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 I recently described here and these ones below:
Colfax (CFX) engages in the design, manufacture, and marketing of fluid handling products to commercial marine, oil and gas, power generation, defense, and general industrial sectors worldwide. On Oct. 31, board director Mitchell Rales bought 25,000 shares at $25.45/share. CFX has continued moving higher and hit a new high on Nov. 8 where valuations are looking at little rich at 42x trailing P/E, 18x forward P/E, 11x EV/EBITDA, and 5x P/B. Moreover, the company doesn't pay a dividend. I wouldn't be negative on the stock either as they reported a nice quarter and have a nice operating history, but don't see a strong reason to buy so I think this is a hold.
Pacific Ethanol (PEIX) produces and markets low carbon renewable fuels in the western United States. On Nov. 2, CFO Bryon McGregor bought 15,000 shares and added another 10,000 shares on Nov. 4, while board director Larry Layne bought 100,000 shares on Nov. 2 as well. This strong insider buying is encouraging and so are some of the valuation metrics trading at a paltry .03x P/S, .2x EV/S, and 1x P/B. However, the operating history is simply ugly where the company lost approximately $8M in net income and $37.5M in FCF this past year and sports an ugly negative 34% ROE. However, there still is a viable market for ethanol and the downside for PEIX is limited while the upside is great. Moreover, the strong insider buying is encouraging so I'd give this a very speculative buy.
Citizens Republic Bancorp (CRBC) operates as the bank holding company for Citizens Bank that provides banking and financial services to individuals and businesses in Michigan, Wisconsin, Ohio, and Indiana. On Nov. 1, board director William Fenimore bought 11,200 shares at $8.89. In the few days since, CRBC has hit a new high and trading at a forward 8.3x P/E, .6x P/B, which is reasonable. However, it trades at a lofty 7.3x EV/S and sports a horrible ROA and ROE of negative 1% and 11% respectively. The company has had great earnings surprises the last two quarters and looks to return to profitability this upcoming year, but it has its risks as the company's management has been rather inept. With such a discount to book though, I think this may be worth a look as a speculative financial holding.
Theravance (THRX), a biopharmaceutical company, engages in the discovery, development, and commercialization of small molecule medicines for various therapeutic areas, including respiratory disease, bacterial infections, and central nervous system/pain. On Nov. 1, major shareholder GlaxoSmithKline (GSK) bought 58,411 shares bringing their total ownership to close to 16M shares or approximately 19% of the total shares outstanding. GSK may eventually announce an acquisition of the remaining shares which would be a great reward to shareholders as they not only have a large stake in THRX, but a partnership in their lung disease and asthma drug Relovair. On a valuation basis, this company has an extremely low .1x PEG, but trades at an astronomical 71x P/S and 69x EV/S while losing close to $100M in net income this past year. This is definitely a gamble on their existing pipeline, which looks promising, and the strong confidence of GSK has me calling this a very speculative buy. GSK is a nice buy as well trading at a trailing 22x P/E, forward 13x P/E, 1.1x PEG, 6.7x EV/EBITDA, and very secure 4.9% dividend yield.
Universal Display (PANL) engages in the research, development, and commercialization of organic light emitting diode technologies and materials for use in flat panel display, solid-state lighting, and other product applications. On Nov. 1, major shareholder Discovery Capital Management bought 300,000 shares bringing their ownership to approximately 5.5M shares. The company has a sterling balance sheet with no debt and over approximately $7/share in net cash and no intangible assets of goodwill. However, the company lost over $20M in net income this past year, has a very high forward P/E of 59x, and trades at 47x EV/S. While the strong insider buying is encouraging, I can't quite see the value and can't rate this a buy at this time.
SLM (SLM) through its subsidiaries, provides education finance in the United States. On Nov. 2, Vice Chairman and CEO Albert Lord bought 100,000 shares bringing his ownership to over 500,000 shares. The company has favorable valuations of a trailing 14x P/E, 7x forward P/E, 1x PEG, and respectable 2.8% dividend yield. SLM isn't cheap at 1.7x P/B, but I like this strong insider buying and the great dividend yield gives me enough to say it's a buy.