Insiders at many companies tend to take a simplistic view to their own company’s stock. If the business outlook is bright but the company’s shares lose value, they tend to become knee-jerk buyers.

#-ad_banner-#Indeed in any solid market pullback, you’ll see insider buying activity surge. The problem with such a response: The market can grind even lower, pushing share prices lower than the prices paid by insiders. For the rest of us, such pullbacks are a gift. They point the way towards bullish insider sentiment and allow us to buy in at a discount to what the insiders paid. Here’s a look at three stocks that can now be bought at an even better price than insiders recently paid.

Terex Corp. (NYSE: TEX)

A range of insiders began acquiring stock in early August, when shares stood at $42. The pace of buying activity picked up in recent days, as shares drift down to a 52-week low of $32. Frankly, the earlier insider buying was premature, as Terex lowered Q3 guidance in mid-September. The company is seeing a slowdown in demand for its cranes and construction equipment in various emerging market economies. Terex is known as a “late cycle play,” as business conditions tend to strengthen when economies have clearly moved out of their post-recessionary phase. Indeed most of the world is still feeling tentative these days.

Still, business conditions are far from lousy. Analysts now think Terex will earn roughly $3 a share next year, down from a forecast of $3.60 a share 90 days ago. Notably, as the global economic cycle strengthens, peak earnings could approach $4 a share or more, in 2016 and 2017. The recent slide into the low $30’s creates an appealing entry point from a price-to-earnings perspective. Analysts at Morningstar, who peg fair value at $39, note that “Terex has transitioned from a bloated industry consolidator into a leaner operator, and its profitability should continue to climb as end markets rebound.”

Prospect Capital Corp. (Nasdaq: PSEC)

Roughly six weeks ago, my colleague Andy Obermueller, who writes StreetAuthority’s Game-Changing Stocks newsletter, discussed the impressive dividend yields at a group of business development companies (BDCs).

Topping the list was this BDC, which sports a rock-solid 12.7% yield.  What Andy didn’t mention is that Prospect Capital has been on the receiving end of an extended phase of insider buying, which began back in 2012, at prices in the $10.25 to $11.25 range. Shares have now fallen below the bottom end of the insider buying range. If history is any guide, that’s likely to lure insiders back into another round of buying.

Kindred Biosciences, Inc. (NYSE: KIN)

The recent market weakness for small caps has been especially tough on biotech stocks. These are seen as especially speculative stocks at a time when investors are in a “risk-off” mode. Insiders at Kindred Bioscience likely wish they had seen the market weakness coming. A pair of them started acquiring large blocks of stock in late August and have bought roughly $1.5 million in stock since then, at an average purchase price of $10.80.

In recent days, shares have moved below the $10 threshold.

Shares of Kindred, which focuses on veterinary medicine, moved above $25 earlier this year, but slumped badly when a key, lead drug, CereKin, produced weak clinical testing data. The drug had been aimed at treating animals that suffer from osteoarthritis. The good news: Kindred has a pair of other promising drugs that are being tested and if approved could reach the market in 2015. The drug Atokin targets canine dermatitis and SentiKin treats post-operative pain in dogs and cats.  The company also has several other drugs in earlier-stage clinical trials.

Unlike many biotechs that may be vulnerable to a freeze in capital markets when fresh money is needed, Kindred has more than $100 million in cash to pursue its trials. The quarterly burn rate is less than $10 million, suggesting minimal dilution risk in coming years.

Other stocks with solid insider buying clusters, which can now be bought for yet lower prices, include:
— Rexx Energy (Nasdaq: REXX)
— Hologic (Nasdaq: HOLX)
— Intevac (Nasdaq: IVAC)
— South Jersey Industries (NYSE: SJI)
— New Mountain Finance (Nasdaq: NMFC)
— Curis (Nasdaq: CRIS)

Risks to Consider: The standard caveat for insiders always applies: insiders are lousy market timers, and their buy signals should be seen as a long-term guideposts and not short-term trading catalysts.

Action to Take–> The market has come under fresh pressure in recent days and weeks, and investors need to be sure that their research targets possess clear value metrics, or other shows of confidence. Large blocks of insider buying is one of those markers that investors should monitor, as it helps confirm that the forward outlook remains intact. Terex, Prospect Capital and Kindred Biosciences reflect a wide range of business models and all three hold appeal. Terex appears poised for better results into the middle of the decade as we reach the later stages of the economic cycle. Prsopect Capital holds great appeal for its rich dividend yield, which has been pushed higher as the share price moves lower. Capital appreciation, along with that dividend, may produce a 25% total return for investors over the next 12 months.

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