Thanks to encouraging economic reports U.S. stocks are now on the rise after a three-day drop, which included the Dow Jones’ first three-day losing streak of the year. Matt Kaufler, a Federated Investors portfolio manager, told Marketwatch that jobless-claims and retail sales numbers are encouraging signs of economic recovery. This inspired us to look for U.S. stocks with similarly encouraging signs of upside potential as indicated by significant insider buying over the last six months. Given their position within a company, insiders have valuable knowledge that others lack. When they decide to buy shares of their company, it indicates that they are bullish about the stock’s future and believe the stock to be undervalued. For this list, we screened for stocks with net insider buying in excess of 2% of share float over the past six months. We decided to narrow down that list by looking for stocks that are undervalued relative to the Graham Number. Created by Benjamin Graham, “the father of value investing”, the Graham Number is a measure of a stock’s maximum fair value. It is based on a stock's EPS and book value per share (BVPS). Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS) The equation assumes that P/E should not be higher than 15, and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued. The List Do you share insiders’ optimism towards these stocks? Use this list as a starting point for your own analysis. Analyze These Ideas: Getting Started: Access a performance overview for all stocks in the list 1. Air Transport Services Group, Inc. ( ATSG): Provides aircraft, airline operations, and other related services primarily to the shipping and transportation industries. Market cap at $417.87M, most recent closing price at $6.47.