Look for Insider Activity
Last week, I took a look at companies that traded below tangible book value and had recent insider buying. Today, am looking for companies where insiders are buying and the shares are cheap on another of my favorite valuation metrics.
Enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA), or EV/EBITDA, is a metric that many of my private equity and leveraged buyout (LBO) friends tell me is their main search criteria. It measures that value of the company based on all capital debt and equity that is invested net of cash balances compared to how much cash the company is generating. EV/EBITDA allows for cross industry comparisons and also gives a clear picture of how much leverage can be used to finance a transaction. The lower the number, the more attractive a takeover candidate a stock may be for leveraged financial buyers of the company....543 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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