Are These Stocks Worth Putting on Your Radar?
Ali is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As virtually every investor comes to find out over their career, finding ways to outperform the market is much easier said than done. However, one screening tool that has shown to be relatively effective in determining whether a stock is moving higher is insider buying due to one simple reason: Insiders buy stocks, just like us, to make more money. Moreover, insiders arguably have the best view of the company by 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 of stocks with recently heavy insider purchases.
Telecommunications giant AT&T (NYSE: T) is world-renowned and has the size to back it up with trailing twelve months revenue exceeding $127 billion and a market capitalization nearing $220 billion. One would think as the company sits near its 52-week high that it would be getting into the “too-expensive” category, but board director Scott Ford thinks otherwise. On July 30, he opened a new position in AT&T (he previously didn’t own any shares) and bought a rather large 55,000 share position at $37.43, equating to over $2 million worth of stock. This strong bullishness is always encouraging for “Fools” and perhaps more so is the stable and juicy 4.7% dividend yield that vastly exceeds the 2.0% average for Fortune 500 stocks. Fellow telecommunications giant Verizon Communications (NYSE: VZ) is also a worthy stock to put on the radar as it too has a virtually identical 4.5% yield. I’d say splitting a position in these two stocks should serve the long term income investor well and in the short term, these stocks may very likely have a nice bump with the expected September release of the Apple iPhone 5.
Westport Innovations (NASDAQ: WPRT) engages in the provision of low-emission engine and fuel system technologies that allows various petroleum-based fuel engines to use natural gas and alternative fuels. The company’s stock has been volatile to say the least over the past year and currently sits roughly 25% below its $50.19 52-week high. Nonetheless, major shareholder Kevin Douglas sees great value ahead as he filed an SEC Form 4 filing on July 31 showing he bought collectively from July 27-30 200,000 shares at an average $38.48 purchase price, equating to approximately $7.7 million worth of stock. The company has moved down slightly since then, meaning that us common investors can follow his coattails at a discount, which always boosts expected returns. Unfortunately, I personally don’t see the bullish case as the company pays no dividend, has lost $56 million in net income over the past twelve months, and trades at lofty 5x price to book valuation. However, on the flip side, the stock blew out consensus analysts’ estimates in the most recent quarter by 63.3% and may signal better times ahead. For now, I’d keep an eye on Westport, but wait for the company to prove itself more as I believe one quarter doesn’t start a trend.
Prohomes owns shares of AT&T; and Verizon Communications. 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.