Jack Adamo looks to Novatel Wireless (NASDAQ: NVTL) as a new buy recommendation. In his Insiders Plus newsletter, he assesses the firm's newest products and recent insider buying.

"Novatel provides wireless broadband access solutions for the mobile communications market worldwide.

"The company offers third generation (3G) wireless PC card and ExpressCard modems, embedded modems, USB modems and other fixed-mobile convergence solutions. It also provides many related support services.

"Novatel recently pulled back from a huge run-up to a near-term high of $14 after announcing a mixed shelf-offering. The market did not like the possibility of earnings dilution from more shares. 

"However, the thing that caught my attention with Novatel lately is that, despite the big rise in price this year, Insiders exercised more than 153,000 options and have not cashed a single one. I pay more attention to this sort of activity nowadays than regular Insider buying. 

"The latter is very often public-relations motivated. The exercises without sale are not watched by most analysts or the public and have no PR value.

"Also, the option owners have to pay tax on the imputed gain upon exercise; when they don’t even sell enough stock to pay the taxes, that’s usually a strong indication they expect the stock to continue to rise.

"The story in a nutshell here is that the company has come out with a battery powered device that instantly generates an Internet hotspot almost anywhere. The device has been extremely well received.

"Meanwhile, the shares trade at a very pricey 33-times next year’s expected earnings, but there’s a good chance earnings will significantly beat expectations. In any case, the projected growth rate justifies the price, if it can keep it up for even one more year."