Insider Buying And A 3 Percent Yield Are Good Reasons To Pick Up This $9 Stock

| About: Methode Electronics, (MEI)

I recently came across a stock called Methode Electronics (NYSE:MEI) that has a lot of qualities I love to find in a small cap stock. Among these are a solid dividend yield, cheap valuations and recent insider buying.

"Methode Electronics engages in the design, manufacture, and marketing of components and subsystem devices worldwide." (Business description from Yahoo Finance)

7 reasons Methode offers solid value at under $9 a share:

  1. The company has a solid balance sheet with around $38 million in net cash (approximately 1/8 of market capitalization).
  2. Several insiders bought 10,000 new shares so far in July.
  3. Earnings are ramping up. The company made 22 cents a share in FY2011. Analysts have it making 52 cents a share in FY2012 and99 cents a share in FY2013.
  4. The stock yields a solid 3.3%.
  5. The company looks like it will grow revenues around 10% in FY2012 and over 20% in FY2013, and the stock sports a very reasonable five year projected PEG (.99) for a three percent yielder.
  6. MEI is priced at 8.9 times forward earnings, a deep discount to its historical average (28.9).
  7. The stock looks like it has bottomed off longer term technical support, has some momentum and recently crossed its 200 day moving average (see chart).

(click image to enlarge)

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MEI over the next 72 hours.