Buy Low with Insiders: 3 Battered Stocks that Appear Poised for a Rebound

Lannett Company Inc. (NYSE:LCI) had eight different insiders purchase shares last week, so let’s take a look at the most noteworthy purchases. To begin with, Chief Executive Officer Arthur P. Bedrosian snapped up 4,500 shares last Friday at a cost of $24.91 per share, lifting his overall holding to 618,016 shares. Kevin R. Smith, Vice President of Sales and Marketing, bought 1,500 shares on the same day at $24.75 apiece and currently owns 15,735 shares. Moreover, Director Jeffrey Farber acquired 5,000 shares last week for $24.48 each, enlarging his stake to 2.42 million shares. Vice President of Finance and Chief Financial Officer Martin P. Galvan purchased 3,000 shares at a price of $24.65 per share and now holds a 38,397-share stake. Lastly, 2,500 shares were bought at $24.57 each by Director Albert R. Paonessa III, who currently owns a mere 3,030 shares.

Assuming that exploding insider buying generally precedes a period of market outperformance, one could consider this stock an attractive long-term investment. It should be noted that the shares of Lannett are nearly 58% in the red over the past 12-month period, which fully explains the exploding insider buying. Just recently, Canaccord Genuity cut its price target on the stock to $28 from $46 and maintained its ‘Buy’ rating on it, a move that followed the release of the company’s financial results for the second quarter of fiscal year 2016 that ended December 31. Lannett reported earnings that were in-line with analysts’ expectations, whereas its top-line results missed estimates. However, Lannett appears to be heavily undervalued at the moment, considering its forward P/E multiple of only 5.91, compared to the forward P/E ratio of 15.87 for the S&P 500 Index. Joel Greenblatt’s Gotham Asset Management owned 1.40 million shares of Lannett Company Inc. (NYSE:LCI) at the end of September.

Disclosure: None