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Three More Stocks With Insider Appeal

Posted: Nov 20, 2009 12:26 PM by Billy Fisher

Tickers in this Article: PMC, PCLN, OWW, AMZN, BKS

This week while browsing lists of recent insider transactions, I came across three more stocks that have experienced insider buying and that are particularly appealing. Although an insider's purchase does not necessarily mean a stock is on the up and up, it is comforting to shareholders to know that an officer or a board member with close knowledge of a company is betting some of his or her own money on the stock's future.

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Hittin' The Books
Between November 10 and November 16, Ron Burkle's holding company Yucaipa Cos. purchased approximately $90.3 million worth of Barnes & Noble (NYSE:BKS) stock at prices ranging from $19.60 to $20.48 per share. BKS closed at $22.14 on Wednesday and is up 34% so far in November.

The company is gearing up for a battle with Amazon (Nasdaq:AMZN) in the e-book reader space with the planned launch of its entry, the "nook", in the coming weeks.

Aside from the attention that Barnes & Noble has gained from the nook and insider buying, there are other positive aspects to consider when evaluating this stock. The company has a consistent history of dividend payments and presently holds a dividend yield of 4.9%. Also, in the company's Q2, Barnes & Noble achieved better-than-expected gross margins and its online sales were slightly above the prior year's level.

Happy Travels
Although smaller in dollar amount, Mike Nelson, an officer of Orbitz Worldwide (NYSE:OWW), recently made an insider purchase that was equally intriguing. He bought 10,000 shares of Orbitz at $5.43 per share on November 10. Shares of OWW closed at $6.25 on Wednesday and have soared over 50% in 2009 as the online travel industry continues to bounce back.

In Q3, the company reported that its airline ticket bookings had improved significantly from Q1 and its hotel bookings in Europe also showed signs of strength. The removal of booking fees has resulted in a decline in revenue when compared to the prior year quarter, but it appears that this trend can be stabilized with improved volume. Orbitz is certainly not the only online travel stock to prosper this year. Shares of Priceline.com Inc. (Nasdaq:PCLN) have risen 175.4% year to date.

Just What The Doctor Ordered
Another interesting insider transaction that recently surfaced was a $370,000 purchase of shares of the pharmacy management company PharMerica (NYSE:PMC) by the company's CEO, Gregory Weishar. The shares were bought last week between $14.85 and $14.88 per share. On Wednesday, PMC closed at $14.99, down 4% since the start of the year.

In Q3, PharMerica's revenue declined on a year-over-year basis due to a higher rate of prescriptions being dispensed as generic brands. However, the company completed an acquisition which helped grow its market share and cash flows from operations remained healthy.

The Bottom Line
Only time will tell whether or not these insider bets prove to be profitable. These particular insiders may be on to something or they may be too overly optimistic on their own companies. Before taking one side or the other, it is always wise to conduct your own independent research. (For related reading, check out Can Insiders Help You Make Better Trades?)

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By Billy Fisher

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