Who's Buying Now?

It's a new week, which means it's time to check the most interesting insider purchases.

After reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top five this week.

The week's buying

Company

Closing Price 8/28/07

Total Value Purchased

52-Week Change

American Eagle Outfitters (NYSE:AEO)

$24.48

$4,417,274

6%

GateHouse Media* (NYSE:GHS)

$13.05

$7,833,155

(35%)

Pep Boys (NYSE:PBY)

$14.88

$1,861,627

21%

USANA Health Sciences (NASDAQ:USNA)

$39.99

$2,669,159

(11%)

Western Alliance Bancorporation (NYSE:WAL)

$27.38

$3,033,550

(27%)

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
*GateHouse Media began trading on Oct. 25, 2006.

American Eagle ready to take wing
Need evidence that the market is anything but rational? Meet American Eagle Outfitters. Just two weeks ago, the retailer disappointed everyone when it reported lower-than-expected comparable-store sales for July. (In June, comps soared.)

But has the investing thesis changed? Not for those following the stock in our Motley Fool CAPS investor-intelligence database:

Metric

American Eagle

CAPS stars (5 max)

****

Total ratings

1,061

Bullish ratings

1,004

Bull ratio

94.6%

Bearish ratings

57

Bear ratio

5.4%

Bullish pitches

181

Bearish pitches

19

Data current as of Aug. 28, 2007.

There's a decidedly long-term bias among the stock pickers who've rated American Eagle to outperform in CAPS. But some also see short-term upside. One, a CAPS All-Star who goes by the nickname NuttyGambler, even promised to "eat his shorts" if the stock doesn't climb above $33 before year's end.

Why the enthusiasm? Many pitchers cite popular designs, which may help to explain why a year-over-year decline might be so troubling for investors. Management, for its part, says that teens were getting a late start on their back-to-school shopping and that, on the whole, its new brands are performing quite well.

Skeptical? I would be, too, if this were little more than an exercise in carbon-dioxide pollution. But that's not the case: Executives are spending serious moola to back up their claims. For example, Chairman Jay Schottenstein, already the owner of nearly 14% of American Eagle, spent $3.6 million to acquire 151,500 more shares last Wednesday and Thursday.

Then there are the financials. American Eagle has a pristine balance sheet with more than $750 million in cash and investments and no debt. Meanwhile, returns on equity and capital exceed 30%.

Mix in a 0.85 PEG ratio, which suggests that the stock trades for a nice discount to its expected growth, and I'm sold. I added a long position in American Eagle to my CAPS portfolio this morning.

USANA doctors try to diagnose a bargain
How about we close with an update? Last week, I raised suspicions over buying at vitamin producer USANA. Rightfully so, I think. After years of selling, and selling at prices very similar to today's, insiders are suddenly using a small portion of the proceeds they've earned to purchase shares.

CEO and founder Myron Wentz had been leading the charge. He still is. On Friday, Wentz spent $190,000 to acquire 5,000 more shares of his company. Yet I'm still not convinced that the core conclusion of a Forbes expose -- that the stock is too dangerous to buy, even at these levels -- is off.

Let's see how deep into his pockets Wentz is willing to reach.

That's all for now. See you back here next week, when we dig through more insider deals in search of the next home run stock.

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American Eagle is a Stock Advisor pick.

Fool contributor Tim Beyers, who is ranked 7,858 out of more than 60,000 participants in CAPS, didn't own stock in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool has a disclosure policy.


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