Are These Companies 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 whatsoever. 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 a few stocks with notable insider purchases and can serve as a nice stating point in your investment research:

Virtualization-based cloud infrastructure solutions giant VMware (NYSE: VMW) is a behemoth in the technology world with well over $4 billion in annual revenues and a market capitalization exceeding $40 billion. The stock has been range bound throughout the year from approximately $80-$120 per share and currently sits at the lower end of that range. Major shareholder EMC (NYSE: EMC) seems to think there is some more upside buying collectively from December 18-19 66,500 shares at an average price of $96.58 equating to almost $6.5 million worth of stock. This is a nice vote of confidence and looking deeper into the company we see that the balance sheet looks clean with relatively little debt and approximately $4 billion in net cash. However, I have to shy away from the company at this time being the conservative investor I am as the company trades at some lofty valuations, has a majority of its value tied up in goodwill/intangible assets which are also tough to get a true value, and does not pay a dividend. I would in no way go short the stock, but simply put this company in the richly priced/too difficult to understand category.

Entertainment and media giant Liberty Media (NASDAQ: STRZA) has its hands in a variety of different areas along with owning and operating the major league baseball club Atlanta Braves. The stock has been on a tear up over 50% year-to-date and sitting right near its $116.92 52-week high. While some may feel the stock is fully or even over-valued after such an impressive run Chairman John Malone thinks otherwise. Mr. Malone bought collectively from December 17-18 490,597 shares at an average price of $115 equating to over $56 million worth of stock. This is always very bullish and looking closer at the company, we see that it trades at some attractive valuations while generating healthy operating and profit margins along with returns on equity exceeding 30%. While the company does not pay a dividend which is something I always highly value as that shows that management rewards shareholders and is disciplined, the company is firing on all cylinders vastly exceeding consensus analysts’ estimates the past four quarters and I think worth putting on your radar.

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 and VMware. Motley Fool newsletter services recommend VMware. 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!

blog comments powered by Disqus