Building a Position in Jacobs

My insider-based system has had me committing more capital to this market over the past two weeks. My commitment is being made grudgingly, however.

It's not just that I don't buy into the concept that any deus ex Obama can save us from more serious fallout from the financial crisis. I'm just not convinced yet that the recent rally is proof that fundamentals are finally starting to matter again. I certainly hope that's the case, but I can't shake the feeling that all the recent bullish price action could just as easily be attributed to stocks merely bouncing technically off of years-old supports.

Still, stocks have traded impressively well recently in the face of the sort of awful economic news that I expect to continue. That's a definite positive. As a result, indices have managed to close just above important technical resistance levels. If this test of resistance proves successful, an additional double-digit percentage surge is technically possible. I certainly wouldn't want to miss that sort of move. But my fear is greater than my greed, and staying nimble is my mantra in any rally we are fortunate enough to muster.

One of the stocks I've bought into recently is Jacobs Engineering (JEC - commentary - Cramer's Take). Jacobs specializes in technical, professional and construction services. It's a 60-year-old global firm with $6.4 billion in market capitalization. The firm's shares have been on fire since December, lit up with most other infrastructure-related shares on excitement regarding President-Elect Obama's stimulus plans.

But Jacobs is still at nearly half the price it traded for at its peak. After hitting a high of $98 in mid-May of last year, the stock dropped over 70%, to just $26 in late November. Insiders, who had traded little in the open market during the stock's months of weakness, suddenly pounced. In all, November saw nine vice presidents buying nearly $950,000 worth of Jacobs' shares for between $27.08 and $37.46 each.

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At the time of publication, Moreland was long JEC, although holdings can change at any time. Jonathan Moreland is director of research and publisher of the weekly publication InsiderInsights, founder of the Web site InsiderInsights.com and the director of research at Insider Asset Management LLC. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, Moreland appreciates your feedback; click here to send him an email.