Are Recent Developments in These Stocks Reason Enough To Buy?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
One of my favorite screening tools is to find stocks with notable insider buying. The reasoning is simple as insiders sell for many reasons (diversify one’s assets, pay for the new house, expensive trip with the family, unfortunate divorce settlement costs, etc.), but they buy only for one reason: to make more money. Therefore, these two stocks caught my eye with their recent heavy insider buying.
Biotechnology firm Incyte (NASDAQ: INCY) focuses on a variety of different diseases and has collaborative research and license agreements with major companies including Novartis, Eli Lilly and Pfizer. Between Jan. 18-19, board director Paul Brooke bought a sizeable 50,000 shares collectively as another major shareholder has been buying aggressively as mentioned here.
The stock has scorched higher approximately 50% over the last two months and -- as is typical with biotechnology stocks -- has little if any book value and/or earnings as it looks for approval on the next blockbuster drug. This company, like most biotechs, is more for the aggressive investor, and the great recent insider buying by a major shareholder is always encouraging.
National restaurant chain Cracker Barrel (NASDAQ: CBRL) is being bought again by Sardar Biglari, Chairman and CEO of Biglari Holdings (NYSE: BH), ? who has been buying feverishly as we brought up here. He bought yet another 4,100 CBRL shares for BH on Jan. 18 bringing Biglari Holdings’ ownership to approximately 3 million shares. CBRL has moved up nicely in recent months looking to close in on its 52-week high, but the company is still reasonably priced at just approximately a 14.5x trailing P/E, 11x forward P/E, .5x P/S, .7x EV/S, and respectable 1.9% dividend yield.
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