Stocks: Four Insider Favorites

S&P's latest screen finds outfits that are seeing solid levels of share purchases—and no selling—by company brass

by Michael Kaye From Standard & Poor's Equity Research

For investors who like to zig when others zag, the current wave of insider selling of company shares could present an interesting opportunity. Of course, selling of shares by insiders (defined as officers, directors, and related parties) doesn't mean that they think that the company's fortunes are set to tumble (see BusinessWeek.com, 12/11/06, "Insider Buying: Look Before You Leap").

But solid levels of insider buying may send a strong signal about top brass's optimism on future prospects. Generally, buying of a company's stock by insiders can be a good indication that those individuals believe that the company's stock is undervalued.

For this week's screen, we searched for the clearest possible signal on insider buying. We looked for those companies with at least 10 recent insider purchases—with zero insider sales.

In addition, to ensure that they were stable, liquid companies, each had to have at least $1 billion in market capitalization.

When we finished the screen, these four names popped up:

Kaye, a chartered financial analyst, is an analyst for Standard & Poor's Portfolio Services. He is the author of The Standard & Poor's Guide to the Perfect Portfolio: Five Steps to Allocate Your Assets and Ensure a Lifetime of Wealth.