Kinder Morgan, Seattle Genetics and Target are among the companies that have seen insider buying recently.
Insiders may sell shares for any number of reasons, but conventional wisdom says that insiders really only buy shares of a company for one reason -- they believe the stock price will rise 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.
The Fresh Market
Since the better-than-expected earnings report, one director scooped up about 435,000 shares of The Fresh Market (NASDAQ: TFM), a specialty food retailer with more than 150 stores. That was worth more than $13.2 million and raised his stake to more than 2 million shares.
The market cap is about $1.6 billion. The long-term earnings per share (EPS) growth forecast is near 17 percent, but the price-to-earnings (P/E) ratio is greater than the industry average. Shares have climbed more than four percent in the past month. Over the past six months, the stock has outperformed Whole Foods Market.
One Kinder Morgan (NYSE: KMI) director has acquired more than $13.5 million worth of shares so far this month. That was 400,000 shares of the stock of this midstream and energy company. Chairman and CEO Richard Kinder also bought 100,000 shares back in May.
Kinder Morgan has a market cap of about $36 billion and a dividend yield near 4.9 percent. Its P/E ratio is less than the industry average, and the long-term EPS growth forecast is more than eight percent. The share price is up almost eight percent in the past month. But over the past six months, the stock has underperformed the Nasdaq and the S&P 500.
At the end of May, one director picked up 85,000 NuStar Energy (NYSE: NS) shares for a total price of around $4.9 million. That same director also bought 55,000 shares back in March, and his total stake is now almost 2.5 million shares.
This San Antonio-based petroleum storage and transportation company has a market cap of about $4.8 billion and a dividend equivalent yield of 7.2 percent. The long-term EPS growth forecast is more than 31 percent. Shares hit a multiyear high on Friday. But over the past six months, the stock has underperformed competitor Williams Companies.
One director bought almost 282,000 shares of Seattle Genetics (NASDAQ: SGEN) in three batches since the beginning of the month. That was worth about $9.8 million, and the transactions followed presentation of clinical data at the American Society of Clinical Oncology 50th Annual Meeting.
Seattle Genetics has a market cap near $4.6 billion. Its operating margin and return on equity are both in the red. Shares are up more than 10 percent in the past week but still down more than 27 percent from three months ago. The stock has outperformed larger competitor Pfizer over the past six months.
One director bought 10,000 shares of Target (NYSE: TGT) recently, raising his stake to more than 26,000. The transaction was valued at more than $567,000. This came on the same day that the retailer was defending its oversight of customer data, as it struggles to put last fall's data breach in the rear-view mirror.
The market cap is less than $20 billion. Target offers a dividend yield near 3.0 percent. The long-term EPS growth forecast is about 12 percent, and the P/E ratio is less than the industry average. The share price is marginally lower than three months ago. The stock has underperformed Wal-Mart and the S&P 500 over the past six months.
One director bought about 278,000 shares of TransDigm (NYSE: TDG) last week, bringing his total holdings to more than 3.1 million shares. Then at the end of the week, the company announced that its board of directors has declared a special cash dividend of $25.00 on each outstanding share of common stock.
The market capitalization of this aerospace company is more than $10 billion and the long-term earnings per share (EPS) growth forecast is more than 13 percent. Shares reached a new multiyear high on Friday. Over the past six months, the stock has outperformed the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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