We found two companies with insider buying that Wall Street is virtually giving away, an insurance company and a small regional bank. Our Correct Call Calendar readers will find the bank story in today’s calendar.
American Equity Investment Life Holding Co. (NYSE:AEL) engages in the development and sale of annuities and life insurance products in the United States and the District of Columbia. The company underwrites annuity and insurance products, as well as collects renewal premiums on certain accident and health insurance policies.
Since March, 2 insiders have purchased 18,000 shares totaling $74,000. That doesn’t sound like much, but considering the C.E.O., Wendy Carlson, bucked up almost 20% of her salary, that says something. The fact that no insider has sold any stock in the last 6 months says something too.
AEL has been as high as $11.40 in the last year and closed trading last night at $5.21. AEL’s book value of $10 is much closer to its 52 week high than its current target price of $8. If American Equity were to trade up to its analysts’ consensus target price, investors would make 54%. Though we would prefer investors get the 92% if AEL can make it to its book value per share.
Based on AEL’s valuations, we can’t help but imaging this stock will be higher than $5.21 in the next 3-to-6 months. At $5.21, the insurance company trades at a forward P/E of just 3.21. That’s a bankruptcy or depression P/E. You think the C.E.O. would chalk up $50K if she were headed for the street? Throw in its PEG ratio of just .41 (remember the lower the better) and price to sales of .6 and you can see why we think AEL will reward Ms. Carlson and investors.
Suggested Closing Price Stop: $4.48
Our Calendar readers will find what we believe is the stronger of the two insider buying stocks in today’s Correct Call Calendar.
