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Arie Goren
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Arie Goren has been, for many years, a global analyst for “Clal Finance Ltd.”, one of the biggest Israeli investment companies. He has many years of experience in the American Equity Market and in the Global Commodity Market. Goren has conducted much research on investment in equities and... More
  • 4 High-Yielding Stocks Insiders Are Buying 0 comments
    May 21, 2013 2:59 AM | about stocks: CZNC, EVOL, PBI, TRST

    Many studies have shown that stocks bought by insiders have a better chance to outperform the market. I have searched for profitable companies that pay rich dividends and insiders have purchased shares of the company this month.

    I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research. All the data for this article were taken from Yahoo Finance and finviz.com.

    The screen's formula requires all stocks to comply with all following demands:

    1. The forward dividend yield is greater than 4.50%.
    2. The payout ratio is less than 70%.
    3. Trailing P/E is less than 15.
    4. Forward P/E is less than 13.
    5. Stock price is above 50-day simple moving average (mid-term uptrend).
    6. Stock price is above 200-day simple moving average (long-term uptrend).

    After running this screen on May 20, 2013, before the market open, I discovered the following four stocks:

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    Pitney Bowes Inc. (NYSE:PBI)

    Pitney Bowes Inc. provides software, hardware, and services to enable physical and digital communications in the United States and internationally.

    Pitney Bowes has a very low trailing P/E of 8.22 and even a lower forward P/E of 7.87. The price to free cash flow for the trailing 12 months is very low at 11.70, and the price-to-sales ratio is also very low at 0.61. The forward annual dividend yield is very high at 5.07%, and the payout ratio is only 42%.

    The PBI stock price is 0.53% above its 50-day simple moving average and 15.78% above its 200-day simple moving average. That indicates a mid-term and long-term uptrend.

    Eleven insiders purchased shares of the company this month, and paid between $14.67 to $15.36 for a share.

    On April 30, Pitney Bowes reported its first quarter 2013 financial results.

    First Quarter Highlights

    • First quarter revenue of $1.2 billion
    • Year-over-year revenue growth in Production Mail and Mail Services
    • Continued moderation in decline of recurring revenue streams in the SMB group
    • Adjusted EPS from continuing operations of $0.42
    • GAAP EPS from continuing operations of $0.34, which includes costs of $0.08 associated with the recent debt tender
    • First quarter free cash flow of $107 million; GAAP cash from operations of $132 million
    • Issued $425 million of 30 year bonds and retired approximately $405 million of debt originally scheduled to mature between 2014 and 2016.
    • Sale of the U.S. International Mail Services (NYSE:IMS) business completed

    In the report, President and Chief Executive Officer, Marc Lautenbach, commented:

    We are taking a number of actions in support of the long-term health and growth of our business. While the results for the quarter were mixed, we are seeing progress in key elements of the business. We continued to experience a moderation in the decline of recurring revenue streams in our SMB group, as well as growth in both our Production Mail and Mail Services segments. Mail Services revenue grew because of increased cross-border shipments, related to the early stages of implementation of our partnership with ebay. We had weaker revenue and EBIT results than expected in our Software segment due in part to continued global economic uncertainty. We believe we have substantial opportunities in these software markets and have taken actions to capture these opportunities.

    The compelling valuation metrics, the very rich dividend, the fact that the stock is in an uptrend and the fact that eleven insiders purchased shares of the company this month are all factors that make PBI stock quite attractive.

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    Chart: finviz.com

    Evolving Systems Inc. (NASDAQ:EVOL)

    Evolving Systems, Inc. provides software solutions and services to the wireless, wireline, and cable markets.

    Evolving Systems has no debt at all, and it has a very low trailing P/E of 12.52 and even a lower forward P/E of 11.42. The current ratio is very high at 3.03. The forward annual dividend yield is very high at 4.92%, and the payout ratio is at 62%.

    The EVOL stock price is 10.72% above its 20-day simple moving average, 5.71% above its 50-day simple moving average and 3.90% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

    Two insiders purchased shares of the company this month, and paid between $5.56 to $5.88 for a share.

    On May 07, Evolving Systems reported its first quarter 2013 financial results.

    First Quarter Highlights

    • Revenue increased 13% to $6.7 million from $5.9 million in the same quarter last year. License and services revenue grew 19% to $4.5 million from $3.8 million. Customer support revenue was up slightly to $2.2 million from $2.1 million.
    • Operating income increased 210% to $1.8 million from $0.6 million in the first quarter last year.
    • Net income increased 55% to $1.2 million from $0.8 million in the first quarter last year. Diluted net income per share was $0.10, up from $0.07.
    • Adjusted EBITDA of $2.0 million, up 144% from $0.8 million in the same quarter last year.
    • Cash Flow: The Company generated $2.8 million in cash from operations in the first quarter compared with $1.5 million in the same quarter last year.
    • Balance Sheet: Cash and cash equivalents at March 31, 2013, were $11.5 million, up from $8.8 million at 2012 year-end.
    • Dividend Update: The Company declared a second quarter dividend of $0.08 per share to stockholders of record on June 10, 2013, payable July 12, 2013.

    The very low multiples, the very rich dividend, the fact that the stock is in an uptrend and the fact that two insiders purchased shares of the company this month are all factors that make EVOL stock quite attractive.

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    Chart: finviz.com

    Citizens & Northern Corp. (NASDAQ:CZNC)

    Citizens & Northern Corporation operates as the bank holding company for Citizens & Northern Bank that provides various banking and mortgage services to individual and corporate customers in north central Pennsylvania and southern New York.

    Citizens & Northern Corporation has almost no debt at all (total debt to equity is only 0.03), and it has a very low trailing P/E of 10.73 and a very low forward P/E of 12.56. The price to free cash flow for the trailing 12 months is very low at 14.42. The forward annual dividend yield is very high at 5.04%, and the payout ratio is at 54%.

    The CZNC stock price is 2.54% above its 20-day simple moving average, 2.94% above its 50-day simple moving average and 6.02% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

    Fourteen insiders purchased shares of the company this month, and paid between $19.35 to $19.68 for a share.

    On March 31, Citizens & Northern reported its first quarter 2013 financial results.

    In the report, the company said:

    As expected, the first quarter of 2013 proved to be very challenging. We anticipated a reduction in net interest income as cash flows received from maturing investment securities and loan payments were reinvested at substantially lower rates. As a result, first quarter net income of $4,706,000 represents a decline of 15.77% over the corresponding period of 2012. However, Return on Average Assets (ROAA) was an excellent 1.50% and Return on Average Equity (ROAE) was a respectable 10.31%. Non-interest income excluding security gains remained strong with a 5.14% increase over the corresponding period of 2012. Non-interest expenses excluding loss on prepayment of borrowings rose a modest 1.66% over the corresponding period of 2012.

    All these factors -- the very low multiples, the very rich dividend, the fact that the stock is in an uptrend and the fact that fourteen insiders purchased shares of the company this month -- make CZNC stock quite attractive.

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    Chart: finviz.com

    TrustCo Bank Corp. NY (NASDAQ:TRST)

    TrustCo Bank Corp NY operates as the holding company for Trustco Bank that provides personal and business banking services to individuals, partnerships, and corporations.

    TrustCo Bank Corp NY has a low debt (total debt to equity is only 0.47), and it has a low trailing P/E of 14.13 and a very low forward P/E of 12.84. The price to free cash flow for the trailing 12 months is at 20.09, and the average annual earnings growth estimates for the next five years is at 5%. The forward annual dividend yield is very high at 4.60%, and the payout ratio is at 65%.

    The TRST stock price is 4.57% above its 20-day simple moving average, 4.32% above its 50-day simple moving average and 5.42% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

    Three insiders purchased shares of the company in the last two months, and paid between $5.28 to $5.59 for a share.

    On April 22, TrustCo Bank reported its first quarter 2013 financial results. The company announced that net income rose to $9.2 million in the quarter ended March 31, 2013, up 2.9% from $8.9 million for the quarter ended March 31, 2012. First quarter net income is up 24.2% over the same period two years ago and 44.4% over the same period four years ago. Return on average assets and return on average equity were 0.86% and 10.35%, respectively for the first quarter of 2013, compared to 0.84% and 10.45% for the first quarter of 2012.

    In the report, Robert J. McCormick, President and Chief Executive Officer noted:

    TrustCo saw continued balance sheet growth in the first quarter of 2013 in both loans and deposits. We began 2013 with solid first quarter results. In addition to bottom line growth, we continue to add profitable customer relationships on both the deposit and loan side. This contributed to the bottom line growth in the first quarter and will continue to do so for the balance of the year and beyond. As we have noted, our highly liquid balance sheet allows us to fund loan growth without having to overpay for deposits. In turn, this enabled us to significantly restructure our deposit mix during 2012, and should be of additional benefit when interest rates eventually begin to rise. We look forward to the balance of 2013 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rates remain at unprecedented levels. We will continue to take advantage of opportunities that are presented.

    The compelling valuation metrics, the very rich dividend, the fact that the stock is in an uptrend and the fact that three insiders purchased shares of the company in the last two months are all factors that make TRST stock quite attractive.

    (click to enlarge)

    Chart: finviz.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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