Fallen Angels: Stocks Insiders Are Buying Cheap

|
 |  Includes: CAL, FSS, LGF, PSUN, SPU
by: Rougemont

Insider buying can be a great sign that a stock is a real value or that it is probably going higher in the near future. Due to the market correction, these stocks have declined substantially from their highs and have recently seen insiders buying shares at prices that appear to be cheap. When you see insider buying at depressed prices, it often means the shares are oversold and offer great long-term value. I have provided links for each stock which verifies the insider buying filed with the SEC below. Here are the stocks:

Lions Gate Entertainment (NYSE:LGF) is trading around $6. Lions Gate is a motion picture company based in California. These shares have traded in a range of $5.69 to $7.84 in the last 52 weeks. The 50 day moving average is $6.23 and the 200 day moving average is $6.65. LGF is estimated to earn 10 cents per share this year and 27 cents for next year. You can see the insider buying here.

What Lions Gate insiders and other investors might be seeing: Lions Gate used to trade regularly for about $10 per share but lately these shares are trading at almost half of that. However, LGF has recently reported improving financial results that beat analyst estimates.

Brown Shoe Co., (BWS) shares are trading at $9.08. Brown Shoe is a leading wholesaler and retailer of shoes, and is based in Missouri. These shares have traded in a range of $8.85 to $18.38 in the last 52 weeks. The 50 day moving average is $11.49 and the 200 day moving average is $12.47. Brown Shoe is estimated to earn about $1.19 per share in 2011, and $1.50 for 2012. BWS insiders have been buying shares.
What Brown Shoe insiders and other investors might be seeing: The current share price is now below the 50 and 200 day moving average and near 52 week lows. I would start buying now, and plan to buy more on any future dips in order to average in. These shares appear to be a bargain for only 6 times 2012 earnings. Another plus is that BWS pays a 28 cent per year dividend, which is equivalent to a 3% yield.
Federal Signal (NYSE:FSS) is trading around $5.84. Federal Signal makes a variety of products for vehicles such as sirens, aerial platforms, etc., and it is based in Illinois. These shares have traded in a range of $4.91 to $7.79 in the last 52 weeks. The 50 day moving average is $6.38 and the 200 day moving average is $6.27. FSS is estimated to earn about 28 cents per share in 2011 and 61 cents in 2012. You can see what insiders are buying here.
What Federal Signal insiders and other investors might be seeing: This company pays a 24 cent dividend, which is equivalent to a 4% yield. This pays you to hold the stock while you wait for a higher share price. Between the dividend and the potential for price appreciation, there could be a solid buying opportunity here.
SkyPeople Fruit Juice, Inc., (NASDAQ:SPU) is trading around $2.18. SkyPeople is based in China and makes a variety of fruit juice beverages. These shares have traded in a range of $1.95 to $6.59 in the last 52 weeks. The 50 day moving average is $3.32 and the 200 day moving average is $4.44. Earnings estimates are 86 cents for 2011 and $1.11 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 about 30,000 shares for $2.43 per share. This stock has dropped significantly in the past several days with the stock market and as concerns over small China based companies continue. It's good to see a CEO buy at the lows as a sign of confidence. SPU recently reported record results.

Pacific Sunwear of California, Inc. (NASDAQ:PSUN) is trading around $2.37. Pacific Sunwear is a specialty retailer based in California. These shares have seen a 52 week high of $6.84 and a low of $2.36. The 50 day moving average is $3.39 and the 200 day moving average is $4.60. Based on earnings estimates, this company is expected to post a loss for 2011, but that hasn't stopped a couple of insiders from making substantial and repeated buys.

Why Pacific Sunwear insiders and other investors might be seeing: At this point, I don't see signs of a major improvement in the financial results for this company, but it's hard to argue with the insiders who have been buying shares repeatedly and in amounts that are very impressive. I am watching this one for signs of a bottom and a turnaround in the financial results.

Disclosure: I am long BWS.

Disclaimer: The data is sourced from Yahoo Finance and Insidercow.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 only.