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4 Margin-Growing Stocks With High Insider Cluster Buys

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·4 min read
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- By James Li

According to the All-in-One Screener, a Premium feature of GuruFocus, four stocks with strong profit margins as of Thursday are The Eastern Co. (NASDAQ:EML), Hanesbrands Inc. (NYSE:HBI), Intel Corp. (NASDAQ:INTC) and Public Storage (NYSE:PSA). The stocks also had multiple insider buys during the past six months.


Final episode of the "World Travels" series discusses ways to seek potential investments

In November 2020, GuruFocus started a "World Travels" video series in which users can take a virtual tour around the globe and find good value investing opportunities across each of the website's subscription regions. The concluding video in the series discusses two key methods to seek good investments: margin-growing companies based on Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio)'s investing strategy and insider cluster buys.

GuruFocus' research suggests that stocks with a high number of insider cluster buys have potential for good growth. Legendary Fidelity Magellan Fund manager Peter Lynch said that while insiders sell shares for several reasons, they buy shares only when then believe their company's stock is due to appreciate in value.

As such, investors can find opportunities in margin-growing stocks with at least two insider buys over the past six months. The Screener listed four such companies based on results retrieved on Thursday.

The Eastern Co.

Two insiders purchased shares of The Eastern Co. (NASDAQ:EML) during the past three months. The total shares purchased is 2,700.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

The Connecticut-based company manufactures industrial hardware, security products and metal products. GuruFocus ranks the company's profitability 8 out of 10, driven by a three-year revenue growth rate that outperforms over 88% of global competitors and an operating margin that has increased approximately 1.3% per year on average over the past five years.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Eastern's valuation ranks 9 out of 10 on the back of price-to-owner-earnings and price-to-free-cash-flow ratios that outperform over 82% of global competitors. The company's stock is modestly undervalued based on Thursday's price-to-GF Value ratio of 0.81.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Gurus with holdings in Eastern include Mario Gabelli (Trades, Portfolio)'s GAMCO Investors Inc. (NYSE:GBL) and Jim Simons (Trades, Portfolio)' Renaissance Technologies.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Hanesbrands

Two insiders purchased shares of Hanesbrands (NYSE:HBI) over the past three months. The total number of shares purchased is 80,000.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

The North Carolina-based company manufactures basic and athletic apparel items under brands like Hanes, Champion and Playtex. GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that has increased approximately 4.2% per year on average over the past five years and is outperforming over 82% of global competitors.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Hanesbrands' valuation ranks 9 out of 10 on the back of a price-earnings ratio close to a 10-year low and a forward price-earnings ratio that outperforms over 93% of global competitors. The stock is fairly valued based on Thursday's price-to-GF Value ratio of 0.99.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Gurus with holdings in Hanesbrands include Diamond Hill Capital (Trades, Portfolio) and Jerome Dodson (Trades, Portfolio)'s Parnassus Endeavor Fund (Trades, Portfolio).

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Intel

Two insiders purchased shares of Intel (NASDAQ:INTC) during the past three months. The total number of shares purchased is 36,339.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

GuruFocus ranks the Santa Clara, California-based semiconductor company's profitability 9 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and an operating margin that has increased approximately 4.7% per year over the past five years and is outperforming approximately 95% of global competitors.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Intel remains one of the most-voted stocks among GuruFocus users: According to the Virtual Baskets feature, 105 users said they bought shares of Intel, while 22 users said they are considering buying shares.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Intel's stock is fairly valued based on Thursday's price-to-GF Value ratio of 0.94.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Public Storage

Two insiders purchased shares of Public Storage over the past six months. The total number of shares purchased is 38,931.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

GuruFocus ranks the Glendale, California-based self-storage REIT's profitability 8 out of 10 on several positive investing signs, which include a five-star business predictability rank and a return on assets that outperforms over 97% of global competitors.

4 Margin-Growing Stocks With High Insider Cluster Buys
4 Margin-Growing Stocks With High Insider Cluster Buys

Disclosure: Long Intel.

Read more here:

  • Yacktman Asset Management's Top 4 Buys of the 4th Quarter

  • US Markets Begin February Significantly Overvalued

  • New Stock Summary Page Feature: Performance Charts



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This article first appeared on GuruFocus.