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!

Below, we highlight a handful of insiders who are making big purchases of their own company's stock in the last 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. We'll then pair 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.


Insider, Position

Market Value of Transactions

CAPS Rating (out of 5)


Timothy Armstrong, CEO

$10.0 million


Flowers Foods (NYSE: FLO)

Benjamin Griswold, director

$0.6 million


TransDigm Group (NYSE: TDG)

Robert Small, director

$5.8 million


Source: wsj.com; Motley Fool CAPS.

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

An investment in the future
You have to give it to AOL CEO Tim Armstrong, he's putting his money where his mouth is. Too bad he might have been better off lighting up a few cigars with $100 bills than buying AOL stock. It's a faded brand that was damaged beyond repair during its tenure with Time Warner (NYSE: TWX). It lost the email war to Google (Nasdaq: GOOG) -- heck Yahoo! (Nasdaq: YHOO) is more popular than AOL -- and its overpriced purchase of the liberal news portal Huffington Post ruined whatever chance it had of trying to be a viable content provider.

Yeah, yeah, HuffPo is only 15% political, or so they say, but just because some of its pages aren't identified as "political" doesn't mean it doesn't carry a bias, and that's going to alienate at least half its potential audience. And since HuffPo is perceived as overtly skewed in one direction, that's its reality. It might have been the right idea -- buy a portal that can drive eyeballs to the site -- but the wrong execution. Its subscriber base is dwindling away to just 3.85 million people (down from 26.7 million at its height) but the declining base means fewer people are viewing its ads, which explains why its online advertising fell 26% last year.

Armstrong's stock purchase is a bit of bravado -- too bad it's just wasted money. CAPS member JohnEHibbert thinks AOL has become a bullet train destined for oblivion:

Sounds great-I think AOL investors will be reading this in about 18 months saying, damn-looks like she was right, we sure did get there faster. Its too bad the final destination is total disaster.

Let us know on the Aol CAPS page whether you agree this is the final nail in this once-iconic name's coffin.

A bun in the oven
Hey, nice buns! But the profits aren't looking so good for bakery goods maker Flowers Foods. Like so many other consumer goods providers, Flowers' fourth-quarter results were eaten away by rising commodities costs and intransigent unemployment. Procter & Gamble (NYSE: PG) and Colgate-Palmolive also suffered sluggish sales because of higher prices. Flowers was forced to pass through its increased costs, while at the same time reducing its promotional efforts, resulting in lower sales volumes.

Despite the current high-cost environment, investors believe Flowers can still rise to the challenge as 97% of the 333 CAPS members rating the baker see it outperforming the broad market averages. We "knead" your opinion on the Flowers Foods CAPS page, or you can bake in some goodness by adding it to your watchlist and having all the Foolish news and analysis aggregated for you.

A transforming event
Aircraft parts supplier TransDigm Group expects the aerospace industry to survive the turbulence it's recently undergone while its recent acquisitions, including McKechnie and others, helped push revenues up 30% from last year. Although GAAP profits will be lower this year, adjusted earnings were revised upwards by 5%.

This isn't the first purchase director Small has made, as CAPS member btthus points out. He purchased more than $8 million worth of stock back in December when it was trading under $70 a share. And though of a more modest amount, director Sean Hennessey recently joined him in purchasing TransDigm shares worth over $408,000 last week.

With 96% of the CAPS members rating TransDigm to outperform, they see it as poised to get further altitude. Let us know on the TransDigm Group CAPS page whether there's still plenty of runway in front of this parts supplier, and follow its flight path by adding it to the Fool's free personal portfolio tracker.

On the inside track
Following the insiders can be a path to profits, but it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Sign up today for the completely free service, and tell us whether its worth trading on this inside information.

Google is a Motley Fool Inside Value recommendation and a Motley Fool Rule Breakers pick. Yahoo! is a Motley Fool Global Gains recommendation. TransDigm Group is a Motley Fool Hidden Gems selection. Flowers Foods and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.