Here are some stocks that have been experiencing abnormally high insider buying. This can be a great screening tool as insiders generally have a great view into the company's operations and when they buy it's generally for only one reason: they believe their stock is going higher. Moreover, they tend to buy right before a big catalyst, meaning it can lead to out-sized gains in a short period of time. Let's analyze these stocks below experiencing notable insider buying, as we've seen others proven to be successful, and see if these are promising as well.
TriQuint Semiconductor, Inc. (TQNT) provides radio frequency (RF) solutions and technology for communications, defense, and aerospace companies worldwide. On Nov. 30, board director Steven Sharp bought a massive 100,000 shares. I mentioned some other semiconductor names here offering great value, but TQNT is worth a look at a 9x trailing P/E, .7x PEG and EV/S, .9x P/B and P/S, and 3.9x EV/EBITDA. Moreover the debt-free balance sheet, close to $1/share in net cash, and large insider purchase, has me thinking that TQNT is at or near a bottom and worth a buy.
Shutterfly, Inc. (SFLY) provides an Internet-based social expression and personal publishing service that enables consumers to share, print, and preserve their memories through the medium of photography. On Nov. 30, board director James White bought 35,000 shares. This is a sizeable buy and encouraging, but I don't think SFLY offers good value at a trailing 75x P/E, 27x forward P/E, 45x EV/EBITDA, and 2.5x P/S. I like the debt-free balance sheet, but that's not enough of a reason for me to buy quite yet.
Hersha Hospitality Trust (HT), a real estate investment trust, engages in the ownership and operation of mid scale limited service hotels in the Eastern United States. On Nov. 30, board director Thomas Hutchinson bought 25,000 shares. HT seems to have some value at a 10x forward P/E, 1.1x P/B, and 5.2% dividend yield, however the negative FCF and high capital expenditures is worrisome to me. I like REITs and feel HT has some positives, but the REITs here I feel offers better value and dividends.
Incyte Corporation (INCY) focuses on the discovery and development of proprietary small molecule drugs for hematologic and oncology indications, and inflammatory and autoimmune diseases. On Dec. 1, major fund owner Baker Brothers further upped its r stake by buying just over 2.4M shares. It looks as though they're very bullish on INCY's Jakafi myelofibrosis drug and with this vote of confidence I'd say INCY is a very speculative buy as the financial are ugly (as most biotechnology companies are without their blockbuster drug).
VMware, Inc. (VMW) provides virtualization and virtualization-based cloud infrastructure solutions primarily in the United States. On Nov. 29, major shareholder EMC bought 32,300 more shares. We discussed about VMW previously here and while I find this insider purchase encouraging, VMW still trades at lofty valuations of a trailing 64x P/E, 38x forward P/E, 43x EV/EBITDA, and 11x P/S. This is the case of a great company but not a great price and I'm not going to buy VMW quite yet.
Kohlberg Kravis Roberts & Co. (KKR) is a private equity and venture capital firm specializing in acquisitions, leveraged buyouts, management buyouts, special situations, growth equity, mature, and middle market investments. On Nov. 29, board director John Hess bought a considerable 83,600 shares. KKR has some good value at a trailing 19x P/E, 6x forward P/E, 1.2x PEG, and 3% dividend yield. However, this trades at a considerably lofty 2.4x P/B, 5x P/S, 6X EV/S, and inconsistent dividend. I'd rather own some of the other financing companies I metioned here.
Applied Micro Circuits Corporation (AMCC), a semiconductor company, together with its subsidiaries, designs, develops, markets, sells, and supports integrated circuits for processing, transporting, and storing information. On Nov. 29, board director Arthur Stabenow bought 20,000 shares. This one-time internet high flier has a pristine balance sheet with no debt and close to $2/share in net cash. Moreover, it's expecting to become profitable this upcoming year with a 21x forward P/E, and was actually FCF positive this past year by over $20M. This makes for a nice speculative buy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.