Are These 2 Perfect Stocks To Buy Now?
Ali is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In this unstable economic climate, finding ways to outperform the market is much easier said than done. However, one screening tool that has proven to be effective in determining whether a stock is moving higher is insider buying due to one simple reason: They buy stocks, just like us, to make more money. In addition, they arguably have the best view of the company (being a part of the day-to-day operations) and/or have a large investment of their own which they like to see increase in value. Below are a couple stocks with strong insider buying.
Fidelity National Information Services (NYSE: FIS) provides banking and payments technology solutions worldwide. The company has been performing nicely recently, sitting just right near its $34.85 52-week high. However, while many may see that Fidelity National is overvalued, board director Richard Massey thinks otherwise. On July 23, he filed an SEC Form 4 showing the purchase of 15,000 shares, raising his ownership stake a considerable 20% to 86,593 shares at an average $32.38 share price. The stock is currently slightly lower, offering us an opportunity to get in at a discount, which we “Fools” always like to do. The stock has a healthy 2.5% dividend yield and with only a 31% payout ratio and free-cash-flow coming in at a healthy $1 billion over the last twelve months, investors can expect the annual dividend to not only be safe, but raised again in the near future as management did substantially from $.20 to $.80 two quarters ago. I think the company’s diversified revenue stream and nice tailwinds from the increase in electronic payments and loan originations make Fidelity National worth putting on a long-term income investor’s radar.
Westport Innovations (NASDAQ: WPRT) engages in the provision of low-emission engine and fuel system technologies that enable light, medium, heavy-duty, and high-horsepower petroleum-based fuel engines to use natural gas and alternative fuels. The company’s stock has been a roller coaster the past 52-weeks and currently sits about 25% off its $50.19 52-week high. With such instability, many investors would be cautious, but major shareholder Kevin Douglas thinks otherwise in a big way. He filed an SEC Form 4 filing on July 20 showing he bought collectively from July 18-19 300,000 shares at an average $36.92 purchase price, equating to over $11 million worth of stock. The company has moved up slightly since then, but not by much, allowing us investors to see if we’d like to buy as well. Unfortunately, I personally don’t see the bullish case as the company pays no dividend, lost $68 million, and has badly missed consensus analyst estimates the past four quarters. By no means would I short the stock, as I’m sure Kevin has a great reason for buying, but I simply can’t invest in a stock, or anything for that matter, where I don't see the value or understand the growth drivers of the business.
Prohomes has no positions in the stocks mentioned above. The Motley Fool owns shares of Westport Innovations. Motley Fool newsletter services recommend Westport Innovations. 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.