Should We Buy These 2 Stocks As Well?
Brian 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: they 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.
Technology bellwether and Dow component Hewlett-Packard (NYSE: HPQ) has long been known as one of the most prosperous and innovative companies since its founding in 1939. However, the company has been lacking in both departments in recent times and it has been reflected in the stock price with HPQ down approximately 50% over the past five years and 35% in just the past year alone. However, major shareholder and board director Ralph Whitworth sees brighter times ahead buying a massive $295 million worth of stock equating to 13,148,735 shares between May 25-May 30. This is a strong vote of confidence and I also believe that HPQ will make for a nice long-term holding as the company has some relatively cheap valuations of just a 5x forward P/E and 2.4% dividend yield. Perhaps more importantly, the recently appointed CEO Meg Whitman has shown she is willing to make the tough decisions and bring credibility back to HPQ, which she did so well during her long tenure as the CEO of eBay from March 1998 to November 2007 as shown in the stock price here.
Diversified energy firm CVR Energy (NYSE: CVI) engages in everything from refining crude oil to supplying nitrogen fertilizer. For those following the company, undoubtedly they’ve seen the tug of war between majority shareholder Carl Icahn’s attempt to take over the company at $30/share and various minor shareholders asking for the company to adopt a poison pill so they can get what they feel is a fair price. Undeterred, on a May 30 SEC form 4 filing, Mr. Icahn acquired another sizable 1 million shares on May 25 which further shows his resolve in acquiring CVR. In my opinion, while the stock initially looks attractive at $24.25 against the $30 offering price, it definitely has its share of risks in what looks to be a lengthy lawsuit and expensive attorney fees (not to mention management’s understandable loss of focus on running the business). If looking for a solid energy company, I believe ConocoPhillips (NYSE: COP) fits the bill. The company recently spun off its Phillips 66 oil and gas refining division and yet still reiterated that the company will maintain its very nice 5% dividend yield making a case for it to be a nice income holding.
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