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Stocks that Gurus and Insiders Are Buying: RCL, WLL, MCRL

September 27, 2011 | About:
Holly LaFon

Holly LaFon

254 followers
"Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise." – Peter Lynch

GuruFocus tracks the stocks that both Gurus and insiders are buying. These are stocks which the most gurus bought along with insiders, with purchase of more than 1,000 shares: Royal Caribbean Cruises Ltd. (RCL), Whiting Petroleum Corp. (WLL) and Micrel Inc. (MCRL).

Royal Caribbean Cruises Ltd. (RCL)

Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, and Royal Celebrity Tours. Royal Celebrity Tours operates cruise tour vacations in Alaska utilizing the world's largest glass-domed railcars.

In the second quarter, five gurus bought or added to their position in this stock. Five unique insiders bought their company’s stock in the second quarter.

The line’s total revenue increased to $1.8 billion in the quarter ended June 30, 2011, from $1.6 the quarter ended June 30, 2010, primarily due to a 6.6% increase in capacity and a 3.8% increase in net yields. For the full year 2011, the company expects a 7.6% increase in capacity. Net income increased significantly in the same time period, to $93.5 million from $53.7 million, with earnings per basic share up to 43 cents from 25 cents.

Three ships the company has on order will add an additional 9,950 berths to its fleet at a cost of $2.7 billion, of which it had deposited $294.8 million as of June 30, 2011. The three ships are expected to enter service in the third quarter of 2011, fourth quarter of 2012 and third quarter 2014, respectively.

Longer term, free cash flow has remained negative since 2006, but was up from a loss of $1.6 billion in 2009 to a loss of $524 million in 2010. Net income fell to their lowest in a decade at $162 million in 2009, and increased to $547 million, their lowest since 2004, in 2010.

Royal Caribbean Cruises Ltd. has a market cap of $4.77 billion; its shares were traded at around $21.99 with a P/E ratio of 8.5 and P/S ratio of 0.7 and P/B ratio of 0.6, all well below the industry average of 14.0, 1.7, and 1.7, respectively. The dividend is 1.8% and it had an annual average earnings growth of 4.4% over the past 10 years.

Four out of five people (80% of U.S. adults) have never experienced a cruise, mainly because few have discovered the many advantages of this type of vacation, the world’s top cruise line CEOs told USA Today at a roundtable in September. Therefore, they believe, the market for their vacations still has significant room for penetration. The average cruiser is 46 years of age, with an above-average ($93,000) annual household income, according to Cruising.org. U.S. Census Bureau statistics show that 0.81% of the population fit this category in 2003.

Whiting Petroleum Corp. (WLL)

Whiting Petroleum Corporation, a Delaware corporation, is an independent oil and gas company that acquires, exploits, develops and explores for crude oil, natural gas and natural gas liquids primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast and Michigan regions of the United States.

In the second quarter, three gurus bought or added to their positions in this stock: Ken Heebner, Lee Ainslie and Ron Baron. Two insiders bought stock of their company in the second quarter.

Whiting Petroleum reported its second-quarter earnings on July 27, 2011 compared to the same period of 2010. Production was essentially flat (daily average production rate of 64,120 compared to 64,600 barrels of oil). Discretionary cash flow, however, totaled a record $313.3 million, a 37% increase, due primarily to a 29% increase in its realized oil price (net of hedging). Net income increased to $120 million from $72 million, or $1.02 per common share from $0.71 per common share.

The company has increased its cash flow each year from 2008, from a $128 million low, to $82.7 million in 2010. The company’s total liabilities reached a 10-year high in the second quarter at $2.5 billion, and the company has approximately $233 million in cash on its balance sheet. Its operating margin is at 66.4%, a 10-year high, and gross and net margins have remained fairly stable.

Whiting Petroleum Corp. has a market cap of $4.31 billion; its shares were traded at around $36.69 with a P/E ratio of 11 and P/S ratio of 2.8. The company had an annual average earnings growth of 3.5% over the past 5 years.

Micrel Inc. (MCRL)

Micrel Inc. is a leading global manufacturer of IC solutions for the worldwide analog, ethernet and high bandwidth markets. The company's products include advanced mixed-signal, analog and power semiconductors; high performance communication, clock management, ethernet switch and physical layer transceiver ICs. Company customers include leading manufacturers of enterprise, consumer, industrial, mobile, telecommunications, automotive, and computer products.

Four gurus bought Micrel stock in the second quarter of 2011: Arnold Van Den Berg and George Soros. Six gurus bought share of their company in the second quarter.

Micrel’s second quarter 2011 revenues increased 1.5% to $68.5 million from $67.5 million sequentially, primarily due to increased demand in the high-speed communications end market and a resumption of more normal shipment levels to a Korean wireless handset and consumer electronic device manufacturer which had moderated product deliveries during the previous quarter. The sequential increase in revenues was less than expected primarily due to lower than expected demand in the industrial end market.

Over the past decade, Micrel’s revenue has seen modest improvement, from $218 million in 2001 to $297 million in 2010. EBITDA and net income are at their highest levels in 10 years, at $74.97 million and $50.70, respectively. Operating margins have also reached a 10-year peak at 25.2%, and gross and net margins have remained fairly steady.

Micrel Inc. has a market cap of $607.5 million; its shares were traded at around $9.77 with a P/E ratio of 12.7 and P/S ratio of 2. The dividend yield of Micrel Inc. stocks is 1.6%, and it has had an annual average earnings growth of 7.1% over the past five years.

On Aug. 29, 2011, Micrel unveiled its new family of pre-bias safe, high power density integrated synchronous buck regulators, which have a 95% efficiency while switch at high frequencies, utilizing very small external components. The applications can be used in servers, routers, 4G/LTE base stations, Blu-ray players, computer peripherals and FPGA/ASIC voltage supply. "High power density in small footprints combined with 95% efficiency offer terrific benefits in advanced applications," noted Doyle Slack, director of analog marketing, Micrel. "The MIC22x05 family saves significant BOM costs while setting a new standard for performance."

These are just three of the companies that both gurus and insiders are buying. To see the complete list, visit GuruFocus’ List of Double Buys.
  • CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
  • Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
  • Double Buys:: Companies that both Gurus and Insiders are buying
  • Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.

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