moving average is $4.93. Earnings estimates are 91 cents for 2011 and $1.29 for 2012. The book value is stated at $4.61. You can see the insider buying here.
What SkyPeople insiders and other investors might be seeing: The CEO recently bought 10,000 shares for $3.79 per share. This stock has dropped significantly in the past several days as concerns over small China based companies continue. This company appears to have a growing business and a strong balance sheet. It's nice to see a CEO buy at the lows as a sign of confidence. SPU recently reported record results which you can read about here.
Central European Distribution Corp. (CEDC) shares are trading at $10.20. These shares have a relative strength index of 25, which indicates the shares are very oversold and are due for a rebound. CEDC is a leading beverage distribution company based in Pennsylvania. The 50 day moving average is $15.51 and the 200 day moving average is $22.21. Earnings estimates for CEDC are $1.02 per share in 2011 and $1.52 for 2012. The 52 week range is $10 to $39.95. Book value is stated at $22.19. You can see the insider buying here.
What CEDC insiders and other investors might be seeing: The company reported earnings which disappointed the market and shares dropped significantly, from about $23 down to around $10. However, there are signs of a major bottom being put in, with multiple insiders making very significant new purchases of this stock at these bargain levels. A couple of directors recently almost doubled their stake in this company with buys that totaled about $275,000. Then, just yesterday (April 14), another director (Marek Forysiak) greatly increased his stake in the company with a buy that totaled about $105,000. When you see this many insiders loading up on shares after a big drop, it confirms to me that they are very confident the market is significantly undervaluing these shares.
Valeant Pharmaceuticals, Inc., (NYSE:VRX) is trading around $52.79. Valeant is based in Canada. These shares have traded in a range between $13.67 to $55 in the last 52 weeks. The 50 day moving average is $43.53 and the 200 day moving average is $30.33. The book value is stated at $16.24 per share. You can see the repeated insider buying here.
What Valeant insiders and other investors might be seeing: Valeant is in a clear uptrend, however, the insiders bought at prices closer to about $40 per share. So with the run these shares have seen I would stay clear for now or at least wait for pullbacks.
Jefferies Group, Inc., (JEF) shares are trading at $23.84. Jefferies is an investment banking company, and is based in New York. These shares have traded in a range between $20.15 to $28.44 in the last 52 weeks. The 50 day moving average is $24.43 and the 200 day moving average is $24.35. Earnings estimates are at $1.63 per share for 2011 and $1.83 in 2012. You can see the repeated insider buying here.
What Jefferies insiders and other investors might be seeing: This stock has dropped recently so insiders could be taking advantage of this dip. The book value is currently at $12.82. This company has a lot of cash and a strong balance sheet. It also pays a dividend of 30 cents per share which is equivalent to a 1.2% yield.
Casella Waste Systems, Inc., (CWST) is trading at around $6.69. Casella provides waste management services and is based in Vermont. These shares have traded in a 52 week range between $3.20 to $8.29. The 50 day moving average is $7.10 and the 200 day moving average is $5.59. Earnings estimates for CWST are for a loss of 76 cents per share for 2011 and a loss of 17 cents for 2012. You can see the insider buying here.
What Casella insiders and other investors might be seeing: The book value is reported to be $1.65. This company has a significant amount of debt (according to Yahoo Finance, about $567 million in debt) and is estimated to lose money, so I really don't see why insiders are buying.
Howard Hughes Corporation (HHC) shares are trading at $63.60. HHC is a real estate investment trust and is based in Texas. These shares have traded in a 52 week range between $31 to $73.79. The 50 day moving average is $62.19. Earnings estimates for HHC are for a loss of 76 cents per share for 2011 and a loss of 17 cents for 2012. You can see the insider buying here.
What Howard Hughes insiders and other investors might be seeing: A number of well known value investors have been buying shares in this company. This would indicate the possibility of hidden value in these shares. The shares are well off their highs of nearly $74 so some investors are taking advantage of the recent dip.
The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I am long CEDC.