Top Stocks With Insider Buying, Buybacks

Updated from 7:01 a.m. EDT

At Stockpickr.com, we keep track of the Top 10 Insider Purchases and Buybacks each week. Here's the perfect setup in my mind: insiders buying the stock, the company buying back its own shares and a super investor like Warren Buffett also making a bullish bet on the stock.

If I can get three out of three, I'm in heaven. If I can get two out of three, or even one out of three, I'm still pretty happy about the situation, particularly if the stock is cheap in other ways as well.

Each Thursday, we update the Stockpickr Top 10 Insider Purchases and Buybacks portfolio, featuring stocks that in recent days have had big insider purchases or newly announced buybacks as well as super investors accumulating shares.

CSX (CSX Quote) makes this week's portfolio. The Jacksonville, Fla.-based railroad operator recently initiated a new $2.4 billion stock-buyback program on March 17, upping its total stock-repurchasing capacity to $3 billion. This new buyback, which CSX expects to complete by the end of 2009, represents the power to repurchase about 15% of the company.

The rail transportation giant also said that it expects first-quarter and full-year earnings above Wall Street's expectations, citing strong pricing and improved efficiency. The company said it expects a profit of 74 to 77 cents a share for the first quarter and $3.40 to $3.60 a share for the year. This would trump analyst per-share earnings estimates of $3.05 for the year. The company also noted that it foresees 18% to 21% annual growth through 2010 vs. its previous estimate of 15% to 17% growth.

Following the announced buyback and guidance, several analysts -- including Bear Stearns' Ed Wolfe and Longbow analyst Lee Klaskow -- upgraded the stock.

Wolfe increased his 2008 earnings estimate by 17% simply due to the increased confidence management has in its plan as well as improving conditions in the coal and metal sectors.

Longbow's Klaskow said, "Clearly CSX is operating on all cylinders ... We believe the company is successfully executing on its turnaround, and it appears to us management is over the hump."

We also find CSX interesting because Atticus Capital owns the stock. Atticus Capital, a leading investment management firm with $13 billion of assets under management, also holds shares of Freeport-McMoRan (FCX Quote) and MasterCard(MA Quote).

Carl Icahn is another noteworthy investor in CSX. The activist investor has stepped up his stock-picking of late and recently won a battle with Motorola (MOT Quote). He also has a large position in Biogen Idec (BIIB Quote).

CSX has been involved in some vicious battles with a few different activist funds that are looking to replace CEO Michael Ward and also gain more clout on the board of directors. Ward spoke with our own Jim Cramer in late March and pointed out that CSX is near the top of both its industry and the S&P 500. He said, "I think all our shareholders are going to be well rewarded over time."

Cramer followed that up with, "I have 499 CEOs in the S&P 500 that I would get rid of before this guy." Given the recent upward guidance, the solid buyback plan in place, and the savvy investors in the stock, Cramer and the CEO do have a good point.

< Previous

1 2

Next >