3 Stocks Insiders Are Buying

Whatever top executives may be saying about cautious optimism, recent trading records show most are cautious, period. In September, the dollar amount of sales by “insiders” — senior officers, board members and major shareholders — was 15 times the amount of purchases. That’s the second-most pessimistic ratio of the past 12 months, according to Trim Tabs, a research group. Just 31% of companies had more insider buyers than sellers over the past four weeks, according to Form 4 Oracle, which compiles insider data for subscribers. In the first three months of 2009, the average was close to 50%.

Those numbers bode poorly for the stock market in general because insiders tend to time sales and purchases well, studies show. But bosses are still bullish at the three companies listed below. They turned up on a recent search for companies with more insider buying than selling, measured in dollar amounts, over the past six weeks.

Less than a year ago, shares of Chico’s (CHS) could be bought for under $2. Now they’re $12 and change. The women’s clothier sells chiefly to baby boomers. Like most investors, they’ve suffered sharp declines in wealth over the past year. Unlike most, however, baby boomers are at or nearing retirement, so they’ve been especially quick to cut spending. In its fiscal year ended Jan. 31, 2009, sales for Chico’s shrank 8% and profits disappeared. Management cut expenses and tightened inventories while continuing to invest in pockets of growth for the company, like direct-to-customer sales and its Soma collection of sleepwear and skimpies. This fiscal year, the company has returned to profitability and sales are expected to increase 3.5%. Shares now sell for 1.4 times sales, more than twice the price of the average clothing seller. Pamela Quintiliano, an analyst with the U.S. arm of Auriga, a Madrid investment bank, initiated coverage of the stock on Oct. 7 with a “hold” recommendation. “The company is firing on all cylinders,” but much of the good news is already reflected in the stock price, she wrote in a note to clients. Two board members recently staked $127,000 on shares.

Based in Oklahoma City, SandRidge Energy (SD) drills for fossil fuels in the gas-rich West Texas Overthrust, the Cotton Valley Trend in East Texas and along the Gulf Coast in Louisiana. It owes plenty — nearly $2.2 billion, vs. a stock market value of $2.4 billion — and revenues have plunged this year on a decline in oil and gas prices. Shares in June 2008 topped $65 apiece. Today they sell for $14. But operating expenses are down, and oil and gas prices are rising. Three months ago, analysts expected the company to earn 50 cents a share this year. Now they foresee 80 cents a share. A pair of directors spent just over a half-million dollars on stock in late September, paying $12 a share.

September F.B.I. background checks for guns were up 12% year-over-year, suggesting a continuation of strong sales. Second-amendment enthusiasts are believed to be stocking up on firepower over fears that a political shift to the left in Washington foretells the passing of antigun legislation. Analysts say fierce buying of personal protection guns has given way to rifles and such in time for hunting season. That’s a promising sign for Cabela’s (CAB), the world’s largest seller of hunting, camping and fishing gear. Its sales are expected to grow modestly this year, while those of many retailers are shrinking. The company owes little and trades at less than 12 times earnings. A board member spent more than a million dollars on stock shortly before Labor Day.