During the turmoil of the markets last week, insiders at numerous firms stepped up and made substantial purchases of shares. This is a definite vote of confidence in the underlying prospects of their companies. Here are three stocks which had substantial insider buying last week that now look like buys:
Helix Energy Solutions (NYSE:HLX): Helix Energy Solutions Group, Inc., together with its subsidiaries, operates as an offshore energy company. It provides reservoir development solutions and other contracting services to the energy market, as well as to its oil and gas properties. The company offers its contracting services in the Gulf of Mexico, North Sea, the Asia Pacific, and West Africa regions primarily in deepwater.
Insider: CEO Owen Kratz bought $997,151 of shares at an average cost of $14.51
5 reasons to like HLX at $16:
1. It has solid long term technical support in the $14 to $16 price level (click chart to enlarge)
Click to enlarge
Click to enlarge
2. It has significantly beat earnings estimates three of the last four quarters and consensus EPS estimates for 2011 and 2012 have risen in the last three months.
3. HLX is selling at 12.5 times this year’s earnings but just ten times consensus 2012 estimates.
4. Helix has a projected five year PEG of 1.04, its market cap is less than 6 times operating cash flow, and revenues are expected to post a double digit increase in 2012.
5. S&P has a price target of $22 on Helix and Morgan Keegan is at $25.50.
Bank of New York (NYSE:BK): The Bank of New York Mellon Corporation, a financial services company, provides various products and services worldwide. The company’s Asset Management segment offers a range of equity, fixed income, cash, and alternative/overlay products, as well as distribution of investment management products. Its Wealth Management segment provides investment management, wealth and estate planning, and private banking solutions to high-net-worth individuals and families, charitable gift programs, endowments and foundations, and related entities.
Insider: Officer Curtis Arledge bought $1mm at $19.60 a share
5 reasons to recommend BK at $20:
1. It is selling at the bottom of its five year valuation based on P/E, P/S, P/B and P/CF.
2. It is selling at under 9 times this year’s expected earnings and just 8 times 2012’s projected EPS.
3. Bank of New York is one of the few banks to post higher earnings in 2010 than in 2006.
4. BK has an AA- rated balance sheet, a low beta of .72 and a dividend yield of 2.5%.
5. Credit Suisse has a $25 price target on BK and the median price target on Bank of New York is $31.
Kraft Foods (KFT): Kraft Foods Inc., together with its subsidiaries, manufactures and markets snacks, confectionery, and quick meal products worldwide. The company offers snacks, including cookies, crackers, salted snacks, and chocolate confectionary; beverages, including coffee, packaged juice drinks, and powdered beverages; cheese, including natural, process, and cream cheeses; and grocery, including spoonable and pourable dressings, condiments, and desserts.
Insider: Director Fredric G. Reynolds spent $1 million acquiring shares at $33.43
4 reasons to find value in KFT at $34:
1. Kraft is a low beta stock (.58) in a defensive sector with a generous dividend yield of 3.4%
2. The recent decision to split the company into two separate entities will unlock shareholder value.
3. KFT has met or beat earnings each of the last four quarters and consensus earnings have gone up for 2011 and 2012 in the last ninety days.
4. Credit Suisse has a price target on KFT of $41 a share. The medium price target on Kraft is $40.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BK over the next 72 hours.