E*Trade, Cheesecake Factory and Other Stocks Insiders Are Buying
Insiders may sell shares for any number of reasons, but there is really only one reason insiders buy shares of a company — 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. Below are some stocks that have seen insider buying recently.
Cheesecake Factory (NASDAQ: CAKE): A director purchased 25,000 shares of this restaurant operator last week. That was worth more than $820,000. The company also had a director retire from the board earlier this month. The company has a market capitalization near $1.4 billion and a long-term earnings per share (EPS) growth forecast of 14.3 percent. Its dividend yield is 1.4 percent. Shares are trading near the 52-week high, and the stock has outperformed competitor Darden Restaurants (NYSE: DRI) and the S&P 500 over the past year.
E*TRADE Financial (NASDAQ: ETFC): Chairman Frank Petrilli and one other director purchased more than more than 126,000 shares of this financial services company last week. That was worth more than $1 million. The board of this New York-based company recently ousted the CEO. The company’s market cap is about $2.4 billion and its long-term EPS growth forecast is 12.2 percent. Short interest is less than 2 percent of the float. Over the past six months, the stock has underperformed rival TD Ameritrade (NYSE: AMTD) as well as the broader markets.
IberiaBank (NASDAQ: IBKC): A pair of directors from this Lafayette, La.-based lender have bought up more than 22,000 shares, worth over $951,000, so far this month. A shipping executive was appointed to the board earlier this month. The regional bank has a market cap near $1.4 billion. The company’s price-to-earnings P/E ratio is greater than the industry average and the dividend yield is about 2.9 percent. The share price has risen about 5 percent in the past two weeks, but that is still down about 6 percent year to date.
IMAX (NYSE: IMAX): A 13(d)(3) group owner purchased more than 299,000 more shares in the past week. That totaled more than $6.2 million. This owner has purchased more than a million shares since July 9. This leading entertainment technology company has a market cap of about $1.4 billion. Its long-term EPS growth forecast is a healthy 21.3 percent. But the share price has dropped more than 14 percent in the past month, and the stock has underperformed the broader markets during that time.
Opko Health (NYSE: OPK): The chairman, Dr. Frost, continues to periodically buy batches of shares, as he has done since last November. He acquired more than 200,000 shares in the past week, which was worth more than $862,000. This Miami-based health care company has a market cap of near $1.2 billion. Short interest is a hefty 23 percent of the float. Shares have fallen more than 7 percent in the past month and are now down more than 12 percent year to date. Over the past six months, the stock has underperformed competitors such as Allergan (NYSE: AGN).
Ruby Tuesday (NYSE: RT): So far in August, two directors have bought 497,000 shares, worth about $3.2 million, in this operator of casual dining restaurants. The company appointed two new board members last week. The market cap is around $430 million. Short interest is more than 7 percent of the float. The share price dropped in July following a disappoint earnings report, but it has risen almost 5 percent in the past week. The stock has underperformed competitor Red Robin Gourmet Burgers (NASDAQ: RRGB) over the past six months.
Bullish: Investors interested in exchange traded funds focused on insider sentiment might want to consider the following trades:
- Guggenheim Insider Sentiment (NYSE: NFO) is up more than 10 percent year to date.
- Direxion All Cap Insider Sentiment Shares (NYSE: KNOW) is up about 5 percent year to date.
Bearish: Traders may prefer to consider these alternative positions to some of the stocks listed above:
- Brinker International (NYSE: EAT) is up more than 29 percent year to date.
- Charles Schwab (NYSE: SCHW) is up more than 12 percent year to date.
- Green Bankshares (NASDAQ: GRNB) is up more than 40 percent year to date.
- Madison Square Garden (NASDAQ: MSG) is up about 36 percent year to date.
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