Heavy insider buying has Spar Group (NASDAQ: SGRP
) and Alphatec Holings (NASDAQ: ATEC
) among the top gainers. With the financial strength of each stock, the profits should continue.
Spar Group is a business service provider in marketing and merchandising with very strong financials. As the economy has rebounded, its performance has improved as more is being spent on advertising. Earnings per share quarter to quarter is now up almost 570 percent. For the year, earnings are up more than 307 percent. The price to earning ratio is 11.37, far below the Standard & Poors' 500 average of 17.7. The stock is moving above its 20 and 200 day moving averages.
Insiders now own 54.53 percent of Spar Group, which is very high. Very low is the short float percentage, at only 0.21 percent. There is no long term debt. The relative strength index is at 50, far beneath the 70 standard for a stock to be considered overbought.
Alphatec Holdings is a medical technology company focused on products for the surgical treatment of spine disorders. Earnings per share for Aphatec are up 900 percent this year. For the next 5 years, earnings per share are expected to increase by almost 70 percent. Alphatec is trading above its 20, 50 and 200 day moving averages.
Leslie H Cross, a director of Alphatec, just bought 20,000 shares at $3.27. Yesterday it closed at $3.58. Institutions own almost 40 percent of Alphatec, which is a show of strength. The short float is a low 3.70 percent.Alphatec has a relative strength index of close to 57.70.
Peter Lynch, the legendary mutual fund manager, once observed that there are many reasons for insiders to sell. Funds could be needed for a new house, college tuition, etc.... But there is only one reason for insiders to buy; they believe strongly enough that the stock price will rise more than the returns offered by other investments. If not, there would be no reason to waste their money on an underperforming investment. Small cap investors should follow the lead of the insiders buying at Spar Group and Alphatec Holdings.