Another regular column I am looking to establish on Tuesdays is a look at under the radar stocks with good valuations and recent insider buying. Here are three that look intriguing.
Kodiak Oil & Gas Corp (KOG) - Kodiak Oil & Gas Corp. engages in the acquisition, exploration, exploitation, development, and production of natural gas and crude oil in the United States. The company’s oil and natural gas reserves and operations are primarily concentrated in the Williston Basin of North Dakota and Montana, and the Green River Basin of Wyoming and Colorado. As of December 31, 2010, it had estimated proved reserves of 10.0 million barrels of oil and 9.0 billion cubic feet of natural gas.
Overview and Price Targets – Kodiak Oil & Gas is a play on the growth of Bakken reserve. KOG sells at 21 times this year’s projected earnings, but just 8 times 2012’s consensus EPS. It has a solid balance sheet with net cash of $36mm and a projected PEG of just 1.06. Kodiak is rapidly adding rigs to its properties in the Bakken and Credit Suisse predicts Kodiak will more than triple revenues from FY2011 to FY2013. Insiders bought over 26,000 shares in June. KOG is selling at $6.40 a share. Northland, Credit Suisse and Robert W Baird all have $8 a share price targets on Kodiak.
Hanover Insurance Group (THG) - The Hanover Insurance Group, Inc., through its subsidiaries, underwrites commercial and personal property, and casualty insurance coverage in the United States. It operates in three segments: Commercial Lines, Personal Lines, and Other Property and Casualty. The Commercial Lines segment provides coverage for commercial multiple peril; commercial automobile; workers' compensation; and other commercial coverages, including specialty program business, inland marine, and bonds, as well as umbrella, general liability, fire, specialty property, and professional and management liability. The Personal Lines segment offers coverage for personal automobile, homeowners, and other personal lines, such as inland marine, umbrella, fire, personal watercraft, and earthquake. The Other Property and Casualty segment provides investment advisory services; and manages assets for unaffiliated institutions, such as insurance companies, retirement plans, and foundations.
Overview and Price Targets – Hanover sells at the bottom of its five year’s valuation range based on P/S, P/B and P/CF. It pays a solid 2.9% in dividends after raising its dividend payout earlier this year by 10%. Insiders have bought a net $500K over the last six weeks. Despite the worse financial crisis since the Great Depression, THG only had one losing quarter in the last five years and is priced at 8 times 2007 peak earnings. Hanover sells for just over 14 times this year’s expected earnings and around 10 times 2012’s consensus. THG goes for under $38 a share. S&P’s target price is $44 and Ray Dirks Research is at $50.
Community Bank Shares of America (CBIN) - Community Bank Shares of Indiana, Inc. operates as the bank holding company for Your Community Bank and The Scott County State Bank that provide various commercial banking products and services in Indiana and Kentucky. The company’s deposit products include non-interest and interest-bearing checking accounts, savings accounts, money market accounts, certificates of deposit, and individual retirement accounts. Its loan portfolio comprises secured and unsecured business loans of various terms to local businesses and professional organizations; consumer loans, such as home equity lines of credit, automobile and recreational vehicles, construction, and loans secured by deposit accounts; and residential real estate loans. In addition, the company also offers non-deposit investment products, such as stocks, bonds, mutual funds, and annuities.
Overview and Price Targets – Community Bank Shares sells at the bottom end of its five year valuation range based on valuation range based on P/B, P/E, P/S and P/CF. It yields a robust 4% and is selling at less than 6 times trailing earnings. Insiders have bought approximately 100K in new shares in the last month. Its market capitalization is less than three times operating cash flow and is priced at about $1.5mm per branch office.