Are These Going to Be the Big Winners of 2013?
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.
Diversified biotechnology and pharmaceutical company Opko Health (NYSE: OPK) operates worldwide with operations predominately in the United States, Mexico, and Chile. The stock performance has been choppy throughout the past year and currently is on an upswing with the stock nearing its $5.53 52-week high. Nevertheless, chairman, CEO, and major shareholder Dr. Frost seems to think there is more value ahead, gobbling up 40,000 shares on Jan. 4 on the open market. From a fundamental standpoint, the stock does not look cheap (which in all fairness is usually the case involving biotechnology stocks), as it sells for over 40x trailing twelve months sales and continues to burn cash.
However, the company does look to have a promising pipeline and just recently purchased a Brazilian pharmaceutical company, which the general market has applauded. If looking for a quality speculative buy, I think Opko is worth considering due largely to the significant insider buying and potential for outsized gains if any of their drugs reach their potential. If one is looking to balance out their risk with this holding in the biotechnology field, Amgen (NASDAQ: AMGN) is one to consider. With a far more stable revenue base exceeding $16.5 billion and much more reasonable valuations, Amgen is definitely for real. In addition, the company pays a very nice 2.1% dividend yield, which at only a 24% payout ratio investors can expect to continue being raised.
Communication equipment and infrastructure solutions maker Sonus Networks (NASDAQ: SONS) is based out of Massachusetts with a respectable trailing twelve month revenue base of just over $250 million. The company has not performed well the past year, however it has recently been in a upswing after hitting its $1.36 52-week low. Major shareholder Empire Capital Management seems to think the company will continue moving higher, buying a sizable 79,600 shares on the open market on Jan. 2. The company operationally has done well, exceeding consensus analyst estimates in two of the last three quarters, and it has a pristine balance sheet with very little debt and a net cash position at approximately $270 million. The company, however, does continue to burn cash and exhibit negative year over year revenue growth, which is not encouraging. I’d put this company on the radar for now until we can see more how the company looks to generate new revenue growth and/or find ways to unlock shareholder value.
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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