Three Stocks With Low P/E Ratios That Insiders are Buying

One of the most common tools used to asses if a stock is trading at a high or low valuation is it price-to-earnings ratio (P/E). However, ratios vary enormously amongst different sectors of the economy. That is why, in order to know if a stock is overvalued or undervalued, one must compare its valuation ratios with those of its industry peers.

A low P/E ratio can imply that the market expects the company in question to underperform the wider market. However, it can also mean that the stock market has not yet caught up with the real value of the company, and the price is due for a correction, sooner or later. So, let’s take a look at three stocks that insiders have been buying (which can be interpreted as a bullish signal), which also trade at low P/E levels in order to elucidate if they stand as good investment options.

First off is ADT Corp (NYSE:ADT), a $5.4 billion market cap provider of electronic security, interactive home and business automation and related monitoring services. The company has already seen nine of its insiders buy its stock this year. Most recently, Naren Gursahaney, Chief Executive Officer, acquired 10,000 shares of Common Stock. On May 2, Mr. Gursahaney purchased 6,176 shares for $30.35 each, and another 3,824 shares for $30.296 each. He now owns 263,281 shares of the company, worth about $8.1 million. Another notable purchase this year was that of ADT’s CFO, Michael Geltzeiler, who acquired at the begging of March, 10,000 shares for prices ranging from $29.56 per share, to $29.60 per share. He now holds 31,900 shares of the company.

ADT Corp (NYSE:ADT)

Fundamentally, ADT looks appealing. Its stock trades at 16.5 times the company’s earnings, versus an industry average of 29.4x, while it boasts industry leading margins and above average returns on equity and assets. However, above-average debt levels are concerning, so its financial standing must be further analyzed.

The second company in this list is MedAssets, Inc. (NASDAQ:MDAS), a $1.37 billion market cap provider of technology-enabled products and services. Although insider purchases hadn’t taken place for a few years now, this changed on May 2, when Halsey R Wise, Board Director, started a position in the stock with 8,950 shares of Common Stock, for which he paid prices ranging from $22.17 per share to $22.40 per share, inclusive. Once again, MedAssets trades below its industry average valuation of 62.1 x P/E, at 49.3x. Its valuation becomes even more attractive when one looks at the company´s P/B ratio (2.8x vs. an industry average of 15.6x) and P/S ratio (2.0x vs. 4.7x). However, below average margins, returns and growth projections are three major sources of concern.

Finally, there’s Unifi, Inc. (NYSE:UFI), a $421 million market cap diversified producer and processor of multi-filament polyester and nylon yarns. Fundamentally, the company looks attractive; above average returns and net margin, low debt levels and an industry leading growth history (over the past three years), make of this stock a good pick. In addition, the company trades at 16.3x P/E, compared to an industry mean of 27.9x, and is also sold at a discount valuation (compared to its peers) in relation to its sales and book-values.

Over the past few days, two Board Directors have been purchasing the company’s stock. Kenneth Langone procured 1,700 shares on May 2, and 1,700 shares on April 30. He now holds more than 1 million shares, through direct (986,629 shares) and indirect holdings. In addition, George R. Perkins Jr., bought, on May 1, 9,000 shares of Common Stock, for which he paid an average price of $21.756 per share. He now holds 354,380 Unifi shares.

Disclosure: Javier Hasse holds no position in any stocks mentioned

Recommended Reading:

Two Technology Stocks That Insiders Love

Insiders are Fond of Simon Property Group Inc (SPG) and Aaron’s Inc (AAN)

Insiders are Buying Sun Bancorp Inc (SNBC) and Famous Daves of America Inc (DAVE)

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!