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Joyeux Noël! Another Insider Buy at Joy Global

The news just keeps getting better for shareholders of mining equipment maker Joy Global (NYSE:JOY). (At least, if you believe that insider buys mean good things for the company they’re buying).

Earlier this week, we highlighted significant insider purchases of Joy stock by the company’s CEO and CFO — and more generally, the pickup in insider purchasing over the past three months. That trend gained further strength today, with the filing of a “Form 4” with the SEC, confirming that company director Richard Loynd has purchased an additional 5,000 shares of Joy stock for his own account.

The purchase, which apparently took place on June 8 (three days after the CEO and CFO made their buys), was made at a share price of $38.51.

What does it mean to you?
Joy shares opened at $40.28 today, of course. This means Mr. Loynd is now sitting on a $8,850 paper profit, but what does it mean to you? Now that the shares have jumped, has this train already left the station?

Not necessarily. At today’s valuation of 14.5 times earnings, Joy shares aren’t as cheap as they were at the beginning of the week, but they’re still not horribly expensive. But even so, investors may be better off taking their cue from Joy insider buying, by buying shares of… someone other than Joy.

Peer mining equipment maker Caterpillar (NYSE:CAT), for example, costs only 14.1 times earnings — cheaper than Joy. And according to analysts who follow the company, Caterpillar is expected to grow its earnings at better than 11% annually over the next five years — versus less than 7% annualized profits growth projected for Joy.

Topping it all off, Caterpillar pays its shareholders a whopping 3.3% dividend yield, which is half-again as big as the 2.1% dividend that Joy shells out. Long story short, if you’re encouraged by the fact that insiders are still snapping up Joy shares, your best bet may be to follow their lead… all the way over to Caterpillar.


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