Top 10 Stocks With Major Insider Buying

So we have all the right ingredients for CVS-Caremark: an enormous buyback, solid earnings and guidance and highly regarded fund managers who own the stock.

Finally, let's take a look at L-3 Communications(LLL Quote). This is another stock we like not only because of insider buying but also because it hammers home a point Jim Cramer likes to make whenever he gets the chance -- as he did on a recent Mad Money show:

When a stock's price reaches its 52-week high and insiders keep buying, that's a sign something big is going on. The stock is undervalued, and you need to make your move.

Not every insider has the guts to buy a stock that is at or near its peak. But when you see this happening, you know those insiders buying at those levels are putting their money where their mouth is and saying, 'My stock is way too cheap, even here.' L-3 Communications falls into this rare category. L-3 Communications is an archetypal high-tech defense contractor. It had two directors buy thousands of shares this past February. 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; L-3 Communications is now trading at $93[-plus].

At the time when the insiders bought it, L-3 Communications was at its 52-week high. Now the high's been pushed much higher. It clearly has much more room to run.

The stock is also owned by the Alger Aggressive Growth Fund, which has posted some stellar returns and received a four-star rating from Morningstar.

To see the rest of this week's picks, check out Stockpickr's Top 10 Insider Purchases and Buybacks portfolio.

Also, for a closer look at Stockpickr's guide to insider purchases and stock buybacks, you can review the last few weeks' picks at the Top 10 Insider Purchases and Buybacks I portfolio, the Top 10 Insider Purchases and Buybacks II portfolio and the Top 10 Insider Purchases and Buybacks III portfolio. You can also review the Barron's Top Insider Purchases from the prior week, as well as Cramer's Mad Money Buybacks.