Cedar Fair, Weatherford, and More Stocks Insiders Are Buying

Insider buying has continued at Francesca’s Holdings Corp (NASDAQ:FRAN), a $1.1 billion market cap retailer of women’s apparel and accessories. See a history of insider buying at Francesca’s. Growth has been high- earnings last quarter were more than double what they were a year earlier- but the market price has already captured quite a bit of future growth with a trailing P/E multiple of 28. The sell-side thinks that the stock is slightly undervalued, with a five-year PEG ratio of 0.9; even though we’re wary of stocks with such high valuations, the recent growth rates have been high enough that it might merit consideration as a growth stock.

Another stock with multiple insiders adding shares is Puerto Rican bank Oriental Financial Group Inc. (NYSE:OFG), which is in the process of acquiring the local operations of another bank. Research insider purchases at Oriental Financial. Analysts join the insiders in being optimistic about the outcome of the transaction, with high EPS growth expected for 2013, but markets are warier: the forward P/E multiple is only 9, and 13% of the outstanding shares are held short. Given that on average M&A tends to destroy shareholder value- but that company insiders are confident enough in this deal to buy the stock- our judgment is that it’s best to wait and see how much the acquisition actually adds to EPS in the next quarter or two.

Navistar International Corp (NYSE:NAV)’s president and COO Troy Clarke bought a little over 8,400 shares at an average price of $20.27 per share. Navistar, which produces trucks, engines, and other parts, has been targeted by activist investor Carl Icahn (see Icahn’s stock picks). The stock trades at 10 times consensus earnings for 2013 after having dropped 45% in the last year; short interest remains high, with 23% of the outstanding shares held short, as many traders expect it to go even lower. With revenue down in its most recent fiscal quarter compared to the same period in the previous year, we would avoid it.