While off for the month, the
Israeli voice-over-internet-protocol (voip)
teleco magicJack VocalTec (
) is rising again in recent action. Investors should take note
that insider buying is helping fuel the rise.
Year to date, VocalTec is up 76.06%, while the Standard &
Poor's 500 Index has increased by 11.40% for 2012. Over the last
month of market action, VocalTec fell by 0.37%, but like
Hannibal, it has risen over the last week, soaring by 7.37% on
The recent insider buying is a bullish sign for VocalTec.
Investing legend Peter Lynch has stated there are many reasons
for insiders to sell stock, including the need to raise capital
to buy a home, or to pay tuition. Insider selling could also be
part of a pre-planned program to diversify an individual's
financial holdings. But according to Lynch, who guided the
Fidelity Magellan Fund to annualized returns of 29.02%
from 1977 to 1990, there is only one reason for an insider to buy
the stock of a company: the expectation that the share price will
continue to rise.
At VocalTech, Gerald T. Vento, a director of the
company, recently bought at 22,000 shares at $23.07 each.
With this buy, Mr. Vento increased his stake by 26.99% to 103,500
shares. Insiders now own close to 40% of the shares of VocalTec,
which is very bullish.
Also very positive for VocalTec is the high level of
institutional ownership at nearly 60%. For an institutional
investor such as a mutual fund or pension fund, to invest in
VocalTec is a very powerful show of strength for the company as
its market cap is just over $500 million.
The balance sheet and income statement of VocalTec support
this insider and institutional buying. For the next year,
earnings-per-share growth is expected to rise by almost 30%, and
the gross margin by 53.66%. The forward price-to-earnings ratio
VocalTec is also viewed very positively by the Wall Street
analyst community. Now trading around $24.35, the mean analyst
target price for VocalTec over the next year is $26.50. The mean
analyst rating is very bullish at 1.50 (5 being the worst and 1
the best). The trend is definitely the friend of
VocalTec shareholders as it's trading above its 20-day,
50-day and 200-day moving averages.