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One stock with a huge amount of insider buying is
Ecolab(ECL - Get Report). This company develops and markets products and services for the hospitality, foodservice, health care and industrial markets. Ecolab provides cleaning and sanitizing products and programs, as well as pest elimination, maintenance and repair services primarily to customers in the food and beverage processing, hospitality, healthcare, government and education, retail, textile care, commercial facilities management and vehicle wash sectors. This stock hasn't done much so far in 2011 with shares up by only around 5%.
This company has a market cap of $12.3 billion and an enterprise value of $13.2 billion. This stock currently trades at a reasonable valuation, since their trailing price-to-earnings is 23 and their forward price-to-earnings is 18. Eclolab's estimated growth rate for this year is 13.9% and for next year it's pegged at 13.8%. This is not a cash-rich company since they have $1.11 billion in total debt and just $163 million in total cash.
Beneficial owner Bill Gates, through his investment firm
Cascade Investment, just
bought 3.9 million shares, or $189.6 million worth of stock, between $48.44 and $50.21 per share. This recent purchase by Gates now makes him the largest shareholder in Ecolab, since it added significantly to his previous holdings. Cascade Investment now holds 4.4 million shares of Ecolab worth around $1.1 billion.
From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a perfect double bottom chart pattern at around $44 a share and since then has bounced all the way up to its current price of just over $53 a share. A lot of that bounce was due to Gate's buying which started on August 23.
If you're looking to buy this stock, I would not chase this off the Gates news. The stock has just made a big run, so it's better strategy to wait for a significant pullback and look to add shares on weakness. Look for a pullback toward the 200-day moving average of $50.64 as a potential entry point.