Company insiders (like officers or directors) have the best access to company information, which is why many potential investors consider insider buying of a stock when making their own investment decision.
Here we report 3 companies seeing significant net insider buying over the last 6 months. These stocks also have positive growth trends in net margin (or rather, earnings as a percent of revenue).
All 3 stocks have 5-year net profit margin growth above 20% and at least a 20% increase in net margin between the trailing twelve months (TTM) and the prior trailing twelve months. These companies are becoming more profitable by keeping more revenue as earnings.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think insiders are seeing even more than increasing profitability? Use this list as a starting-off point for your own analysis.
List sorted by 5-year net margin growth.
1. KKR Financial Holdings LLC (KFN): Asset Management Industry. Market cap of $1.73B. Net profit margin growth over the last 5 years at 49.98%. TTM net profit margin at 64.32% vs. prior-TTM net profit margin at 41.13% (an increase of 23.19%). Net insider purchases over the last 6 months at 1,144,000 shares, or 0.77% of the company's 149.41M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.69). The stock has gained 33.75% over the last year.
2. SandRidge Energy, Inc. (SD): Oil & Gas Drilling & Exploration Industry. Market cap of $4.28B. Net profit margin growth over the last 5 years at 27.47%. TTM net profit margin at -13.13% vs. prior-TTM net profit margin at -91.77% (an increase of 78.64%). Net insider purchases over the last 6 months at 1,369,450 shares, or 0.37% of the company's 369.18M share float. The stock has gained 62.62% over the last year.
3. NL Industries Inc. (NL): Synthetics Industry. Market cap of $918.70M. Net profit margin growth over the last 5 years at 23.71%. TTM net profit margin at 66.22% vs. prior-TTM net profit margin at -2.09% (an increase of 68.31%). Net insider purchases over the last 6 months at 52,894 shares, or 0.83% of the company's 6.36M share float. NL has had a couple of great days, gaining 5.06% over the last week.
*Net margin data sourced from Screener.co, insider data sourced from Yahoo! Finance, 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.