Should We Join the Insiders and Buy These Stocks as Well?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In this unstable economic climate, finding ways to outperform the market is much easier said than done. However, one screening tool that has proven to be effective in determining whether a stock is moving higher is insider buying due to one simple reason: they buy stocks, just like us, to make more money. In addition, they arguably have the best view of 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. Below are a couple stocks with strong insider buying:
Satellite and communication equipment services marker ViaSat (NASDAQ: VSAT) is a well-established company with close to $1 billion in sales and a market capitalization at approximately $1.75 billion. The company’s stock has been choppy all year with it now right in the middle of its $33.09-$49.80 trading range. One may find it hard to see where the company is heading, but major shareholder FPR Partners seems to see great value accumulating collectively from December 27-31 a massive 178,903 shares at an average price of $38.22 equating to over $6.8 million worth of stock. This strong insider buying is very encouraging while we also see that well-respected value firm, The Baupost Group, owns approximately 25% of the firm as well making this all the more intriguing. However, the company has whiffed on two of the last three quarters consensus analysts’ estimates while the company continues to burn cash. I don’t quite see the value in this firm as well when we see negative returns on equity and assets, while it trades for a rich 18x enterprise value to EBITDA. I’d keep this stock on my radar for now and see if things improve before jumping in as well.
Standard Parking (NASDAQ: STAN) based out of Chicago provides exactly what its name implies: parking. In addition, it does a pretty good job at it churning approximately $350 million in annual revenue while its market capitalization is nearing $500 million. The stock has performed well the past 52 weeks and now sits approximately 10% from its $24.67 52-week high. While one may think the company is fully or even overvalued, board director Charles Biggs seems to think differently buying an impressive 34,000 shares on December 28 at $21.94 equating to almost $750,000 worth of stock. The company has performed well the past four quarters exceeding consensus analysts’ estimates in three of those (although the most recent quarter was a downer), while it has strong returns on equity exceeding 23.5% over the same time frame. On the flip side though, the company does not pay a dividend and has a negative net tangible book value as the company has a lot of goodwill/intangible assets which are generally lower quality. If looking to invest in this space, I would much rather be in a more diversified company like ABM Industries (NYSE: ABM). The company operates parking lots and garages like Standard Parking, but also provides cleaning and related services, while also sporting a much stronger revenue base exceeding $4 billion. Perhaps most importantly, the company sports a growing 2.9% dividend yield, which looks poised to continue growing as it barely pays just over a 50% payout ratio (generally we like to see payout ratios below 80%).
As always, respectful comments and questions are always welcome on the message board below and please know any viewpoints are simply just the opinion of the blogger. I always strongly recommend every investor to do follow-up research and due diligence for the sake of their financial health.
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