Insider buying can be a great sign that a stock is a real value or that it is going higher in the near future. Insiders tend to know their companies better than outsiders or analysts, so when they put their own money in share purchases it can be meaningful. The fact that insiders are buying these names now could be a sign that there is significant upside potential in these names.
Some of these companies have moved up recently, so I would wait for pullbacks and buy in stages only. I have provided links for each stock which verifies the insider buying filed with the SEC below. Here are the stocks:
Novatel Wireless, Inc. (NVTL) shares are trading at $5.11. Novatel makes mobile communication products and is based in California. The 50-day moving average is $5.79 and the 200-day moving average is $7.53. Earnings estimates for NVTL are for a loss of 37 cents per share in 2011 and a profit of 29 cents for 2012. The 52-week range is $5 to $11.53. Book value is stated at $5.82. You can see the insider buying here.
There has been substantial buying from multiple insiders. The stock also looks cheap in terms of book value. I think this company could even be a takeover target.
Federal Signal (NYSE:FSS) is trading around $6.40. Federal Signal makes a variety of products for vehicles such as sirens, aerial platforms, etc. and is based in Illinois. These shares have traded in a range between $4.91 to $10.30 in the last 52 weeks. The 50-day moving average is $6.40 and the 200-day moving average is $6.16. FSS is estimated to earn about 34 cents per share in 2011 and 62 cents in 2012. You can see the insider buying here.
This company pays a 24 cent dividend, which is equivalent to a 3.8% yield. This pays you to hold the stock while you wait for a higher share price. These shares are down nearly 40% from the 52-week highs. Between the dividend and the potential for price appreciation, there could be a solid buying opportunity here. The repeated buying by multiple insiders is a very strong sign they might be seeing improving results at this company.
Idenix Pharmaceuticals, Inc. (NASDAQ:IDIX) shares are trading at $4.24. Idenix is a biotechnology company and is based in Massachusetts. These shares have traded in a range between $2.57 to $6.11 in the last 52 weeks. The 50-day moving average is $3.25 and the 200-day moving average is $4.24. Earnings estimates are expected be a 64 cent loss for 2011 and a 58 cent loss for 2012. You can see the repeated insider buying here.
In this case, the major insider buying is coming from pharmaceutical giant Novartis (NYSE:NVS). It appears that Novartis sees significant potential in the pipeline Idenix has, as it's spent many millions buying these shares. Since this stock has jumped recently, I would wait for pullbacks.
China TransInfo Technology Corp. (NASDAQ:CTFO) is trading around $4.73. China TransInfo produces software solutions primarily for use in the transportation sector and is based in China. These shares have traded in a 52 week range between $4.13 to $7.99. The 50-day moving average is $4.69 and the 200-day moving average is $5.59. Earnings estimates for CTFO are at 80 cents per share for 2011 and 94 cents per share for 2012. You can see the insider buying here.
This stock is trading not far from the 52 week lows, so it appears that the CEO (who has been making repeated insider buys) is doing some bargain hunting. Many Chinese stocks have been hit hard by allegations of fraudulent practices, and this has impacted almost every small-cap Chinese stock. The book value is reported to be $3.77. Based on earnings and book value, plus insider buying, this stock looks inexpensive.
CVR Partners LP. (NYSE:UAN) is trading around $17.88. CVR is a fertilizer producer and is based in Texas. These shares have traded in a range between $16.75 to $18.20 since it went public. The 50-day moving average and the 200-day moving average is not available since it just went public. Earnings estimates are not available. The book value is stated at $13.13. You can see the insider buying here.
There has been substantial buying by the CEO, COO, CFO, directors and officers at this company. The company recently went public at a price of $16. Any dips to about $16 appear to be a solid buying opportunity with all the insider buying at that level.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.