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Analysts follow the buying trends of company insiders because insiders know more about their companies than anyone else. When a stock sees increased insider buying, it is a sign that executives have confidence in their company’s performance.

We ran a screen on stocks that appear highly undervalued, with PEG below 1 and P/FCF below 15. We screened these stocks 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 top six 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.


(Click to enlarge)

Do you agree with insiders 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. (AIG): Operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. Market cap of $46.80B. PEG at 0.33, P/FCF at 10.60. Net insider shares purchased over the last six months at 6.98M, which is 2.88% of the company's 242.37M share float. The stock has lost 19.6% over the last year.

2. ITT Educational Services Inc. (ESI): Offers postsecondary-degree programs in the U.S. that provide diplomas as well as associate's, bachelor's, and master's degrees. Market cap of $1.78B. PEG at 0.94, P/FCF at 3.40. Net insider shares purchased over the last six months at 374.0K, which is 2.10% of the company's 17.79M share float. The stock is a short squeeze candidate, with a short float at 34.43% (equivalent to 11.15 days of average volume). The stock has gained 0.33% over the last year.

3. Dell Inc. (DELL): Provides integrated technology solutions in the information technology (IT) industry worldwide. Market cap of $27.13B. PEG at 0.94, P/FCF at 5.79. Net insider shares purchased over the last six months at 17.23M, which is 1.11% of the company's 1.55B share float. The stock has gained 17.36% over the last year.

4. AOL, Inc. (AOL): Operates as a Web services company that offers a suite of brands and offerings for the worldwide audience. Market cap of $1.52B. PEG at 0.58, P/FCF at 5.43. Net insider shares purchased over the last six months at 490.0K, which is 0.47% of the company's 105.22M share float. The stock is a short squeeze candidate, with a short float at 16.08% (equivalent to 6.8 days of average volume). The stock has had a good month, gaining 18.8%.

5. Mercer International Inc. (MERC): Manufactures and sells pulp produced from wood chips and pulp logs. Market cap of $392.71M. PEG at 0.57, P/FCF at 1.95. Net insider shares purchased over the last six months at 98.53K, which is 0.21% of the company's 45.87M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 3.32). The stock has gained 62.52% over the last year.

6. Biglari Holdings Inc. (BH): Engages in the ownership, development, operation, and franchising of restaurants in the United States. Market cap of $449.84M. PEG at 0.97, P/FCF at 7.98. Net insider shares purchased over the last six months at 1.04K, which is 0.10% of the company's 1.04M share float. The stock has had a couple of great days, gaining 5.47% over the last week.

*Insider data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 6 Highly Undervalued Stocks Being Snapped Up By Insiders