If you are interested in what insiders or analysts think, this list might offer a good starting point for ideas.
Below is a group of companies that have seen significant net insider buying over the last 6 months, expressed as a percent of share float. These stocks are also currently trading at a steep discount to mean analyst target price (used as a proxy for fair value).
We admit target price is often biased to the upside; however, there is merit to this measure when the discount from the target is large.
click for expanded images
We also created an equal weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
Do you think these stocks are underpriced? Use this list as a starting-off point for your own analysis.
List sorted by net insider purchases as a percent of share float.
1. AbitibiBowater Inc. Common Stoc (ABH): Paper & Paper Products Industry. Market cap of $2.58B. Target price at $35.04 vs. current price at $26.90 (implies a discount of 23.23%). Net insider purchases over the last 6 mo. at 3,608,951, which is 4.38% of a 82.31M share float. The stock has lost 3.38% over the last month.
2. Central Pacific Financial Corp. (NYSE:CPF): Regional Bank. Market cap of $406.82M. Target price at $17.50 vs. current price at $13.51 (implies a discount of 22.80%). Net insider purchases over the last 6 mo. at 515,500, which is 3.72% of a 13.86M share float. which may be appealing to risk-averse investors. It's been a rough couple of days for the stock, losing 8.91% over the last week.
3. Energy Partners Ltd. (NYSE:EPL): Independent Oil & Gas Industry. Market cap of $644.25M. Target price at $21.25 vs. current price at $16.28 (implies a discount of 23.39%). Net insider purchases over the last 6 mo. at 200,000, which is 0.70% of a 28.59M share float. After a solid performance over the last year, EPL has pulled back during recent sessions. The stock has performed poorly over the last month, losing 11.53%.
4. Maiden Holdings, Ltd. (NASDAQ:MHLD): Property & Casualty Insurance Industry. Market cap of $566.78M. Target price at $10.80 vs. current price at $7.91 (implies a discount of 26.76%). Net insider purchases over the last 6 mo. at 134,464, which is 0.26% of a 50.92M share float. The stock has had a couple of great days, gaining 7.52% over the last week.
*Insider data sourced from Yahoo! Finance, target price and all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.