Insiders Have Bought Murphy Oil, CarMax, and More

Sigma-Aldrich Corporation (NYSE:SIAL), a $9.3 billion market cap company which provides chemicals and chemical equipment, had senior vice president George Miller buy 1,000 shares at prices just below $77. Sigma-Aldrich is priced for growth at a trailing P/E of 20, though recently it has not been delivering results in line with this multiple. Specifically, in the fourth quarter of 2012 sales and net income were up 7% from Q4 2011, and for the year as a whole earnings were essentially unchanged. Analyst consensus for 2014 implies a forward P/E of 17, and we think that we would avoid the stock.

Multiple insiders have reported buying shares of Newcastle Investment Corp. (NYSE:NCT), which is a real estate investment trust investing in real estate assets including mortgage-backed securities, at prices of about $10.50. Because REITs are required to distribute much of their income to shareholders, they often pay high yields; Newcastle’s dividend yield is almost 8%. However, the financial crisis was very hard on the company: quarterly dividend payments are less than a third what they were in 2007 and the stock is about flat since the beginning of 2008. Any future problems in the real estate market would therefore be expected to cause a reduction in yield as well.

BRE Properties, Inc. (NYSE:BRE) is another real estate investment trust where we have picked up on an insider purchase; a Board member bought about 2,000 shares at an average price of $48.95 per share. BRE owns apartment buildings, and reported a 9% increase in funds from operations last year compared to 2011 (REITs are evaluated in terms of their funds from operations rather than net income because it allows depreciation to be added back; real estate assets often increase in value, rather than depreciating in line with traditional accounting standards). The company has also raised its dividend, though its yield is lower than Newcastle’s at 3.2%.

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