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.
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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. (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. (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. (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.