One of my favorite ways to look into stocks to buy now is to check out what the insiders are getting into.
Insider buying and selling of the shares of the companies they control has often been a way to get excess profits in your portfolio.
Insiders can often be early as they are buying on anticipation of an improvement in business conditions and not necessarily market movements but they are often correct.
Insiders aren't buying stocks for short-term profits, they have long-term plans. Insiders buy with a long timeframe in mind, but they are also looking for huge returns over that time.
Investors interested in the same outcome should pay attention when insiders act.
Recently, there have been several insider buys worthy of attention for individual investors looking for stocks to buy.
Three of the Best "Insider Buying" Stocks to Buy Now
"Insider" Stocks to Buy #1: Energy Moneymaker: Halcon Resources Corp. (NYSE: HK) is an independent oil and gas company operating in some of the key shale fields in the United States.
HK is down 35% over the past year, but at around $6 a share it looks like it has bottomed. There is a lot of insider and smart money betting that this stock rebounds and rewards investors with huge returns over the next couple of years.
The company operates in the Bakken oil field with locations in Montana and North Dakota; the Eagle Ford in Texas and the Utica/Point Pleasant Field in Pennsylvania.
About 82% of the company's production right now is oil and just 13% is the cheaper natural gas. The remaining 5% is natural gas liquids such as propane, butane and ethane.
The company has adopted a "drill baby drill" approach in spite of lower gas prices. Production rose more than 500% year over year in the first quarter of 2013 from the year before. Halcon has drilled dozens of new wells in the past year and is drilling more as we speak.
The company's bad side includes a large debt load, but Halcon is selling all assets considered non-essential to pay that down.
To some degree this company is a highly leveraged turnaround situation - one where insiders have a high degree of conviction that Halcon will succeed.
CFO Mark Mize recently opened his checkbook to pick up an additional 15,000 shares of the company. Charles Cusack, the Chief Operating Officer, purchased 20,000 shares last month.
They are not the only ones buying as the Canada Pension Plan Investment Fund just bought over $10 million worth of stock and legendary oil man T. Boone Pickens has also been buying.
"Insider" Stocks to Buy #2: Entertaining Profits: RLJ Entertainment Inc. (Nasdaq: RLJE) is an entertainment company that distributes content across a wide variety of mediums.
RLJ has 5,300 exclusive titles that are distributed via cable television and the Internet, and sold as DVDs. The company was founded by the former CEO and founder of BET Robert Johnson.
RLJ is very well-capitalized with strong management. The company believes it is small enough and flexible enough to stay on top of industry trends.
Currently it is exploring content delivery opportunities using Internet-driven search like YouTube. The company also has a market-leading position in the rights for British mysteries and dramas such as "Foyle's War" and "Poirot."
The stock has been hit hard this year and earnings have been below expectations. But insiders including Johnson have expressed belief they can right the ship in the strongest possible way.
Johnson recently announced a $2 million plan to buy shares and several other executives have been open market buyers of the stock.
Outsiders seem to like the stock as well as both Goldman Sachs and Wexford Capital continued to buy the stock in the first quarter of the year. A return to the earlier highs in this stock, hit about six months ago, would mean doubling in share prices.
"Insider" Stocks to Buy #3: Bank Bargain Hunter: Insiders at First Pac Trust Bancorp Inc. (Nasdaq: BANC) have been consistent buyers of the stock this year.
The bank has been transitioning to a full-service commercial bank, and it's been doing so by buying up other California banks at bargain prices. It just completed an acquisition of Private Bank of California and the combined operations now have assets of more than $3 billion.
Insiders seem to feel the new strategy will be a success. In addition to several directors both CEO Steven Sugarman and CGO Ronald Nicolas Jr. have been buyers of the stock in recent months, buying more than 20,000 shares and 9,000 shares, respectively. Total insider purchases in the last six months are more than 50,000 shares.
Currently trading around $13 a share, BANC is up 16% in the past year. The bank not only has the potential to recover back to the old highs of 2006 - near $30 a share - but it also yields more than 3.5% at current prices.
Want to follow the insider buying into more stocks to buy? Two Companies with Strong Insider Buying
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.