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 $200,000 filed on August 2nd. Here are five stocks that I found:
1. ZST Digital Networks (ZSTN) is a China-based company, principally engaged in: (1) supplying digital and optical network equipment and providing installation services to cable system operators in China, and (2) providing GPS location and tracking services to local logistics and transportation companies in China. The company has developed a line of IPTV devices that are used to provide bundled cable television, Internet and telephone services to residential and commercial customers. The company has assisted in the installation and construction of over 400 local cable networks in more than 90 municipal districts, counties, townships, and enterprises. The company has also launched a commercial line of vehicle tracking devices utilizing its GPS tracking technologies and support services for transport-related enterprises to track, monitor and optimize their businesses.
Peter Deutsch purchased 1,848,612 shares on June 13-July 13 and currently controls 5,008,285 shares of the company. The company has 11.5 million shares outstanding, which makes Mr. Deutsch a 36% owner of the company.
The company reported its last quarterly financial report on November 14th for the period ending September 30th with the following highlights:
|Earnings per share||$0.71|
Full year 2011 outlook
The company reiterates its estimates that revenues will range between $160 million and $175 million, and net income will range between $28 million and $30 million.
It is important to note that the company has not filed its annual report for 2011 nor the latest quarterly earnings reports. If the company does have the cash it claims to have, this stock would be a good pick below the net cash per share value of $4.85.
2. Ruby Tuesday (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.
- Steven Becker purchased 222,800 shares of the company on July 31-August 1st. Mr. Becker has been a director of the company since 2011.
- Bernard Lanigan purchased 134,000 shares of the company on July 30th and currently controls 211,139 shares of the company. Mr. Lanigan has served as a director of the company since 2001.
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.
3. STAAR Surgical Company (STAA) which has been dedicated solely to ophthalmic surgery for over 25 years, designs, develops, manufactures and markets implantable lenses for the eye. All of these lenses are foldable, which permits the surgeon to insert them through a small incision. STAAR's lens used in refractive surgery as an alternative to LASIK is called an Implantable Collamer Lens or ICL. A lens used to replace the natural lens after cataract surgery is called an intraocular lens or IOL. Over 300,000 Visian ICLs have been implanted to date.
Broadwood Partners purchased 296,718 shares on July 31st-August 2nd and currently holds 6,376,449 shares of the company. The company has 36.3 million shares outstanding which makes Broadwood Partners a 17.6% owner of the company.
The company reported the second quarter financial results on August 1st with the following highlights:
|Net loss||$0.01 per share|
The company introduced its key target metrics for the second half of 2012:
1. Increase in revenues of Solid Double Digit Growth.
2. Increase in Visian ICL revenues of 25%.
3. Continuous expansion of gross margins to achieve 71% for the full year.
4. Achieve profitability in Q3 and Q4.
5.Implement manufacturing consolidation with no disruption to customer supply requirements. This metric will be measured by the amount of customer backorders.
I would recommend buying the shares on pull backs towards $5 level. The stock saw a 26% surge after the second quarter earnings release.
4. Oragenics (ORNI.OB) is focused on becoming the world leader in probiotics for oral health for humans and pets and in novel antibiotics against infectious disease. Oragenics develops, markets and sells proprietary probiotics specifically designed to enhance oral health for humans and pets, under the brand names Evora and ProBiora in over 13 countries worldwide. Oragenics has established an exclusive worldwide channel collaboration for lantibiotics, a novel class of broad spectrum antibiotics, with Intrexon Corporation, a synthetic biology company.
- Randal Kirk purchased 857,555 shares on July 31st and currently controls 5,249,980 shares of the company. The shares were purchased through a secondary offering. After this secondary offering the company has 25 million shares outstanding, which makes Randal Kirk a 20% owner of the company.
- Koski Family purchased 1,692,123 shares on July 31st and currently controls 13,378,465 shares of the company. The shares were purchased through a secondary offering. After this secondary offering the company has 25 million shares outstanding which makes Koski Family a 52% owner of the company.
- Fred Telling purchased 98,111 shares on July 31st and currently holds 114,511 shares of the company. The shares were purchased through a secondary offering. Dr. Telling served as a Director beginning in June 2010 and became Chairman in February 2011.
The company reported the first quarter financial results on May 15th with the following highlights:
|Net loss||$1.6 million|
The company received $13 million from the private placement closed on August 2nd.
Dr. John Bonfiglio, Chief Executive Officer commented on August 2nd:
"This financing provides us with a strong cash position going forward and allows us to advance our novel lantibiotics program through our Exclusive Channel Collaboration with Intrexon Corporation, as well as expand the sales and marketing of our commercial Evora and ProBiora3 probiotic product lines. We believe that we are well-positioned to achieve significant milestones related to both initiatives."
The stock has a $7.38 price target from the Point&Figure chart. I believe the target price is achievable during the next 12-24 months.
5. Sequenom (SQNM) designs, develops, manufactures and markets innovative technology, instrumentation and tests that target and serve discovery and clinical research, and clinical molecular diagnostics markets. Applications include translational research, oncology, agricultural genomics and in vitro diagnostics for prenatal and retinal disorders.
- Paul Maier purchased 10,000 shares on August 1st and currently controls 63,111 shares of the company. Mr. Maier serves as Sequenom's chief financial officer.
- Ronald Lindsay purchased 100,000 shares on August 1st and currently holds 167,243 shares of the company. Dr. Lindsay serves as Sequenom's executive vice president of research and development.
- Harry Hixson purchased 50,000 shares on August 1st and currently controls 150,161 shares of the company. Dr. Hixson serves as the company's chief executive officer. Dr. Hixson has served as chairman of the board of directors since 2003.
The company reported the second quarter financial results on July 26 with the following highlights:
|Net loss||$0.26 per share|
- The company is increasing its internal goal from 40,000 MaterniT21 PLUS tests billed to 50,000 MaterniT21 PLUS tests billed in 2012. This increase doubles the original goal of billing 25,000 tests in 2012, as announced in January of this year.
- Sequenom CMM plans to further expand its prenatal sales force during the second half of 2012, adding approximately 25 new sales representatives during the third quarter, bringing the total to more than 75 diagnostic sales representatives actively selling in all 50 states in the U.S.
- The company expects its diagnostic services margins to improve in the second half of 2012 as Sequenom CMM implements further test enhancements and the steps to achieve the benefits of volume growth.
The stock dipped after the second quarter financial results even after the improved outlook. 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 SQNM over the next 72 hours.