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As the old saying goes, insiders can sell their shares for a variety of reasons, but they only buy shares for one reason ... because they think they're going up. With that in mind, I screened the S&P 500 for stocks with two or more insider buys in the last six months and an EV / EBITDA less than 10x. Only the following 20 stocks passed the test.

Ticker Company Price Insiders Buying EV / EBITDA P/E
ED CONS EDISON INC 53.56 10 8.50 15.36
WIN WINDSTREAM CORP 13.13 5 7.44 16.82
CHK CHESAPEAKE ENERG 30.58 5 6.31 9.79
LO LORILLARD INC 110.94 3 8.45 15.71
OI OWENS-ILLINOIS 26.43 3 7.26 9.46
CA CA INC 23.18 3 6.14 14.34
D DOMINION RES/VA 48.63 2 9.75 14.58
EMR EMERSON ELEC CO 57.19 2 9.75 19.00
DOV DOVER CORP 69.19 2 9.75 17.99
DOW DOW CHEMICAL CO 36.38 2 9.45 14.82
IGT INTL GAME TECH 18.27 2 9.35 22.14
BLL BALL CORP 40.36 2 9.30 12.81
BA BOEING CO/THE 75.07 2 9.00 18.14
DPS DR PEPPER SNAPPL 41.92 2 8.74 16.44
BSX BOSTON SCIENTIFC 7.17 2 7.87 16.34
FTR FRONTIER COMMUNI 8.20 2 7.44 20.72
KSS KOHLS CORP 55.18 2 6.01 14.59
FCX FREEPORT-MCMORAN 55.12 2 4.88 10.36
DELL DELL INC 17.14 2 4.85 9.69
BBY BEST BUY CO INC 31.82 2 3.78 9.06

With an average EV / EBITDA of 7.7x and a PE under 15x, the list certainly looks cheap, and the insider buying only reaffirms that sentiment. While everything on the list is likely worth a look, here are a few of the companies that really jumped out at me.

Best Buy has been hurt by concerns of a weaker consumer and competition from online retailers like Amazon. However, the company still enjoys a tremendous brand name and incredibly steady earnings, and their rock solid balance sheet, strong cash flows, and low valuations are allowing them to buy back tons of shares, which should create a lot of value for today's investors. Insiders aren't alone in liking the stock at current prices- David Einhorn has been adding shares in the low $30s, right around today’s price. Also, ongoing state budget deficits could lead to a comprehensive online tax policy, which would even the field between Best Buy and online retailers.

Sticking with the retail theme, Kohl’s also seems interesting. The company trades for just 12x forward earnings despite recently raising their full year earnings per share estimate. Same store sales have come in stronger than expected recently, and the company’s large share buyback program could prove very accretive at today’s prices.

In the tech space, Dell's stock has been depressed on fears of tablets cutting into their consumer PC and laptop business and hurting revenue. However, Dell is now much more than just laptops and PCs, which only account for about 1/3 of revenue and 1/4 of operating income, and, even if revenue remains flat, Dell has plenty of ability to grow profits by increasing margins from their current 5% to 7.5%. At a PE under 10x, shares certainly appear cheap. Michael Dell seems to think so, as he's acquired more than $250m worth of shares in the past year.

Finally, Freeport-McMoran looks cheap. This is a “high beta” name that is extremely sensitive to commodity prices and, by extension, economic growth, but today’s valuation in a near apocalyptic economic scenario. At current prices, shares yield almost 2%, and long term demand for hard assets from emerging economies and a continued global economic rebound should drive the stock higher.

All of these stocks are certainly worth looking into. The stocks look cheap, and the insiders are saying the companies have value the market is missing.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 20 Undervalued Stocks With Strong Insider Buying Ahead of Pullback