Which Stocks are Insiders Buying this Week?
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Studies show that insider purchases tend to be bullish signs for a stock. Because these purchases can be important signals for how a stock is going to do, we track insider buys so that investors can review these stocks further and see if any particular one might be a good investment for them as well. Here are five stocks that insiders have been buying recently.
The CEO of Bruker (NASDAQ: BRKR), Frank Laukien, invested over $1 million of his own money in the company’s stock. Bruker provides scientific instruments and products, principally to life science customers. It trades at a high price-to-earnings ratio of 27, but is expected to grow its business over the next several years; it trades at 16 times forward earnings estimates, a considerably cheaper multiple. While earnings per share were down for the first half of the year versus 2011, this was partly due to increased research and development spending (which in theory should benefit the company in the future).
AGCO (NYSE: AGCO) saw an investment of 61,000 shares from Tractors and Farm Equipment Limited, which is run by AGCO board member Mallika Srinivasan. AGCO grew its earnings by 50% last quarter compared to the same period a year ago (although we suspect that some of the company’s improved business came from milder weather in the U.S. earlier this year that pushed farm equipment sales). AGCO trades at only six times trailing earnings and so would be a bargain if it can continue performing as it has in the past. The five-year PEG ratio is 0.6, indicating that Wall Street analysts believe that the company has good growth prospects as well. See our earlier discussion of AGCO.
Board member William Greehey bought almost $24 million of stock in NuStar Energy (NYSE: NS), becoming the latest of several insiders to purchase shares of the $3.5 billion pipeline company. NuStar could be a good defensive stock as it pays a high dividend yield (8.9%) and its beta is 0.8. On a value basis it isn’t quite as attractive- analyst consensus is for earnings per share of $2.80 next year, which implies a forward P/E multiple of 18. In our analysis of NuStar from earlier this month, we thought that it made for a good buy compared to its peers (read our analysis of NuStar).
Bill Barrett Corporation (NYSE: BBG) board member Carin Barth purchased 5,000 shares of the company this month at an average price of $26.59. Bill Barrett is an oil and gas exploration and production company with a strong position in the Denver-Julesburg (D-J) Basin. Falling natural gas prices have hurt the company so far this year, with net income down 18% in the first six months compared to the first half of 2011. Bill Barrett still feels good about its acreage: it invested $460 million in capital expenditures in the same period, which is high compared to a market cap of $1.3 billion.
James Christmas, a board member at Halcon Resources (NYSE:HK), also thought that his oil and gas exploration and production company was a buy. Christmas bought 100,000 shares at an average price of $7.24. Halcon, like Bill Barrett, operates onshore in the US and has most of its proved reserves in Texas (it also recently entered the Utica Shale). Sell-side EPS estimates are $0.43 next year, and if the company can achieve that figure (which depends on oil and natural gas prices as well as its production) the forward multiple will end up being 17. In this case we actually thought that despite the insider purchase some of Halcon’s peers made for better buys. See which companies we liked instead.
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 has no positions in the stocks mentioned above. 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.