A major market correction has created much lower stock prices, and many insiders are taking advantage of this opportunity. The amount of insider buying has surged in the last few weeks. When you see insider buying at depressed prices, it often means the shares are oversold and offer great long-term value. Some of these stocks look like good investments for the future, while others seem to be better as a short-term trading opportunity. I have provided links for each stock to verify the insider buying filed with the SEC below. Here are the stocks:
United Continental Holdings Inc., (UAL) shares are trading at $16.72. United is a major global airline. The 50-day moving average is $19.03 and the 200-day moving average is $21.23. The shares have traded in a range between $15.51 to $29.06 in the past 52 weeks. UAL is estimated to earn about $3.71 per share in 2011 and $5.25 in 2012. This puts the PE ratio at ridiculously low levels, just about 4 times 2011 earnings, and less than 3 times earnings for 2012. Book value is listed at $6.99 per share. Higher oil prices and economic concerns have been impacting airline stocks, but this appears to be an overreaction based on emotion rather than the fundamentals, like earnings. The CEO recently bought 4,000 shares.
Chimera Investment Corporation (CIM) is trading around $2.62. Chimera is a real estate investment trust, and is based in New York. These shares have traded in a range between $2.38 to $4.34 in the last 52 weeks. The 50-day moving average is $2.80 and the 200-day moving average is $3.23. CIM is estimated to earn about 57 cents per share in 2011. CIM pays a very generous dividend of 52 cents per share, which is equivalent to a 19.8% yield. The book value is stated at $3.27. With the stock trading below book value, and a generous yield, this stock looks very cheap. A director recently bought 100,000 shares and other insiders recently bought as well.
Invesco Mortgage Capital, Inc. (IVR) is trading around $15.23. Invesco is a mortgage real estate investment trust. The 50-day moving average is $14.87 and the 200-day moving average is $18.30. These shares have traded in a range between $17.22 to $24.07 in the last 52 weeks. IVR pays a dividend of $3.20 which is equivalent to a 21.6% yield. The book value is $16.45. IVR is estimated to earn about $3.55 per share in 2011, and $3.24 in 2012. These shares were trading for about $24 in January, but the company announced a secondary offering that caused the stock to drop along with the market correction. The CEO recently bought 2,200 shares and in September he bought 2,500 shares.
Jacobs Engineering (JEC) is trading at $39.95 today. Jacobs is a leading engineering and construction company. These shares have a 52 week high of $55.73 and the low is $30.74. The 50-day moving average is $37.26 and the 200-day moving average is $42.19. Earnings estimates for JEC are about $3.03 per share in 2011 and $3.39 for 2012. JEC shares have touched the $32.50 level a couple of time on bad market days, so it might payoff to be patient and wait for another dip around that level. This stock looks cheap now, but I would wait for it to get a little cheaper. An officer recently bought 375 shares, and a few weeks ago, a director bought 4,000 shares.
Beazer Homes (BZH) shares are trading at $1.98. Beazer is a major home builder. The 50-day moving average is $1.88 and the 200-day moving average is $3.14. The shares are trading below stated book value of $2.68 per share. Earnings estimates indicate a loss of $1.50 for 2011, and a loss of 97 cents for 2012. With the company posting major losses, it makes no sense to buy for a long-term trade yet, but this stock might see a nice rally in January when the tax-loss selling is over. A couple of directors recently bought over 25,000 shares.
Kinder Morgan Inc. (KMI) is trading around $28.80. Kinder is a oil and gas pipeline company, based in Texas. These shares have traded in a range between $23.51 to $32.14 in the last 52 weeks. The 50-day moving average is $27.46 and the 200-day moving average is $27.76. KMI is estimated to earn about $1.06 per share in 2011, and $1.19 in 2012. Kinder shares pay a dividend of $1.20 which yields 4.2%. In late August, this stock dipped to about $24, and it now trades at the upper level of the recent trading range. Because of this, I would wait for dips below $26 before considering a buy here. The CEO recently bought nearly 2 million shares when the stock dipped to about $25.35.
Data sourced from Yahoo Finance and Insidercow.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.