Insider Buy Alert: Are These Stocks Strong Buys?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Every investor or trader is always searching to find stocks that hopefully outperform the general market and alternative investment classes. Of course during these unstable times that is rather difficult to execute and has us uncertain as to what is an effective strategy or criteria to use. 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 like to see increase in value. The following are stocks that have recently had notable insider buying and serve as a nice stating point in your investment research.
VMware (NYSE: VMW) is a giant in the virtualization and cloud infrastructure solutions market churning over $4 billion in revenue these past twelve months and sporting a market capitalization at approximately $38 billion. The stock has been all over the place the past year, but has recently trended lower and created what looks to be a buying opportunity. Major shareholder EMC (NYSE: EMC) seems to think so buying collectively from November 30-December 3 98,595 shares at an average price of $91.25 equating to a sizeable $9 million worth of stock.
Strong accumulation of insider buying is always a positive sign and seeing that the company has exceeded consensus analyst estimates the past four quarters is bullish as well. However, VMware is definitely not for the value investor as the company trades at some lofty valuations and pays no dividend to boot. Being the more conservative investor that I am, I’d rather invest in EMC which is trading at much more reasonable valuations and having a more diversified revenue base, but that’s just my humble opinion.
Vistaprint (NASDAQ: VPRT) operates as an online provider of coordinated portfolios of marketing products and services to micro businesses worldwide. The stock has been range bound the past year, but recently the stock took a hit and now sits right near its $28.03 52-week low. Major shareholder Prescott General Partners seems to think this is a buying opportunity by accumulating from November 27-29 281,594 shares collectively at an average price of $30.33 equating to just over $8.5 million worth of stock. This is very encouraging and as we look deeper, the company has operationally performed well exceeding consensus analyst estimates in each of the past four quarters.
Moreover, the stock is trading at a relatively cheap 1x price/sales and price-to-expected-growth. On the flip side, the company is not paying a dividend which is discouraging, but with compelling fundamentals and such strong insider buying, Vistaprint is worth putting on your radar and possibly buying as a value opportunity.
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.
Wiseinvestors has no positions in the stocks mentioned above. The Motley Fool owns shares of EMC, VMware, and Vistaprint. Motley Fool newsletter services recommend VMware and Vistaprint. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!