Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else.
Here we ran a screen on stocks that appear to be undervalued relative to earnings growth (with PEG under 1) and undervalued relative to free cash flow (with P/FCF under 10). From this universe, we searched for those stocks that have seen significant net insider buying over the last six months.
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.
We also created a price-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 could be undervalued? Use this list as a starting point for your own analysis.
List sorted by net insider buying as a percent of share float.
1. American International Group, Inc. (AIG): Property and Casualty Insurance Industry. Market cap of $53.55B. PEG at 0.29. P/FCF at 5.92. Net insider purchases over the last six months at 6.98M, which is 3.06% of the company's 228.46M share float. It has been a rough couple of days for the stock, losing 5.71% over the last week.
2. Lincoln Educational Services Corporation (LINC): Education and Training Services Industry. Market cap of $430.15M. PEG at 0.58. P/FCF at 6.78. Net insider purchases over the last six months at 291.38K, which is 1.38% of the company's 21.19M share float. The stock is a short squeeze candidate, with a short float at 8.53% (equivalent to 5.89 days of average volume). The stock has had a good month, gaining 25.74%.
3. Mercer International Inc. (MERC): Paper and Paper Products Industry. Market cap of $456.37M. PEG at 0.65. P/FCF at 2.60. Net insider purchases over the last six months at 98.53K, which is 0.28% of the company's 34.60M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 3.32). The stock has gained 147.69% over the last year.
4. Entercom Communications Corp. (ETM): Broadcasting Industry. Market cap of $316.80M. PEG at 0.89. P/FCF at 3.94. Net insider purchases over the last six months at 37.20K, which is 0.19% of the company's 19.10M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.69). The stock is a short squeeze candidate, with a short float at 13.38% (equivalent to 15.54 days of average volume). It has been a rough couple of days for the stock, losing 7.61% over the last week.
*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.
