(By Rich Beiglmeier) Accumulation precedes price is an axiom that has paid off well for investors. Every week, iStock uses a proprietary methodology to determine the cash in to and out of the stocks the preceding week.
To measure degree, we look at total accumulation/distribution as a percentage of market cap, $4 million is much different for a company with a $100 million market value versus a $100 billion.
iStock thinks you'll agree.
We found five companies of interest in today's results. In this article, we'll highlight the first with the rest to follow during the week.
By our calculations, Navistar International Corporation
) experienced $101 million in accumulation, or 6.26% of NAV's current market cap. That sort of buying can only come at the hands of institutions.
The interest in NAV was sparked by reports out of Germany that Volkswagen might be interested in purchasing the truck manufacturer. The news pulled in the money and pulled Navistar's price off of the mat, from $22.33 change to today's $28 and change.
Investors might want to see how this plays out as activist NAV investor Carl Icahn recently pushed Navistar to merge with U.S. heavy truckmaker Oshkosh Corporation
). The Wall Street Journal reports that Icahn increased his stake by 883,200 shares last Thursday.
Let iStock throw a third name at you, Caterpillar Inc.
). The two companies have been working together since, joining forces to create a new truck manufacturing company called NC(2) Global.
Things could be just about ready to heat up.
If either Oshkosh or Volkswagen is interested, they'll be getting NAV on the cheap.
The company's shares have been as high as $58.50 in the past 12 months and have deep value characteristics. The current P/E stands at 1.55 and the stock is valued at 14 cents for every dollar Navistar does in sales. Meanwhile, NAV's enterprise value stands at $5.76 billion versus its market value of a little less than $2 billion.
By any of the above measuring sticks, Navistar has plenty of headroom for potential bids. While we don't feel Navistar warrants bids at more than double the current price, iStock believes a price between $50 and the year high would be attractive and likely approved by shareholders.
Fifty bucks would be a 73% premium from today and value Navistar International Corporation (NAV) at 2.7 times current earnings, a price to sales of 24 cents on the dollar, and an enterprise value of $3.4 billion. All of which would still represent a major discount for CAT, OSK or Volkswagen.