Insider Purchases and Buybacks: CACH

During the uncertain times that we are facing these days, how do we decide which stocks to invest in? Cache (CACH - commentary - Cramer's Take) has just announced a buyback program, which usually signals a bright future for a stock, but I expect the stock to continue to feel the pressure of lower spending on retail due to a general economic slowdown. (On Stockpickr, you can see the rest of the insider trades and buybacks.)

Cache's board has approved the buyback of 500,000 shares. The latest authorization is in addition to the existing buyback program, raising the total number of shares authorized for repurchase to 2 million, or about 8% of the company's total outstanding shares as of Sept. 29. Cache spent $10.3 million to purchase 637,029 shares in the third quarter.

It's not only the board that sees value in the shares of the chain of women's apparel stores. We saw some active insider purchases as well in December. COO Thomas Reinckens bought 5,000 shares of the company at a price range of $10.35 to $10.95. CEO Brian Woolf purchased 7,000 shares at between $11.10 and $11.12. Adrienne Kantor, executive VP of design and merchandising, bought 5,000 shares at between $11 and $11.10.

In the third quarter, Cache's sales were up 1% at $60.6 million, while comparable sales rose 4%. Net income declined to $161,000, or a penny a share, and gross margins contracted to 45.7%. An increase in price markdowns to clear the summer merchandise exerted pressure on margins.

The company's sales have recently been suffering as well, with October same-store sales down 3% and November same-store sales down 4%. Cache said it would have to cut its fourth-quarter EPS guidance from the current projection range of between 47 cents and 49 cents.

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At the time of publication, Raznick had no positions in the stocks mentioned, although positions may change at any time.

Jason Raznick is president of Easy Stock Alerts and has been involved with the capital markets for several years. He has worked for Merrill Lynch, Dynamis and Tricap Holdings, a joint venture with Fortress Investment Group. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Raznick appreciates your feedback; click here to send him an email.