Top 10 Stocks With Big Insider Buying, Buybacks

Updated from 5:49 a.m. EST

One of the primary goals of Stockpickr.com is to allow everyday investors to see what the big guns are buying. Often times, we see a big-name investor loading up on a particular stock. This is usually a good sign because you know that person put a lot of time and due diligence into that process. Plus, high-profile investors have bankers, lawyers and consultants breaking down the business every which way imaginable.

The real icing on the cake, however, is when that same company announces that an insider has purchased a large chunk of stock or even better, the board initiates a new, large share-buyback program.

That's why each Thursday at Stockpickr we update the Top 10 Insider Purchases and Buybacks portfolio, featuring the stocks that in the last week had either big insider purchases or newly announced buybacks, as well as super-investors accumulating shares.

Amazon.com (AMZN Quote - Cramer on AMZN - Stock Picks) makes this week's portfolio. The Seattle-based online retailer announced a plan to buy back $1 billion in common stock over the next two years. The buyback plan replaces an April 2007 authorization worth $500 million.

Amazon also said its board authorized a debt-repurchasing program. The company may buy back all of its outstanding 4.75% convertible subordinate notes due next year, worth about $899 million, and its 6.875% convertible subordinated notes due in 2010, worth roughly $350 million, totaling $1.25 billion.

The company last month reported outstanding fourth-quarter and full-year earnings due mainly to strong international sales. In the fourth quarter, net sales jumped 42% to $5.67 billion, up from $3.99 billion in the same period last year, while net income rocketed 112% to $207 million, or 48 cents a share, vs. net income of $98 million, or 23 cents a share.

In 2007 free cash flow increased 143% to $1.18 billion. Sales for the full year jumped 39% to $14.84 billion while net income soared 150% to $476 million, or $1.12 a share, which was in line with Wall Street's expectations.

Analyst Mark Mahaney from Citi Investment Research likes Amazon and rates the stock a buy with a $97 price target. With Amazon shares trading at 5% free cash flow yield, he believes its healthy cash flow is one of the company's most attractive metrics and this new buyback adds to that case for Amazon.

It's also good to see a successful investor like Bill Miller buying Amazon shares. Miller, portfolio manager of Legg Mason Value Trust, has been the only mutual fund manager to beat the S&P 500 for the last 14 straight years (although that streak just ended in 2006). He also likes US Steel (X Quote - Cramer on X - Stock Picks), and he recently sold out of Amgen (AMGN Quote - Cramer on AMGN - Stock Picks).

We like that Amazon is in the portfolio of the Munder Internet Fund, which invests at least 80% of its assets in equity securities of the types of companies positioned to benefit from the growth of the Internet. The fund also holds shares of Digital River (DRIV Quote - Cramer on DRIV - Stock Picks) and Move (MOVE Quote - Cramer on MOVE - Stock Picks), an online company that helps consumers throughout the moving process.

So with Amazon, we have a buyback, record earnings, a buy rating and two successful investors into the stock. It may be time to log on to this Internet retailer.

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