There are many indicators I use when analyzing a stock. One is unusual option activity. Another indicator I look for are relatively cheap dividend stocks. Finally, another strong indicator is insider buying, such as the ones described here and these ones below:
- Equity One (EQY),a REIT, engages in the ownership, management, acquisition, renovation, and development of neighborhood and community shopping centers in the United States. Chairman Chaim Katzman bought 200,000 shares on Oct. 4 at $15.15 after buying 425,000 shares collectively in the month of September alone. The stock is trading at 19.5x P/E, 1.1x P/B, and considerable 5.8% dividend yield. I don't see how the dividend is sustainable for much longer as it has a 124% payout ratio and negative free cash flow of approximately $58M this past year. I think fellow REITs, Vornado Realty (VNO) and Brookfield Office Properties (BPO) offer better options. VNO trades at 16.3x P/E and its 3.8% dividend yield translates to only a 60% payout ratio, while BPO trades at a paltry 3.8x P/E, .8x P/B, and 4.2% dividend yield which translates to only a 15% payout ratio.
- NVIDIA (NVDA) provides visual computing, high performance computing, and mobile computing solutions that generate interactive graphics on various devices ranging from tablets and smart phones to notebooks and workstations. On October 3, board director Brooke Seawell bought 100,000 shares at $11.91. The valuation looks compelling as this fast grower trades at 15.3x P/E, 1.5x EV/S, and virtually no debt with approximately $4/share in net cash. Fellow semiconductor companies Marvell (MRVL), LSI (LSI), and Altera (ALTR) also offer compelling valuations. MRVL trades at 12.3x P/E, 1.9x EV/S, and has no debt with close to $4/share in net cash. LSI also has no debt, trades at 10.9x P/E, and close to $1.6 in net cash, while ALTR trades at a cheap 12x P/E, very strong FCF of approximately $850M, and a strong net cash position of over $2.75B.
Sources: SEC filings, Yahoo, GuruFocus, and OpenInsider.