Insiders Have Bought Cigna, Diebold, and More

An LLC related to the CEO of Dresser-Rand Group Inc. (NYSE:DRC) bought almost 18,000 shares of stock for an average price of $57.02 per share. Dresser-Rand provides equipment and parts to customers in energy, industrial, and power generation businesses. The company reported double-digit growth rates on both top and bottom lines in the fourth quarter of 2012 versus a year earlier. However, a considerable amount of future growth is already priced into the stock given the trailing P/E of 25. The sell-side is expecting very high growth, resulting in a forward P/E of 13 and a five-year PEG ratio of 0.5, but we would be skeptical of such optimistic projections.

Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), a mortgage investor services company, was another stock seeing insider buying. 60% of Altisource’s revenues for 2012 came from one customer, Ocwen Financial; Ocwen, an originator and servicer of mortgage loans, has been growing rapidly (thanks in part to acquisitions) and Wall Street analysts believe that Altisource will therefore generate more business form the company. The current-year P/E is 12, beyond which point Altisource would only need modest earnings growth.

A Board member purchased 70,000 shares of DexCom, Inc. (NASDAQ:DXCM), a $1.1 billion market cap provider of medical instruments which are used by diabetics to monitor blood glucose levels. The average transaction price was $15.50 per share, though the stock has risen a bit in response to the news. DexCom has recorded operating losses each of the last three years, with little change in these losses despite high revenue growth. Cash flow from operations has also been negative, and the company is running low on cash and investments according to its balance sheet. As a result we would recommend avoiding the stock.

Disclosure: I own no shares of any stocks mentioned in this article.