5 Stocks Loved by Insiders and Institutions

With U.S. markets near all-time highs, finding stocks poised for future price and earnings growth is a difficult task. Who is best positioned to judge the future growth prospects of a company? Corporate insiders such as officers and directors, the old investing adage goes, since they have the most detailed understanding of the company's business and growth prospects. Similarly, institutional investors with large research teams are thought to have a better-than-average understanding of a company's growth trajectory.

The screen. We used Recognia Strategy Builder to search for U.S. stocks with a high percentage of institutional ownership and a high level of buying among corporate insiders. We began by setting a minimum market capitalization threshold of $10 billion to focus on larger, more established companies in the U.S. market. Next, we looked for companies that are loved by institutional investors. We selected companies with institutional ownership of at least 50 percent but no more than 80 percent. We also focused on companies with significant buying activities by insiders. Net insider shares bought is defined as total shares bought minus shares sold by corporate insiders such as officers and directors in the company's last reporting period. We focused on companies with at least 100,000 insider shares bought. Finally, to filter out any thinly traded companies, we focused on companies that have a 90-day average daily volume of at least one million shares. Here are the results.

Carnival Corporation is a British-American cruise company and the world's largest cruise ship operator. A Smarter Investor post in January highlighted the cruise line industry as a promising sector due to improved margins resulting from declines in the price of oil. In the past year, Carnival's stock has moved ahead by more than 25 percent. Carnival has a very high level of institutional ownership at 80.7 percent and had extremely high insider buying of over 40 million shares in the last reporting period.

Lowe's Companies, based in Mooresville, North Carolina, operates over 1,800 home improvement stores in the U.S., Canada and Mexico. It is the second-largest U.S. hardware chain behind Home Depot. The company has over 77 percent institutional ownership and had over 200,000 insider shares bought in its last reporting period. The company's stock has performed very well in the past year, rising 55 percent in the past 12 months. Although Lowe's does have international operations, 95 percent of its revenue comes from its U.S. operations. This makes the company relatively well-insulated from the foreign exchange woes that are currently affecting other multinationals as a result of the strong U.S. dollar.

Kellogg Company also makes our list with an 81 percent institutional ownership rate. There is added interest in food stocks such as Kellogg after the Heinz-Kraft merger in March. Many market watchers believe this sector is ripe for consolidation and that other mergers or acquisitions are possible. Kellogg is also aided by declining prices for commodities such as wheat that make up much of its operating costs.

FedEx Corp. also enjoys strong levels of institutional ownership and insider buying. The company has been in the news recently with its $4.8 billion acquisition of Dutch courier company TNT Express. This acquisition is expected to give FedEx an enhanced footprint in Europe and drive future European growth. FedEx is also enjoying good growth in its home markets and has seen strong stock appreciation over the past several years. The stock price is up 23 percent in the past 12 months and 81 percent in the past two years. Further growth of online retail sales should further boost FedEx's business in the coming years.

Yahoo Inc. also makes our list with an institutional ownership level of 73 percent. The Web portal and search giant has also seen significant insider buying recently with 200,000 shares purchased in the last reporting period. After years of decline, CEO Marissa Mayer has made strides to turn the company around and has seen some promising results with the company stock up 89 percent in the past two years.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Recognia Inc. in respect of the investment in financial instruments. Investors should conduct further research before investing.

Peter Ashton of Recognia is a blogger for The Smarter Investor. You can follow him and Recognia on Twitter at @Recognia_Peter and @Recognia.