Top Stocks With Insider Buying, Buybacks

Large repurchases make CSX and Baxter stocks to watch.
By James Altucher ,

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) - Get Report

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) - Get Report

and

MasterCard

(MA) - Get Report

.

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)

. He also has a large position in

Biogen Idec

(BIIB) - Get Report

.

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.

Next on the list is

Baxter International

(BAX) - Get Report

. The health care giant on March 18 approved a new $2 billion stock-buyback plan to launch after the completion of the existing $2 billion program it launched in March 2007, which has less than $700 million remaining.

JP Morgan analyst Michael Weinstein reiterated his overweight rating on the stock. He said free cash flow would be up more than 20% in 2008 and the company is on solid financial footing right now. He expects that the company will increase its dividend and also look to be a player on the M&A market.

Fitch Ratings also reaffirmed its outlook on Baxter, noting that "Baxter will continue to improve profitability through improved product mix, continued cost controls and new product introductions."

It's also good to see the likes of

Maverick Capital

is invested in Baxter. This $10 billion hedge fund also holds positions in

Union Pacific

(UNP) - Get Report

and

Qualcomm

(QCOM) - Get Report

.

Another reason we like Baxter is because

Navellier & Associates

believes in the company. The $4.5 billion fund, run by Louis Navellier, also holds shares of

Lockheed Martin

(LMT) - Get Report

and

Apple

(AAPL) - Get Report

.

So with Baxter, we have a large buyback, a solid 2008 outlook and a well-known investor in the stock. That makes this stock a play worth considering.

For more stocks and analysis, check out this week's

Top 10 Insider Purchases and Buybacks

at Stockpickr.com.

For the 10 most recent portfolios, check out:

You can also review

Barron's Top Insider Purchases

from the prior week as well as Cramer's

"Mad Money" Buybacks

.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.

James Altucher is president of

Stockpickr

LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the

Financial Times

and the author of

Trade Like a Hedge Fund

,

Trade Like Warren Buffett

and

SuperCa$h

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;

click here

to send him an email.

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