Looking for interesting stock trade ideas, but don't know where to start? Here are some ideas you may find helpful.
Company insiders, such as members of the board and upper management, can purchase company stock if they are optimistic on their companies' outlook. When a company sees a lot of insider buying, this is viewed very highly among analysts, because insiders know more about their companies than anyone else.
Business section: Investing ideas
So we began a stock screen by searching for companies that have seen high net insider purchases over the last six months. We then ran a screen on profitability, searching for companies with consistently increasing gross profit margin over the last six months.
Gross profit margin is the percentage of profits taken after deducting "cost of goods sold," the cost attributed to inventory sold, which represents the largest expense for many companies centered on selling physical products. Although gross margins vary widely across industries, one universally positive sign is when companies see consistent increases in their gross margin.
The final list is below. These insiders believe in their employers, and their profitability trends are encouraging -- do you think they're poised for success?
List sorted by net insider purchases as a percent of share float. (Click here to access free, interactive tools to analyze these ideas.)
1. Opko Health
2. ITT Educational Services: Offers postsecondary-degree programs in the U.S. that provide diplomas as well as associate's, bachelor's, and master's degrees. Gross profit margins increased from 58.76% to 62.2% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 62.2% to 65.9% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 65.9% to 66.31% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). Over the last six months, insiders were net buyers of 374,000 shares, which represents about 2.08% of the company's 17.96M share float.
3. Genomic Health: Focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. Gross profit margins increased from 72.93% to 75.41% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 75.41% to 78.23% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 78.23% to 80.56% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). Over the last six months, insiders were net buyers of 554,745 shares, which represents about 2.06% of the company's 26.92M share float.
4. Lincoln Educational Services: Provides career-oriented post-secondary education services in the United States. Gross profit margins increased from 57.44% to 59.27% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 59.27% to 61.76% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 61.76% to 62.51% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). Over the last six months, insiders were net buyers of 291,384 shares, which represents about 1.38% of the company's 21.18M share float.
5. Solar Capital
6. Neoprobe
7. Level 3 Communications
8. STAAR Surgical Company
9. USA Mobility: Provides wireless communications solutions to the health care, government, enterprise, and emergency response sectors in the United States. Gross profit margins increased from 62.75% to 64.28% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 64.28% to 66.9% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 66.9% to 67.08% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). Over the last six months, insiders were net buyers of 6,743 shares, which represents about 0.04% of the company's 18.59M share float.
10. Aeroflex Holding: Designs, engineers, manufactures, and sells microelectronics, and test solution and measurement equipment in the United States, Europe, the Middle East, Asia, and Australia. Gross profit margins increased from 41.57% to 48.06% during the first time interval (12 months ending 2009-06-30 vs. 12 months ending 2008-06-30). For the second time interval, gross margins increased from 48.06% to 52.36% (12 months ending 2010-06-30 vs. 12 months ending 2009-06-30). And for the final time interval, gross margins increased from 52.36% to 53.76% (12 months ending 2011-06-30 vs. 12 months ending 2010-06-30). Over the last six months, insiders were net buyers of 23,795 shares, which represents about 0.03% of the company's 69.46M share float.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Accounting data sourced from Google Finance.
