9 Stocks With Strong Profitability Growth Being Snapped Up By Insiders

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Includes: AIG, BKH, DEP, EQY, KRO, NWSA, RFP, SD, SKS
by: Kapitall

One helpful way to gauge profitability growth is with the ratio EBITDA/common equity (where EBITDA is earnings before interest, taxes, depreciation, and amortization). Because common equity is in the ratio, it measures the return to stockholder investment, and it allows for comparison between firms of different sizes. Increases in the ratio across time indicate profitability growth.

We ran a screen on stocks seeing high growth in EBITDA/common equity, comparing the trailing-twelve-month ratio to the five-year average. To control for low interest payments, we also screened for companies seeing an increase in the interest coverage ratio year-over-year. Finally, we screened for stocks seeing significant net insider buying over the last six months.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

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Do you think insiders are calling it right on their companies? Use this list as a starting-off point for your own analysis.

List sorted by net insider purchases as a percent of share float:

1. Saks Incorporated (NYSE:SKS): Department stores industry. Market cap of $1.60 billion. TTM EBITDA/common equity at 0.23 vs. 5-year average at 0.11. TTM interest coverage ratio at 2.64 vs. prior-TTM at 0.22. Net insider shares purchased over the last six months at 4.70 million, which is 4.43% of the company's 106.00 million share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.62). The stock is a short squeeze candidate, with a short float at 26.8% (equivalent to 9.75 days of average volume). The stock has had a couple of great days, gaining 11.67% over the last week.

2. AbitibiBowater Inc. Common Stoc (ABH): Paper and paper products industry. Market cap of $1.66 billion. TTM EBITDA/common equity at 6.11 vs. 5-year average at 0.58. TTM interest coverage ratio at 7.22 vs. prior-TTM at -2.13. Net insider shares purchased over the last six months at 3.61 million, which is 4.38% of the company's 82.37 million share float. The stock is a short squeeze candidate, with a short float at 13.14% (equivalent to 15.23 days of average volume). The stock has had a couple of great days, gaining 6.46% over the last week.

3. American International Group, Inc. (NYSE:AIG): Property and casualty insurance industry. Market cap of $47.26 billion. TTM EBITDA/common equity at 0.61 vs. 5-year average at 0.36. TTM interest coverage ratio at 4.37 vs. prior-TTM at 2.34. Net insider shares purchased over the last six months at 6.98 million, which is 3.06% of the company's 228.44 million share float. The stock has had a couple of great days, gaining 8.64% over the last week. The stock has performed poorly over the last month, losing 12.91%.

4. Equity One Inc. (NYSE:EQY): REIT. Market cap of $2.07 billion. TTM EBITDA/common equity at 0.18 vs. 5-year average at 0.15. TTM interest coverage ratio at 1.94 vs. prior-TTM at 1.34. Net insider shares purchased over the last six months at 900.0 thousand, which is 1.55% of the company's 58.18 million share float. The stock is a short squeeze candidate, with a short float at 13.82% (equivalent to 11.13 days of average volume). The stock has gained 18.62% over the last year.

5. SandRidge Energy, Inc. (NYSE:SD): Oil and gas drilling and exploration industry. Market cap of $3.07 billion. TTM EBITDA/common equity at 0.81 vs. 5-year average at -0.49. TTM interest coverage ratio at 0.27 vs. prior-TTM at -4.30. Net insider shares purchased over the last six months at 1.37 million, which is 0.40% of the company's 346.48 million share float. The stock has had a couple of great days, gaining 12.13% over the last week, yet it has performed poorly over the last month, losing 35.98%.

6. Duncan Energy Partners LP (NYSE:DEP): Oil and gas pipelines industry. Market cap of $2.44 billion. TTM EBITDA/common equity at 0.37 vs. 5-year average at 0.19. TTM interest coverage ratio at 7.79 vs. prior-TTM at 5.79. Net insider shares purchased over the last six months at 46.98 thousand, which is 0.20% of the company's 23.12 million share float. The stock has had a couple of great days, gaining 5.14% over the last week.

7. News Corp. (NASDAQ:NWSA): Entertainment industry. Market cap of $44.97 billion. TTM EBITDA/common equity at 0.21 vs. 5-year average at 0.13. TTM interest coverage ratio at 12.00 vs. prior-TTM at 8.32. Net insider shares purchased over the last six months at 3.64 million, which is 0.16% of the company's 2.25 billion share float. The stock has gained 37.73% over the last year.

8. Kronos Worldwide Inc. (NYSE:KRO): Specialty chemicals industry. Market cap of $2.54 billion. TTM EBITDA/common equity at 0.66 vs. 5-year average at 0.31. TTM interest coverage ratio at 15.86 vs. prior-TTM at 2.34. Net insider shares purchased over the last six months at 15.29 thousand, which is 0.07% of the company's 21.55 million share float. The stock has performed poorly over the last month, losing 29.66%.

9. Black Hills Corporation (NYSE:BKH): Electric utilities industry. Market cap of $1.20 billion. TTM EBITDA/common equity at 0.30 vs. 5-year average at 0.23. TTM interest coverage ratio at 2.15 vs. prior-TTM at 1.55. Net insider shares purchased over the last six months at 14.73 thousand, which is 0.04% of the company's 36.60 million share float. The stock is a short squeeze candidate, with a short float at 19.25% (equivalent to 19.7 days of average volume). The stock has gained 5.07% over the last year.

*EBITDA/common equity and interest coverage data sourced from Screener.co, insider data sourced from Yahoo Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.