5 Stocks Insiders Love Right Now
They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.
Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share.
But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.
The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.
At the end of the day, its large institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity, but it's twice as important to make sure the trend of the stock coincides with the insider buying.
Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks.
Here's a look at five stocks whose insiders have been doing some big buying per SEC filings.
Powin has a market cap of $76 million and an enterprise value of $64 million. This stock trades at a rich valuation, with a price-to-sales of 1.44 and a price-to-book of 9.32. This is barely a cash-rich company, since the total cash position on its balance sheet is $2.94 million and its total debt is $475,000.
The CEO and chairman of the board just bought 673,900 shares, or $270,000 worth of stock, at 40 to 42 cents per share.
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From a technical perspective, PWON is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending big-time from its 52-week high of $2.30 to its recent 52-week low of 30 cents per share. This stock skyrocketed 39% on Wednesday to close at 57 cents per share.
If you're bullish on PWON, I would only look for long-biased trades off of high-volume intraday strength since this is an over-the-counter stock bulletin board stock. OTC stocks are pure momentum plays, since once the buyers leave the price usually collapses due to lack of liquidity. I would like to play the next high-volume move over 60 cents intraday for a possible run back towards $1 a share. Look for volume that's above Wednesday action of 33,750 shares.
American Spectrum Realty has a market cap of $16.3 million and an enterprise value of $400 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 3.65. This is far from a cash-rich company, since the total cash position on its balance sheet is $473,000 and its total debt is $384.02 million.
The CEO and president just bought 214,340 shares, or $919,500 worth of stock, at $4.29 per share.
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From a technical perspective, AQQ is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending since the start of the year, with shares dropping from $7.60 to a recent low of $3.71 a share. After tagging that low, the stock has started to rebound, and it's even broken out above some near-term overhead resistance at $4.65.
If you're a bull on AQQ, then I would look for long-biased trades once it breaks back above its 50-day moving average of $5.38 a share with high-volume. Look for volume on that move that registers near or well above its three-month average action of 3,311 shares. If we get that action soon, AQQ could trade into the mid-$6s which is a big area of overhead resistance from earlier this year.
Keep in mind that it's also possible to play AQQ from the long side as long as it's trending above that recent breakout level of $4.65 a share. I would simply use a stop near some support at $4.27 in case this fails to get back above its 50-day soon.
U.S. Bancorp has a market cap of $60 billion and an enterprise value of $109 billion. This stock trades at an extremely cheap valuation, with a trailing price-to-earnings of 12.14 and a forward price-to-earnings of 10.56. Its estimated growth rate for this year is 14.5%, and for next year it's pegged at 8.7%. This is far from a cash-rich company, since the total cash position on its balance sheet is $9.56 billion and its total debt is a whopping $57.85 billion.
The vice president and general counsel just bought 8,000 shares, or $204,000 worth of stock, at $25.52 per share. It looks like this insider activity in USB was part of a private purchase of stock.
From a technical perspective, USB is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been in a monster uptrend for the past six months, with shares soaring from a low of $23.47 to a recent high of $32.03. During that monster move, shares of USB have consistently made higher lows and higher highs, which is bullish technical price action. The stock also held its 50-day moving average for most of that move.
If you're a bullish on USB, I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $32.03 a share with high-volume. Look for volume on that move that's near or above its three-month average action of 11,301,000 shares. If we get that action soon, I would look for USB to tag $35 to $38 a share or higher in the near future.
If you buy this stock off weakness in an effort to anticipate the breakout, then I would simply use its 50-day moving average at $30.44, or just below that level as my stop. You could then just add to any long positions once USB takes out $32.03 with strong volume.
USB shows up on a recent list of 10 Stocks That Fidelity Funds Are Buying.
Apogee Enterprises has a market cap of $404 million and an enterprise value of $370 million. This stock trades at a premium valuation, with a trailing price-to-earnings 87.60 and a forward price-to-earnings of 19.25. Its estimated growth rate for this year is 188.20%, and for next year it's pegged at 55.1%. This is a cash-rich company, since the total cash position on its balance sheet is $54.03 million and its total debt is $20.92 million.
The CEO and president just bough 18,600 shares, or $250,000 worth of stock, at $13.42 per share.
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From a technical perspective, APOG is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has consistently found buying interest during the last four months whenever it's trading down near $12 a share. The stock has also just triggered a near-term breakout with APOG moving above some overhead resistance at $13.70 to $13.80 on heavy volume. This move is quickly pushing APOG within range of triggering another big breakout trade.
If you're a bull on APOG, I would look for long-biased trades if this stock can trigger a breakout above some near-term overhead resistance at $14.93 to $14.97 a share with high-volume. Look for volume on that move that's near or well above its three-month average action of 100,592 shares. If we get that action soon, look for APOG to easily hit $16 a share or much higher in the near future. I would simply avoid any long traders in APOG if it moves back below $13.80 to $13.46 (its 50-day) with heavy volume.
Huntington Bancshares has a market cap of $5.76 billion and an enterprise value of $8.45 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 10.74 and a forward price-to-earnings of 10.09. Its estimated growth rate for this year is 6.8%, and for next year it's pegged at 4.3%. This is far from a cash-rich company, since the total cash position on its balance sheet is $1.32 billion and its total debt is $4.11 billion.
The CEO and president just bought 18,150 shares, or $117,000 worth of stock, at $6.42 per share.
From a technical perspective, HBAN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past six months, with shares moving higher from a low of $4.59 to Wednesday's high of $6.68 a share. The action in this stock on Wednesday was very bullish since HBAN broke out above some near-term overhead resistance at $6.58 on monster volume. Volume registered 17.09 million shares traded versus its three-month average action of 13.38 million.
If you're bullish on HBAN, I would now be looking for long-biased trades as long as the stock is trending above $6.58 to $6.68 with strong upside volume flows. I would consider upside volume near or above 13.38 million shares as bullish. If HBAN can hold this recent breakout, then this should easily hit its 2011 high of $7.52 a share and potentially tag $8 to $9 a share in the near future. I would simply avoid this stock from the long side if it moves back below its 50-day moving average of $6.18 on heavy volume.
Huntington Bancshares shows up on a recent list of 5 Bank Earnings Winners From Jefferies.
To see more stocks with notable insider buying, including Zep (ZEP), Pendrell (PCO) and Bank of The Ozarks (OZRK), check out the Stocks With Big Insider Buying portfolio on Stockpickr.
Roberto Pedone
04/26/12 - 07:00 AM EDT
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