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.
As any investor will tell you, being able to consistently outperform the market is no easy feat. One strategy that has proven to be effective over time in determining whether a stock is moving higher is insider accumulation, due to one simple reason: insiders buy shares, just like us, to make more money. Furthermore, they have an enviable vantage point of the day-to-day operations of the company and/or have a large investment of their own, which they would like to see increase in value. The following are a few stocks with notable insider purchases and can serve as a nice stating point in your investment research.
AGCO (NYSE: AGCO) manufacturers and distributes a variety of agricultural equipment worldwide, including tractors, hay tools, and diesel engines. The stock has been range-bound the past year and currently sits in the middle of its $38.09 52-week low and $54.00 52-week high. Board director Mallika Srinivasan sees brighter days ahead, though, buying a massive 275,447 shares on Oct. 31 at an average price of $45.57, equating to over $12.5 million worth of stock. The company has handily beaten consensus analyst estimates in three of the past four quarters (although it did miss in its most recent one which is discouraging) while trading at some rather cheap valuations. At just .5x price and enterprise value to sales and an 8x forward P/E, I think AGCO is worth a look, even though they do not pay a dividend, which typically is not to my liking.
If looking for more stability, fellow giant Deere & Company (NYSE: DE) may fit the billing. While the stock trades at a richer valuation compared to AGCO, the company has considerably better margins and returns on equity. Perhaps most importantly, the company pays a dividend, and a nice 2.1% dividend at that, which looks poised to continue being raised, with the company's small 23% payout ratio.
BlackRock (NYSE: BLK) is one of the world’s largest asset managers as of Sept. 30, 2012, when it collectively managed a stunning $3.67 trillion in assets ranging from fixed income to alternative investments to real estate. The stock has not been performing too well the past 52 weeks, but has been in a steady up-trend since the summer and currently sits roughly 10% from its $209.37 52-week high. Board director James Grosfeld sees the stock continuing to move higher, buying an impressive total of 108,098 shares on Oct. 23-24 at an average price of $189.01, equating to over $20 million worth of stock.
Looking deeper at the fundamentals, BlackRock has done well, exceeding consensus analyst estimates the past four quarters while seeing future estimates being raised indicating strong bullishness. Moreover, the company continues to sport very healthy margins and sports an attractive 3.2% dividend yield. With just a 46% payout ratio, expect that to not only be secure, but continuing being raised; that's why I think BLK makes for a nice long-term financial income holding.
If looking to diversify with another well run financial firm, Wells Fargo (NYSE: WFC) is worth a look. Having Warren Buffett as your largest shareholder is always encouraging, along with the fact that the company has exceeded consensus estimates the past four quarters. Add in the fact that the company pays a nice 2.6% dividend yield, and with just a 25% payout ratio, that looks poised to be raised again in the near future.
I’d like to also say I appreciate you reading my thoughts and reiterate that these are just the views of the blogger and should not serve as a substitute for any professional financial advice or counsel in general. Respectful comments and questions are always welcome below on the comment board.
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Wiseinvestors has no positions in the stocks mentioned above. The Motley Fool owns shares of Wells Fargo & Company. Motley Fool newsletter services recommend BlackRock and Wells Fargo & Company. 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.