Are These Stocks Poised To Rebound?
Ali is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Insider buying is always a strong indicator that a stock is poised to move higher since they buy for only one reason: to make more money. Moreover, they arguably have the best view of where a stock is headed being a part of the day-to-day operations and/or having a large sum of money at stake. Below are a couple stocks with sizeable insider buying.
Waste management giant Republic Services (NYSE: RSG) has its tentacles virtually all over the nation being in 39 states along with Puerto Rico as of December 31, 2011. Moreover, it has been able to generate over $8 billion in revenue the past twelve months and close to $600 million in net income further establishing its strong presence in their respective industry. However, the stock took a hit this past month on an earnings disappointment and currently sits approximately 15% below the $31.5 share price it was trading at before the announcement. Interestingly enough, major shareholder and investment vehicle of billionaire Bill Gates, Cascade Investment LLC, just added a massive 1,397,649 shares on May 18 bringing its total ownership to just over 71.6 million shares or approximately 19.5% of the total shares outstanding as of the most recently reported quarter. This strong bullish action by Cascade is definitely encouraging and I believe the stock has been punished enough as its now yielding a very nice 3.3% dividend. Moreover, with just a 56% payout ratio, look for it to be raised again soon.
If one wants to diversify this position, Waste Management (NYSE: WM) is a solid choice as it too has a geographically diverse revenue stream and massive economies of scale as it generated approximately $13.5 billion in revenue over the past twelve months. Moreover, it has a great 4.3% yield and with that being just a 68% payout ratio, investors can confidently say the dividend is stable and likely to continue being hiked in the foreseeable future.
Sonus Networks (NASDAQ: SONS) operates in the communication equipment arena and predominately provides voice and multimedia infrastructure solutions. The stock hasn’t been performing well really since the dot com bubble blew up back in 2000, but that didn’t stop major shareholder Empire Capital Management from buying collectively a big 2,245,000 shares from May 17-18, bringing their total ownership to over 31 million shares or approximately 11% of the total shares outstanding as of the most recently reported quarter. While this bullishness is nice to see, the company has had its problems losing approximately $7 million in net income the past twelve months and showing declining year over year revenue growth. The balance sheet is very solid though showing no debt and approximately $1.15 in net cash along with virtually zero with regards to goodwill or intangible assets. I think with the rock solid balance sheet showing the stock trading at approximately 50% net cash, strong insider buying, and the company looking to have turned things around somewhat as they have either met or exceeded consensus estimates the past three consecutive quarters makes Sonus a reasonable buy.
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Prohomes has no positions in the stocks mentioned above. The Motley Fool owns shares of Waste Management. Motley Fool newsletter services recommend Republic Services and Waste Management. 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.
