American Realty Capital Properties Inc (ARCP), W.P. Carey Inc. REIT (WPC): Two Mind-Blowingly Bullish Insider Buys You May Have Missed

The second case

Esterline Technologies Corporation (NYSE:ESL) is a specialized aerospace and defense manufacturing company.  Henry Ward Winship, IV, a director of the Company, recently completed a pair of insider purchases representing 28,000 shares.

Some background

The Company recently reported first fiscal quarter results of net income of $25.1 million, or $0.80 per diluted share, on sales of $458.0 million.  Prior year first quarter income was $22.8 million, or $0.73 per diluted share, on $470.9 million in sales.  Esterline’s share price is up over 12% YTD, but is down 5.8% so far in April.

Performance

The stock is currently trading right at its 50 day SMA, but well above the 200 day SMA.  There appears to be longer term resistance at around $75.  Thus, it may take some significant impetus to move the stock above that level.

Further, it should be noted that the defense and aerospace industries may face headwinds due to federal budget concerns moving forward.  The Company did state that it is poised for growth in other sectors, including high-speed rail projects in China, nuclear power initiatives in the U.K., and casino gaming console installations.  By diversifying, Esterline appears to be protecting itself from any possible downturn in the aerospace industry.

A peer

A competitor in the aerospace and defense sector is Rockwell Collins, Inc. (NYSE:COL).  Unlike Esterline, Rockwell currently has a dividend yield of 1.94%.  Rockwell has a P/E ratio of 14.17, versus a P/E ratio of 19.96 for Esterline.  Rockwell’s stock prices is up 6% YTD, and has greater short interest with a short float of 5.34%.

Final thoughts

American Realty and Esterline may be investment opportunities if the insider purchasers are correct.  American Realty Capital Properties Inc (NASDAQ:ARCP) appears to be poised for growth, and has an attractive dividend yield, while federal budget issues may need to be sorted out before further significant growth for Esterline is a possibility.  Investors should take a closer look at these companies to see if they fit with their personal investment criteria, while paying attention to up-to-the-minute records of insider transactions.

Disclosure: none