A significant correction has created much lower stock prices, and many insiders are taking advantage of this opportunity. In times like these, there is often a disconnect between the negativity in the headlines and the reality of operating results at certain companies. 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 which verifies the insider buying filed with the SEC below. Here are the stocks:
Cenveo, Inc., (CVO) is trading around $3.18. CVO is a printing company, based in Connecticut. The 50-day moving average is $3.25 and the 200-day moving average is $4.95. These shares have traded in a range between $2.64 to $6.85 in the last 52 weeks. Earnings estimates for CVO are for a profit of 47 cents per share in 2011 and 63 cents for 2012. This is my top pick for a major rally fueled by the end of tax loss selling in the next couple of weeks, followed by a significant short squeeze rally around the first week of January, because nearly 6.7 million shares are short. This stock is way too cheap here, and insider buying confirms this stock could move significantly higher. Just days ago in early December, multiple insiders bought over 20,000 shares, and even more shares were bought before that.
Chimera Investment Corporation (CIM) is trading around $2.68. 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. Two directors recently bought 10,000 shares each, and other insiders recently bought as well.
RAIT Financial Trust (RAS) shares are trading at $4.44. RAIT is a real estate investment trust, based in Pennsylvania. These shares have traded in a range between $2.90 to $11.34 in the last 52 weeks. The 50-day moving average is $4.44 and the 200-day moving average is $5.49. RAIT focuses on commercial real estate, which is healthier than the residential market. A dividend of 24 cents per year is paid which is equivalent to a 5.3% yield. This stock looks like a good buy now, and the dividend will pay you to wait for higher prices. An insider recently bought over 100,000 shares.
Beazer Homes (BZH) shares are trading at $2.15. Beazer is a major home builder. The 50-day moving average is $2.05 and the 200-day moving average is $2.99. 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. This stock could see a nice rally in January when the tax-loss selling is over, but I would sell on any major rallies. Multiple insider recently bought about 13,000 shares each.
American Axle (AXL) shares are trading close to $8. AXL is a leading manufacturer of automotive components. The 50-day moving average is about $8.78 and the 200-day moving average is about $10.23. Earnings estimates for AXL are $2.01 per share in 2011, and $2.10 for 2012. The PE ratio is about 5. Not long ago, this stock dropped to about $7 per share but it has rebounded slightly. If it trades down to around $7 again, that would be a great buying opportunity. Deutsche Bank recently upgraded the stock to a buy. Insiders have been repeatedly buying shares, and two of them recently bought a total of about 9,000 shares.
Synovus Financial Corp. (SNV) shares are trading at $1.34. Synovus is a regional bank located in Georgia. The 50-day moving average is about $1.39 and the 200-day moving average is about $1.84. Earnings estimates are a loss of 18 cents for 2011 and a profit of 14 cents for 2012. This gives SNV shares a PE ratio of about 10 times forward earnings. The dividend is 4 cents per share per year which is a yield of about 2.8%. SNV has been considered a takeover target for a major bank looking to expand. A director bought 70,000 shares.
The data is sourced from Yahoo Finance and Insidercow.com.
Disclosure: I am long AXL, CVO, CIM.
Disclaimer: The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.