The market correction has created a number of new stock bargains, and investors who have a longer-term horizon might want to start accumulating shares at this time. In particular, it could make sense to focus on stocks that have seen recent insider buying. Insiders tend to know their companies well and they already often have significant stock and option positions in the companies they work for. That's why when they use their own money to add to these stakes, it can be a buy signal that other investors should follow. Here are a few stocks with recent insider buying:
Yahoo, Inc. (YHOO) shares have been holding up fairly well in this market correction. That could be a sign that the stock is already excessively undervalued and poised to move higher. The company has been making plenty of news thanks to activist investors pushing for changes and new management, and also due to the sale of certain Asian assets held by the company. In addition, the company announced restructuring plans and layoffs earlier this year, in an effort to boost profit margins.
Yahoo appears to have significant upside potential that could be unlocked once it completes a recently announced an asset sale which is expected to result in proceeds of about $7.1 billion. Yahoo shares appear to have limited downside risk and plenty of upside if management performs. On May 30, 2012, Harry James Wilson, a director, bought 25,000 shares in a transaction valued at about $378,750.
Here are some key points for YHOO:
Current share price: $15.45
The 52 week range is $11.09 to $16.79
Earnings estimates for 2012: 97 cents per share
Earnings estimates for 2013: $1.12 per share
Annual dividend: none
Fairchild Semiconductor International, Inc. (FCS) shares have drifted down to about $13 per share in the recent market slide. This company has about $1.6 billion in annual revenues and it is a leading designer and manufacturer of integrated circuits. Fairchild's semiconductors are used in a wide variety of electronic products from personal computers, to automotive to power supply and many other applications. Since the company has a diversified revenue base, it lowers the risk of an industry specific slowdown. Fairchild has a strong balance sheet with about $381 million in cash and just around $300 million in debt. The shares also trade for a slight premium to book value which is $10.39. Analysts are expecting earnings to rise sharply from about 75 cents to $1.27 in 2013. On May 28, 2012, Bryan R. Roub, a director, bought 4,000 shares in a transaction valued at about $54,800.
Here are some key points for FCS:
Current share price: $13.68
The 52 week range is $10.25 to $17.75
Earnings estimates for 2012: 75 cents per share
Earnings estimates for 2013: $1.27 per share
Annual dividend: none
Hewlett Packard (NYSE:HPQ) might be one of the least favored tech stocks, and because of that, it is extremely undervalued. Investors seem fed up with lower revenues in some segments, and with disappointing new product launches like the HP Touchpad which was meant to compete with the iPad tablet. Investors want to see strong management and revenue growth which has not been easy to find at Hewlett Packard in the past several years. However, the company appointed Meg Whitman to the CEO position less than 1 year ago, and given the challenges and size of the company, investors may have not given her enough time to implement changes and to make her mark on the company. Meg Whitman created shareholder value when she was CEO at eBay, Inc. (NASDAQ:EBAY), so she probably deserves the benefit of the doubt. She has already taken some tough decisions and announced a major round of layoffs of about 25,000 jobs. This is nearly 7% of the workforce at the company, so the savings could be very significant over time. The stock trades for just about 5.5 times earnings and it offers a dividend yield around 2.4%. The board seems to think the company could be heading in the right direction, and multiple insiders have been making large stock purchases. On May 31, 2012, Raymond J. Lane, a director, bought 91,400 shares in a transaction valued at about $1,994,000. Between the 28th to the 30th of May, Ralph Whitworth (a director), bought over 12 million shares in transactions valued over $270 million!
Here are some key points for HPQ:
Current share price: $22.36
The 52 week range is $20.57 to $37.70
Earnings estimates for 2012: $4.07 per share
Earnings estimates for 2013: $4.42 per share
Annual dividend: 53 cents per share which yields 2.4%
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I am long HPQ, YHOO.