When insiders buy shares on the open market, their companies are usually undervalued. Corporate insiders often have the inside track on their companies' prospects. Insiders probably wouldn't risk investing too much of their own money in their own companies unless they thought the stock might rise.
I screened for companies where at least one insider made a buy worth over $500,000 filed on August 1st. Here are five stocks that I found:
1. Dole Food Company (NYSE:DOLE) engages in sourcing, growing, processing, marketing, and distributing fresh fruits and vegetables, and food products to wholesale, retail, and institutional customers worldwide. It operates in three segments: Fresh Fruit, Fresh Vegetables, and Packaged Foods.
David Murdock purchased 617,400 shares on July 30th-August 1st and 278,800 shares on July 24th-25th. Mr. Murdock has beneficial ownership of an aggregate of 52,606,200 shares or 59.1% of the company's stock. Mr. Murdock, 86, joined Dole as Chairman of the Board and Chief Executive Officer in July 1985.
The company reported the second quarter results on July 19th with the following highlights:
|Earnings per share||$0.73|
David A. DeLorenzo, Dole's President and CEO on company's strategic review during second quarter earnings announcement:
"We are continuing to look at a wide variety of potential alternatives as part of the strategic review of our businesses. As part of this review, we are exploring transactions that may include a full or partial separation of one or more of our businesses through a spin-off or other capital markets transaction, as well as joint venture and sale transactions, all of which are aimed at enhancing shareholder value. This review continues to be a company priority in our efforts to enhance shareholder value."
The stock has a $24 price target from the Point&Figure chart. I believe the target price is achievable during the next 12-24 months.
2. Human Genome Sciences (HGSI) is a commercially focused biopharmaceutical company with one potentially major product approved by FDA in March 2011 and a broad pipeline of novel drugs in late- and mid-stage development.
Glaxosmithkline (NYSE:GSK) purchased 6,722,929 shares on July 30th-August 1st and currently holds 165,383,807 shares of the company. The company has 199.6 million shares outstanding, which makes Glaxosmithkline a 82.9% owner of the company. On July 16th, GlaxoSmithKline and Human Genome Sciences announced that the companies have entered into a definitive agreement under which GSK will acquire HGS for $14.25 per share in cash.
I believe there is still a chance that Glaxosmithkline will have to up their offer for the remaining number of shares. It could still take months for this deal to close.
3. Universal Stainless (NASDAQ:USAP) manufactures and markets semi-finished and finished specialty steel products, including stainless steel, tool steel and certain other alloyed steels, in a wide variety of grades, widths and gauges in response to customer specifications.
Pennant Capital Management purchased 17,543 shares on July 30th-August 1st and currently controls 1,042,543 shares of the company. The company has 7.5 million shares outstanding - which makes Pennant Capital Management a 13.3% owner of the company. Pennant Capital Management has purchased 356,773 shares since April 2012.
The company reported the second quarter financial results on July 19th with the following highlights:
|Net income||$0.62 per share|
Chairman, President and CEO Dennis Oates commented on July 19th:
"Soft demand due to channel inventory adjustments is expected to continue through the normal summer slowdown. However, the fundamental drivers of our end markets remain in place and our long-term growth strategy and prospects remain intact."
The stock has a $18 price target from the Point&Figure chart. If the target price will be reached I would be looking to be a buyer at that level.
4. Ruby Tuesday (NYSE:RT) has company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, 12 foreign countries, and Guam. As of June 5, 2012, the company owned and operated 714 Ruby Tuesday restaurants and franchised 79 Ruby Tuesday restaurants, comprised of 36 domestic and 43 international restaurants.
The company reported on July 25th the financial results for the fiscal fourth quarter ended June 5, 2012 with the following highlights:
|Net loss||$0.09 per share|
Fiscal year 2013 guidance:
- The company estimates same-restaurant sales for company-owned restaurants will be in the range of flat to 2.0% for the year.
- Diluted earnings per share for the year are estimated to be in the $0.20 to $0.30 range including the CEO pension expense and new CEO transition expenses. Excluding the impact of these items, diluted earnings per share for the year are estimated to be in the $0.24 to $0.34 range. Fully-diluted weighted average shares outstanding are estimated to be approximately 63-64 million for the year.
The stock dipped following the earnings announcement on July 25th. I believe the $5 level could be a good entry point for the stock.
5. First Opportunity Fund (FOFI.PK) was incorporated in Maryland on March 3, 1986, as a closed-end management investment company. The Fund is non-diversified and its primary investment objective is total return.
Nicholas Adams purchased 92,367 shares on July 30th-31st and currently holds 528,414 shares of the company. Nicholas Adams serves as an Officer of Investment Adviser.
The stock has a $15.75 price target from the Point&Figure chart. I believe the current share price is a good entry point for the stock.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DOLE over the next 72 hours.