This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Lit Fuse: Insider Buying in Energy

NEW YORK (TheStreet) -- Unless you're buying a company's shares for income and a worthwhile dividend you're most likely buying because you believe the stock has significant upside growth potential.

There are many metrics and gauges that help us determine when a stock is a good value and has been unjustly overlooked by the investment community.

Some people listen to financial analysts, some receive information from their brokerage firm, and many rely on their own experience, research and instincts.

Those are all important ways that help us to find value in whatever asset class we want to invest in. Yet we also need to ask some important questions, especially when it comes to the shares of companies we're considering.

Who is most likely to know the details of the financial condition of the company? Who spends each day guiding the decisions, knowing the business prospects and managing the expectations of the shareholders?

Which individuals know the competition? Who is more likely to know the prospects for the industry sector that this company, the one you're considering investing in, is a part of?

The answer is the insiders who work for that company, especially the operating officers who have to make the big decisions on a day-to-day basis.

When they're willing to invest a meaningful amount of their net worth in their company's stock they're showing shareholders that their financial interests are aligned with them.

This doesn't always mean that a company's share price is ready to turn around and head higher. It also doesn't mean that the officers and directors know where the stock's price bottom resides.

It usually does mean the insiders believe the stock is worth more than the market is currently valuing it. With their inside awareness of the company's current operating environment and earnings they can often see far enough down the road to know that the stock will eventually be more fairly priced.

Ready to Energize

One sector where a number of quality companies are not currently being treated with much enthusiasm or respect is the energy sector. Many of these companies are trading at such low valuations that if you didn't know the ins and outs of how they make money you wouldn't realize that the stock should be priced more generously.

Stock quotes in this article: MDR, SD, PSX, COP 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs