Insider buying can often be a strong indicator of an imminent rebound, especially in stocks that have underperformed over recent weeks.
With that in mind, we created a screen for stocks trading near 52-week lows that have seen significant insider buying during recent weeks.
For this screen, we only looked for companies that have seen insider buying that exceeds 1% of the total share float.
In addition, all of these stocks have seen extremely negative media coverage, based on a proprietary sentiment algorithm that we have developed. Extreme sentiment is often a contrarian signal, especially at extreme highs and lows.
We've sorted the list based on the distance from the 52-week low.
1. Federal-Mogul Corp. (NASDAQ:FDML)
Background: Federal-Mogul Corporation supplies powertrain and safety technologies worldwide.
52-week Range: Currently trading 5.70% above its 52-week low.
Media Sentiment: Negative sentiment at 30% vs. Positive sentiment at 14%
Insider Buying Over Last Six Months: Insiders were net buyers of 300,649 shares (1.36% of the company's 22.13M share float)
Why Shares are Down: The company unveiled a fourth quarter net loss of $80M at the start of March, as well as a full-year net loss of $117M.
Why Shares Could Rebound: The company has negotiated a longer credit agreement with JP Morgan Chase & Co., which extends the credit line from 2014 to 2016. This refinancing deal could help it get its finances on track. What's more, the company could benefit from a plan to transfer capacity from higher cost locations to lower cost locations in Mexico, Poland, China and other sites.
2. American Superconductor Corporation (NASDAQ:AMSC)
Background: Provides wind turbine designs and electrical control systems primarily in North America, Europe, and the Asia-Pacific. Founded in 1987, American Superconductor Corporation currently has 365 employees.
52-week Range: Currently trading 7.08% above its 52-week low.
Media Sentiment: Negative sentiment at 21.54% vs. Positive sentiment at 16.92%
Insider Buying Over Last Six Months: Insiders were net buyers of 2,057,010 shares (4.89% of the company's 42.07M share float)
Why Shares Could Rebound: Earnings momentum is back. According to a recent company filing, AMSC is expecting fourth quarter fiscal 2012 revenues between $19 and $20 million as of March 31, with cash equivalents and restricted cash of between $49 million and $50 million. That's slightly higher than the originally anticipated $18 million in revenues and cash of more than $48 million. The company also predicts it will see positive net cash flows on a quarterly basis by the end of its fiscal year 2014.
3. STR Holdings, Inc. (NYSE:STRI)
Background: Engages in the manufacture and sale of encapsulants to the solar module industry.
52-week Range: Currently trading 8.84% above its 52-week low.
Media Sentiment: Negative sentiment at 25.49% vs. Positive sentiment at 3.92%
Insider Buying Over Last Six Months: Insiders were net buyers of 1,262,120 shares (3.9% of the company's 32.35M share float)
Why Shares Are Down: The company suffered the loss of its biggest customer, First Solar.
Why Shares Could Rebound: As of December 31, 2012, the Company had $81.9 million of cash and no debt. The possibility of a LBO or takeover cannot be ruled out, and the company has already hired UBS to review strategic alternatives.
4. Targacept, Inc. (TRGT)
Background: Engages in the design, discovery, and development of novel Neuronal Nicotinic Receptors (NNR) Therapeutics for the treatment of diseases and disorders of the central nervous system.
52-week Range: Currently trading 11.43% above its 52-week low
Media Sentiment: Negative sentiment at 27.87% vs. Positive sentiment at 13.11%
Insider Buying Over Last Six Months: Insiders were net buyers of 2,023,840 shares, (8.88% of the company's 22.79M share float)
Why Shares Are Down: Results have been weaker than expected, and hedge funds have been running for the doors. At year's end, a total of 10 hedge funds held long positions in the stock, a 9% decrease from the previous quarter.
Why Shares Could Rebound: The company recently announced a closer collaboration with AstraZeneca, which could yield additional benefits for both partners.
5. Regis Corp. (NYSE:RGS)
Background: Operates, and franchises hairstyling and hair care salons in the United States, the United Kingdom, Canada, Puerto Rico, and internationally.
52-week Range: Currently trading 11.72% above its 52-week low.
Media Sentiment: Negative sentiment at 29.03% vs. Positive sentiment at 16.13%
Insider Buying Over Last Six Months: Insiders were net buyers of 2,536,880 shares (5.33% of the company's 47.58M share float)
Why Shares Could Rebound: Divestiture of the company's Hair Club for Men asset looks like a short term catalyst, but it could be a nice play for long term growth. If the new management stops the bleeding at Supercuts salons, they are off to a promising start as of last quarter.
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.