Insiders Buy Shares of Methode Electronics Inc. (MEI) & Kratos Defense & Security Solutions, Inc (KTOS)

As a part of our investment strategy, we track insider purchases every day. Recent studies have shown that stocks that experience insider purchases tend to outperform the broader market. This is why in this article I will look into two small-cap companies in the Industrials segment that saw their insiders buy their stock.

First off is Methode Electronics Inc. (NYSE:MEI), a $ 1.18 billion market cap manufacturer of component and subsystem devices. The company has manufacturing, design and testing facilities in China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, Philippines, Singapore, Switzerland, UK and the United States. On Feb. 18th, Paul Shelton, a Board Director of the company, acquired 3,000 shares for $30.14 apiece. He added the shares to different trusts of which he is a direct beneficiary, and holds, in total, about 65,000 shares of the firm, worth more than $2 million.

Methode Electronics Inc. (NYSE:MEI)

In addition to these insiders, several ‘hedgies’ are betting on Methode Electronics Inc. (NYSE:MEI). One of the largest investors is Chuck Royce, who owns 1.48 million shares of the company. Others worth mentioning are Jim Simons, who increased his stake in the company by 35% during the last quarter of 2013, to 423,200 shares, and Israel Englander, who more than doubled his bets on the manufacturer, to 245,400 shares.

All of this bullishness is quite comprehensible, given the company’s industry leading returns on equity and assets, coupled with very low debt levels and a below-average valuation, at 19.8 times the company’s earnings. In fact, analysts expect Methode Electronics Inc. (NYSE:MEI) to deliver average annual EPS growth rates around 25% over the next five years, widely outperforming its peers. Moreover, a mean price target of $40 per share implies plenty of upside potential from the current $31.50 price point.

Another interesting case is that of Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), a specialized security technology business with a market cap of over $444 million. The firm saw three insiders purchase its stock over the past week:

- Eric Demarco, President and CEO, bought 10,000 shares of the company over the past week. On March 14th, he acquired 6,957 shares for $7.19 each; on March 17th, he purchased another 3,043 units, for $7.12 per share. Mr. Demarco now owns over 339,100 shares of the company, worth more than $2.6 million.

- Richard Poirier, President at the Electronic Products Division, procured, on March 17th, 3,500 shares of the company, for $7.14 each, and currently holds more than 53,000 shares.

- On March 14th, Elizabeth Jane Judd, Board Director, acquired around 1,800 shares of the company: 900 for $7.08 per share, and an extra 920 for $7.07 per share. She now owns 22,000 shares of the company, worth slightly more than $164,000.

Moreover, it’s not only insiders that like this stock: analysts and hedge funds do too.  Once again, both Chuck Royce and Israel Englander have large stakes in the company (2.16 million shares and 1.26 million shares, respectively).

With both insiders and hedge funds betting on these industrial companies, should you too?

Disclosure: Javier Hasse holds no position in any stocks mentioned

Recommended Reading:

Two Small-Cap U.S. Regional Bank Stocks That Insiders Love

Digging Into Two Energy Stocks That Insiders Seem to Love

Bottoms Up: Two Stocks That Insiders Are Chug-a-Lugging

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!