Stocks to Avoid Now?

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If you're thinking of selling your stocks, you're not alone. According to insider tracker Form 4 Oracle, executives at these three firms cashed in shares last week:

The week's selling

Company	Closing Price 2/20/09	Total Value Sold	52-Week Change
Owens & Minor (NYSE: OMI)	$36.83	$3,653,449	(14.9%)
Compass Minerals International (NYSE: CMP)	$56.17	$688,951	3.4%
NetSuite (NYSE: N)	$8.96	$89,365	(58.1%)

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle.

Insiders sell for many reasons, ranging from compensation to estate or tax planning to just plain getting out, but the reasons are rarely (if ever) given. Having said that, these are open market sales, made by executives who have 100% control over the timing of their trades. Not so at Equinix (Nasdaq: EQIX) and Omniture (Nasdaq: OMTR), whose insiders have mostly been cashing in on a predetermined schedule known as a 10b5-1 trading plan.

Firms typically find their way here because those selling either exhibit good timing or are dumping significant portions of their stakes. G. Gilmer Minor III, chairman of the board of his namesake company, Owens & Minor, has shown anything but good timing in the past. He bought shares of SunTrust Banks (NYSE: STI) in July at $37.99 apiece. The stock is down more than 80% since.

So timing isn't the issue with Minor, volume is. He's dumped roughly 50% of his reported stake in Owens & Minor since March 4, 2008, when the company tallied ownership data for a proxy statement. More than a third of that selling was executed last Wednesday, at $36.49 a share.

Two weeks prior, Owens & Minor bumped the high end of its 2009 profit guidance to $2.70 per share, but trimmed the low end of its revenue growth guidance to 8%. Mixed signals? I'll say. Factor in Minor's selling and, on uncertainty alone, this strikes me as a stock to avoid.

Is this compass pointing south?
Compass Minerals, like Owens & Minor, gets mostly good ratings from our 125,000-strong Motley Fool CAPS community:

Metric	Compass Minerals
CAPS stars (5 max)	****
Total ratings	524
Percent Bulls	96.4%
Percent Bears	3.6%
Bullish pitches	58 out of 59

Data current as of Feb. 22, 2009.

They've good reason to like the stock. Following the worst year for dividends in five decades, management earlier this month announced a 6% dividend increase. Compass has boosted its payout in each of the last six years.

What's more, salt production is good business. I should know; I lived in Syracuse, New York for two years, and nowhere is salt more widely used to keep icy roads clear. So long as Old Man Winter keeps blowing cold, there'll be a need for Compass' salty services.

Compass also sells potash fertilizer like PotashCorp (NYSE: POT), but competition isn't easily found in its core rock salt business.

"Great mid-cap company with a decent dividend. Deals in basic commodities; deicer salt and SOP. Wide business moat with limited competition," wrote CAPS investor jawilde earlier this month. "Has been able to raise prices as needed. Do not see any reason why this 'hidden gem' will not continue growing for quite some time."

That's a strong endorsement. So, why are insiders selling? General Manager Ronald Bryan and Rodney Underdown, combined, have sold close to $700,000 worth of stock over the past week.

Ownership isn't a concern; even after the sales, both executives maintain a healthy stake in the business via options. What's troubling is the timing. If Compass is as cheap and well-positioned as CAPS investors believe, isn't now the time to be buying? Color me confused.

There's your update. See you back here on Friday for more stocks you should avoid.

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