The famous investor Peter Lynch once said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.” This is certainly a theory that seems to hold water, and with this maxim in mind, let us turn our attention to a few higher quality stocks on the TSX index that have recently seen a fair amount of insider buying.
Rogers Communications (TSX: RCI.B)(NYSE: RCI)
Despite mediocre earnings growth over the past year, this remains one of the top stocks in the Canadian telecoms space. There are a few reasons why a would-be investor may want to follow the crowd and get invested, from an increased 8.2% expected annual growth in earnings to a moderate dividend yield of 2.91%, (though new investors have only a couple of weeks to think about a purchase until the stock trades ex-dividend).
Rogers Communications carries a high percentage of debt on its books, though this level is coming down and is well covered by the company’s operating cash flow. A 23.7% return on equity over the next three years is expected to carry over from a past-year ROE of 24%, which is good news for investors who like to buy according to performance-based indicators.
Barrick Gold (TSX: ABX)(NYSE: GOLD)
This top-tier precious metals miner often tops the lists of must-have gold stocks. It’s been popular with insiders of late, with a high volume of shares getting scooped up. Currently selling at its fair value with a P/B of 1.4 times book, Barrick Gold has a healthy balance sheet and feels like it’s simply passing through the fair price zone on its way to overvaluation. In other words, this could be a lucrative capital gains play.
Saputo (TSX: SAP)
With yearly returns of just 7%, this wish-list dairy stock still managed to beat the industry. With a 19% discount off its fair value, Saputo still has a ways to go until it’s priced where it should be, meaning that the opportunity to cream some capital gains is moderately high.
A touch overpriced with a P/E of 23.4 times earnings and P/B of 3.3 times book, the main reasons to get invested in Saputo would be its notable market share, dividend yield of 1.44%, and positive 13.5% projected growth in earnings over the next one to three years.
Husky Energy (TSX:HSE)
A favourite of the “unloved” oil and gas crowd, this solid energy ticker boasts a positive track record in terms of earnings growth, with more than a 60% leap in earnings over the last 12 months. Though a slightly negative expected growth in earnings is in the cards, its combination of tasty dividends (see a yield of 3.71%) and undervaluation (it’s selling below book with a P/E of 9 times earnings) make for a compelling play in the energy space.
The bottom line
Roger Communications is somewhat overpriced, with a P/B of 4.3 times book; however, it remains arguably the best telecoms stock on the TSX index. Meanwhile, Barrick Gold’s dividend yield of 1.31% and significantly high 24.6% expected annual growth in earnings make for a solid gold play in the precious metals space.
