Investors follow the buying trends of company insiders because, after all, insiders know more about their companies than anyone else.
We ran a screen on high-growth stocks, with 5-year projected earnings per share growth above 20%, that appear undervalued to earnings growth (with PEG below 1). We screened this universe for those that have seen significant net insider buying over the last six months.
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 (NYSEARCA:SPY) index over the last month.
(Click chart for more detail)
Do you think insiders are calling it right on their companies? Use this list as a starting-off point for your own analysis.
List sorted by net insider purchases as a percent of share float.
1. American Superconductor Corporation (NASDAQ:AMSC): Diversified Electronics Industry. Market cap of $388.87M. 5-year projected EPS growth at 30.0%. PEG at 0.30. Net insider purchases over the last 6 months at 1.51M, which is 3.86% of the company's share float. The stock is a short squeeze candidate, with a short float at 22.57% (equivalent to 6.6 days of average volume). The stock is currently stuck in a downtrend, trading 9.56% below its SMA20, 13.09% below its SMA50, and 66.23% below its SMA200. The stock has lost 76.56% over the last year.
2. Jefferies Group Inc. (JEF): Investment Brokerage - Regional Industry. Market cap of $3.81B. 5-year projected EPS growth at 25.83%. PEG at 0.57. Net insider purchases over the last 6 months at 766.00K, which is 0.41% of the company's share float. The stock is currently stuck in a downtrend, trading 8.12% below its SMA20, 10.73% below its SMA50, and 20.99% below its SMA200. It's been a rough couple of days for the stock, losing 5.9% over the last week.
3. PennyMac Mortgage Investment Trust (NYSE:PMT): REIT Industry. Market cap of $445.27M. 5-year projected EPS growth at 25.0%. PEG at 0.38. Net insider purchases over the last 6 months at 77.25K, which is 0.34% of the company's share float. The stock has gained 6.3% over the last year.
*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.