Last week, the market experienced some intriguing insider purchases by a number of big-name companies. The challenge now is to determine which of these buys is a good indication that the stock is undervalued and which of these buys may have occurred at too steep of a price. Check out four stocks that insiders are buying right now, and what these buys could be telling us about their future potential.
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Chevron: The High-Octane Buy
On Tuesday of last week, a director at Chevron (NYSE:CVX) pulled the trigger on an indirect purchase of just under $1 million worth of CVX shares. The buy occurred at a purchase price of $96.43. Year-to-date, shares of Chevron have climbed 8.2%.
Although Chevron is already trading at a 52-week high, this stock has become an interesting play in light of oil prices rising north of $85 per barrel. It is now expanding its reach in the energy markets with its $4.3 billion acquisition of natural gas company Atlas Energy (Nasdaq:ATLS), which was completed last week. CVX may also be attractive to income investors given the stock's dividend yield of 3%.
On Monday of last week, a director for AOL (NYSE:AOL) made a direct purchase of more than $260,000 worth of AOL shares. The buy took place at a price of $22 per share. Shares of AOL have experienced a decline of 7.3% so far this year.
Boeing: Preparing for Takeoff
Last Tuesday, a director for Boeing (NYSE:BA) made an indirect purchase of a little more than $300,000 worth of BA shares. The director paid $71.56 per share. Shares of BA have gained more than 11.9% in 2011.
Last month, Boeing reported its Q4 results in which EPS dropped 10.9% versus its year-ago quarter as revenue and operating margins were pinched. The company has encountered some hiccups along the way, but is aiming to deliver on its 787 in Q3. Boeing is presently sitting on a commercial airplane backlog estimated to be worth $256 billion.
Nalco: Chemical Reaction
One other stock that saw some notable insider activity last week was the chemical company Nalco Holding (NYSE:NLC). On Tuesday, two separate directors purchased a combined $300,000 worth of NLC common shares. The purchases occurred at $26.79 and $26.86 per share. Year-to-date, shares of Nalco have fallen 15.3%.
The Bottom Line
Last week presented an interesting mix of insider transactions given the fact that two of these stocks have been on the rise so far in 2011, while the other two have pulled back. These purchases may serve as a vote of confidence to existing shareholders, but potential shareholders are still advised to do their own due diligence before jumping on the bandwagon. (For related reading about insiders, see What Investors Can Learn From Insider Trading.)
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