Are These Stocks Worth Putting on Your Radar?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The stock market and investing in general has its way of humbling even the best of investors as nobody has proven to have a method that is truly infallible. However, one method that has proven to be useful in determining whether a stock is moving higher is insider buying due to one simple reason: insiders accumulate shares, just like the common investor, to make more money. Furthermore, insiders arguably are able to best analyze 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 aligning their interests with all other investors. The following are recent stocks with strong insider buying and for the prudent investor should only be viewed as a starting point before committing any investment capital.
Restaurant operator Cracker Barrel (NASDAQ: CBRL) is present in 42 states and as of September 18 has 620 stores up and running. The stock as well has been up and running the past year sitting not far off its $69.30 all-time high and up approximately 25% year-to-date. Nonetheless, major shareholder Sardar Biglari through his holding company, Biglari Holdings (NYSE: BH), bought collectively from October 12-15 an impressive 34,000 additional shares at a $66.67 average price equating to over $2.2 million worth of stock.
Looking deeper into the company, I have to agree that the fundamentals look solid as the firm has greatly exceeded consensus analyst estimates the past four quarters and increasing the free-cash-flow amount towards $150 million. Perhaps most importantly the company now yields a nice 3.1% dividend that has been raised twice in the last year alone with a low 26% payout ratio, investors can feel confident that it is not only secure, but likely to continue to rise in the near future.
If looking to diversify this position, McDonald's (NYSE: MCD) is a solid restaurant company for the long-term income investor. The company of course has a world-class brand name and should continue to be a beneficiary in the coming years and decades as the global middle class continues to rise, albeit not as fast as a few years ago. Add in the fact that the company yields a very nice 3.5% dividend and with a low 53% payout ratio, expect more dividend hikes in the near future.
Satellite and communications equipment maker ViaSat (NASDAQ:VSAT) is a worldwide company focused on serving the government and commercial customers. The stock performance has not been impressive though of late sitting not far off its $33.09 52-week low, but major shareholder FPR Partners sees brighter days ahead. The firm filed on October 12 and SEC Form 4 showing the purchase of a sizeable 80,755 shares at a price of $38.98 amounting to over $3.1 million worth of stock. This strong vote of bullishness is encouraging, along with the fact that the stock is trading approximately 2.5% below this entry price allowing us to get in at a discount if we choose, but the fundamentals do not look that solid. The company has missed consensus estimates badly the last two quarters and has a large debt position against its available cash while not having anything to show for that investment with a negative return on assets and equity.
Moreover, the company does not pay a dividend, while fellow communications equipment make Cisco Systems (NASDAQ: CSCO) has one exceeding 3%. Furthermore, Cisco has a fantastic balance sheet with a net cash position exceeding $30 billion and real low payout ratio of just 19% giving me confidence that the dividend is not only secure, but poised to be raised again in the near future. Being the more conservative investor that I am, I’d rather be in Cisco than ViaSat over the long-term.
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Wiseinvestors has no positions in the stocks mentioned above. The Motley Fool owns shares of Biglari Holdings and McDonald's. Motley Fool newsletter services recommend Cracker Barrel Old Country Store and McDonald's. 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.