Cramer's 'Mad Money' Recap: 52-Week-High Pickup

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When a stock's price reaches its 52-week high and insiders keep buying, that's a sign that something big is going on, Jim Cramer told viewers of his "Mad Money" TV show Tuesday. "The stock is undervalued, and you need to make your move," he said.

Insider selling happens all the time for many different reasons, but insiders only buy for one reason, Cramer said: "They think their stock is going higher." The problem here is that of course insiders believe in their companies -- you need to discern which companies are the good ones.

Therefore, narrowing it down, Cramer said the rare case when investors should want to piggyback off the insiders is when they're buying their own stock at or near its 52-week high.

Not every insider has the guts to buy a stock that's at or near its peak, he said.

Buying at the high is like "putting your money where your mouth is" and saying, "My stock is way too cheap even here."

Cramer said he has two stocks that fall into this "rare" category. The first one he named was L-3 Communications (LLL Quote).

LLL is an archetypal high-tech defense contractor, Cramer said. Back in February it had two directors buy thousands of shares. First, Peter Cohen, a director, bought 15,000 shares, and then Robert Miller, another director, bought 45,000 shares. The highest they paid was $87.20; now LLL is trading at $93.91, Cramer said.