You're Not the Only One Buying Here

Famed money manager Peter Lynch gave us the inside scoop on how to look at insider transactions. Executives can sell their stock for any reason, he said, but they only buy for one: They think the price is going to go up!

Today, I've highlighted two insiders who have made big purchases of their own company's stock in the past week. These aren't executives getting big chunks of shares from option grants. Rather, they're insiders putting their own money on the line, buying shares at market prices. I then paired that information with insights from the members of Motley Fool CAPS to see if they think the stock has the same prospects the insiders do.

Source: FinViz.com. *Indirect ownership.

Although following the lead of insiders can be profitable, we still recommend you do further due diligence to determine whether these stocks ought to be sold from your own portfolio -- or would make a good addition! So this isn't a list of stocks to sell or buy, but just the inside track on companies you might want to check out further.

Timberrrr!
Although it sounds like a scenario for pillaging the environment, Dominion Resources' plans to convert three of its coal-burning plants to ones that consume wood actually would use waste wood from timber operations. The conversion to biomass is seen as a means of remaining competitive against natural gas plants while at the same time lowering greenhouse gas emissions. It would also be a cheaper source of fuel compared to coal.

Although the CAPS Utilities sector managed to eke out a 3% gain over the past year, besting the market's 1.7% gain, this year it's been a different story, with the S&P 500 up 4% versus a 1.7% gain for the sector group.

It may be green of Dominion to do this conversion, but it certainly doesn't hurt that the EPA exempted all biomass power projects from emission caps for the next three years. Other utilities aren't rushing into the breach however. Despite no coal-fired plants being built, there's no warm embrace for biomass by utilities either.

Dominion isn't alone in trying to stay competitive against natural gas. Car battery maker A123 Systems
(Nasdaq: AONE) also supplies utilities like AES (NYSE: AES) and Sempra Energy with grid-power systems (they comprise a third of its revenues), and it sees lithium-ion batteries actually making greater inroads into the utility network.

The attraction of utilities, regardless of how they're powered or how their power is stored, has been as steady performers, which is what attracted CAPS member Wisdomled to Dominion. That, and healthy dividends -- Dominion is currently yielding 4.7% -- make them attractive.

Add the utility to your watchlist, then let us know on the Dominion Resources CAPS page if you think it will dominate the utility market.

Finger-licking good
With the separation from Arby's complete, the story of Wendy's is now whether the burger joint can successfully manage a turnaround. The early results say yes. Revenues for the last quarter were up 5.6%, with comps up more than 4%, generating adjusted earnings per share of $0.04 -- in line with expectations but ahead of last year's effort. The company believes it can achieve same-store sales growth of between 2% and 3% in 2012 even as it plans to grow out its base of stores here and abroad.

Motley Fool blogger Tom Gibbs views Wendy's efforts as more akin to a gnat buzzing around McDonald's (NYSE: MCD) head, noting the golden arches has an advertising budget "as large as WEN's current net worth."

That may be true, but Wendy's has its sights set on lower-hanging fruit, wanting to take on upstart burger chains like Smashburger and Five Guys. Wendy's is trying to change consumer attitudes about its offerings. Now whether we'll see a bacon-flavored milk shake like Jack in the Box just introduced remains to be seen, but the outlook for growth at Wendy's is something investors might be willing to drink in.

CAPS member rockjam78 is one who likes the changes under way at the burger chain, but by adding Wendy's to the Fool's free portfolio tracker, you'll be able to receive regular updates on whether the changes resonate with the rest of the dining public.

On the inside track
These two companies still have big hurdles before them. Discover two other small-cap stocks The Motley Fool found with solid state contracts that have the potential to deliver multibagger returns. This special report is free for the asking, but it's available for only a limited time, so ask for your copy today!