4 Highly Profitable, Undervalued Stocks Being Bought Up By Insiders

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 |  Includes: AIG, AKRX, MRGE, PSEC
by: Kapitall

Analysts often follow the buying trends of company insiders because insiders have more information about their companies than anyone else.

We screened stocks trading at significant discounts to their mean analyst target price for those with improving net margin, comparing the trailing-twelve-month margin to the company’s five-year average. We then screened these companies for those seeing 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.


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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 International Group, Inc. (NYSE:AIG): Property & Casualty Insurance Industry. Market cap of $42.06B. TTM net margin at 13.61% vs. 5-year average at -19.86%. Target price at $30.55 vs. current price at $22.16 (implies a potential upside of 37.86%). Net insider purchases over the last six months at 6.98M, which is 3.06% of the company's 228.46M share float. The stock has performed poorly over the last month, losing 23.45%.

2. Merge Healthcare Incorporated. (NASDAQ:MRGE): Healthcare Information Services Industry. Market cap of $482.32M. TTM net margin at 1.66% vs. 5-year average at -116.99%. Target price at $6.83 vs. current price at $5.38 (implies a potential upside of 27.01%). Net insider purchases over the last six months at 281.0K, which is 1.34% of the company's 21.00M share float. It's been a rough couple of days for the stock, losing 14.74% over the last week.

3. Prospect Capital Corporation (NASDAQ:PSEC): Asset Management Industry. Market cap of $786.34M. TTM net margin at 74.38% vs. 5-year average at 31.68%. Target price at $11.00 vs. current price at $8.07 (implies a potential upside of 36.31%). Net insider purchases over the last six months at 128.27K, which is 0.13% of the company's 96.25M share float. The stock has performed poorly over the last month, losing 19.46%.

4. Akorn, Inc. (NASDAQ:AKRX): Drugs Industry. Market cap of $724.0M. TTM net margin at 49.85% vs. 5-year average at -9.62%. Target price at $9.67 vs. current price at $7.65 (implies a potential upside of 26.36%). Net insider purchases over the last six months at 33.50K, which is 0.05% of the company's 67.53M share float. The stock has gained 138.32% over the last year.

*Net margin and target price sourced from Screener.co, 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.