U.S. Steel, Genomic Health and Other Stocks Insiders Are Buying
Insiders may sell shares for any number of reasons, but conventional wisdom is that insiders really only buy shares of a company for one reason -- they believe the stock price will move higher and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares. Here are some stocks that have seen insider buying recently.
One director, Felix Baker, bought more than 1.9 million shares last week. That was worth more than $24.9 million. This San Diego-based biopharmaceutical company has been discussed as a possible takeover target and it last week announced a secondary offering.
The market capitalization is about $1 billion and the long-term earnings per share (EPS) growth forecast is about 20 percent. Shares of ACADIA Pharmaceuticals (NASDAQ: ACAD) are up more than 180% year-to-date. Over the past six months, the stock has outperformed larger competitors AstraZeneca (NYSE: AZN) and Eli Lilly (NYSE: LLY).
A director, Felix Baker again, last week bought more than 311,000 shares, which was worth more than $10.8 million, of this health care company. A novel genetic test by Genomic Health (NASDAQ: GHDX) to gauge the aggressiveness of prostate cancer became available on the market last week.
The diagnostics company has a market cap near $1.1 billion. While the long-term EPS growth forecast is about 33 percent, the return on equity is less than six percent. The share price is up more than 37 percent year-to-date and just shy of a new 52-week high. The stock has outperformed the broader markets over the past six months.
One director scooped up 30,000 Murphy Oil (NYSE: MUR) shares recently, at a price of more than $1.9 million, while other directors and executives were selling shares. This same director also bought 100,000 shares back in February.
This El Dorado, Arkansas-based oil and gas producer is in the process of spinning off its retail gas stations into a separate, publicly traded company. It has a market cap more than $12 billion and a dividend yield near two percent. The forward earnings multiple is less than the industry average price-to-earnings (P/E) ratio.
Shares are trading more than 11 percent higher than six months ago but have faced resistance at $65 for much of that time. Still, the stock has outperformed the likes of BP (NYSE: BP) and Exxon Mobil (NYSE: XOM) over the past six months.
United States Steel
So far this month, two directors have purchased 87,000 shares, which was worth almost $1.6 million. Last week, Pittsburgh-based U.S. Steel (NYSE: X) warned that domestic markets for steel may not recover until sometime in 2015.
The market cap is about $2.6 billion and the dividend yield is near one percent. The long-term EPS growth forecast is about five percent, and the return on equity is less than one percent. The P/E ratio is much higher than the industry average.
The share price hit a 52-week low in April and it is now down year-to-date by more than 24 percent. Over the past six months, the stock's performance has been in line with that of peer ArcelorMittal (NYSE: MT) but it has underperformed the Down Jones Industrial Average.
Western Gas Partners
Last week, the CEO, the CFO, the COO and a director purchased 28,500 shares altogether of this Woodlands, Texas-based limited partnership. That was worth more than $1.7 million. The company issued more than 7 million common units recently to raise funds to repay debt and for other purposes.
Western Gas Partners (NYSE: WES) has a market cap of more than $6 billion and its dividend yield equivalent is near 3.4 percent. The long-term EPS growth forecast is more than 51 percent. Shares retreated more than two percent from a multiyear high last week. The stock has outperformed larger competitor Kinder Morgan Energy Partners (NYSE: KMP) over the past six months.
ETFs and Alternatives
Investors interested in exchange traded funds focused on insider sentiment might want to consider the following trades.
- Direxion All Cap Insider Sentiment Shares (NYSE: KNOW) is up more than 19 percent year-to-date.
- Guggenheim Insider Sentiment (NYSE: NFO) is up about 16 percent year-to-date.
Traders may prefer to consider these alternatives to some of the stocks listed above:
- MannKind (NYSE: MNKD) is about 117 percent higher year-to-date.
- PAREXEL International (NASDAQ: PXRL) is about 50 percent higher year-to-date.
- Delek US Holdings (NYSE: DK) is more than 40 percent higher year-to-date.
- Buckeye Partners (NYSE: BPL) is about 38 percent higher year-to-date.
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