4 Stocks Insiders are Buying this Week
Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Company insiders often have a better perspective of the company’s future performance than outside investors do. Furthermore, they have an incentive to diversify their investments away from their employer so that negative company-specific events don’t result in a hit to both their income and to their wealth. So when an insider buys a stock, it should be evidence that the company has good times ahead- and statistically this is the case. Insider Monkey tracks SEC filings that report insider transactions so that we can catch significant changes in an insider’s holdings as well as pick up on any patterns that emerge from insider trading activity. Here are four stocks that have seen insider buying recently:
The CFO of Delta Air Lines Inc (NYSE: DAL) purchased 50,000 shares at an average price of $9.34 per share. A number of hedge funds such as Lansdowne Partners also moved more heavily into the stock in the first quarter of the year. Delta’s stock has rallied 35% over the last year but it still trades at an attractive set of value multiples: its trailing P/E is 8 and its forward P/E based on analyst estimates for 2013 is just over 3. The five-year PEG is only 0.1, so the buy side is taking a much, much more negative position on this stock than the sell-side and now the CFO (read more coverage of the insider purchase at Delta).
Two Board members at Woodward Inc (NASDAQ: WWD), an industrial goods company which provides control and optimization systems to aerospace and energy markets, bought a total of 13,000 shares of the stock. The transaction prices tended to be between $32.75 and $33.00 per share. Insider Monkey likes to see insider buying, but we really like to see multiple insiders buying because it is an even stronger bullish signal. The first three quarters of Woodward’s fiscal year have seen moderate growth, with earnings per share rising by 5% compared to last year, and it trades at 18 times trailing earnings (take a closer look at the transaction and the company).
The incoming CEO at Logitech (NASDAQ: LOGI) has his work cut out for him, with the company reporting a 76% increase in its net losses in its most recent quarter compared to the same period in the previous year. Logitech is also being hammered by a consumer trend toward touchscreen devices such as smartphones and tablets, which reduces demand for its consumer peripherals, yet the stock trades at a trailing P/E of 29. But the incoming CEO recently purchased 12,000 shares at an average price of $8.24 per share- he had owned 100,000 shares previously, so this is a significant increase- suggesting that he is confident that he can turn around the company.
Quest Diagnostics (NYSE: DGX) saw its President and CEO, Stephen Rusckowski, buy 5,000 shares at an average price of $59.34. Quest is growing its business nicely, with earnings per share of $2.10 in the first half of 2012 being more than triple what it had earned by the same point in 2011. The medical diagnostics test company trades at fairly low valuation multiples given its strong market position and historical growth- 14 times trailing earnings and 12 times forward earnings. The stock was a favorite of Relational Investors, which owned 4.2 million shares of the company at the end of the first quarter. Rusckowski had previously bought 20,000 shares of Quest Diagnostics in March (read our discussion of this insider buy).
This article is written by Matt Doiron and edited by Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article. The Motley Fool owns shares of Logitech International SA (USA). Motley Fool newsletter services recommend Logitech International SA (USA) and Quest Diagnostics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.