5 Stocks Insiders Are Loading Up On

R.R. Donnelley & Sons

One stock that insiders are doing some notable buying in is R.R. Donnelley & Sons(RRD), which operates primarily in the commercial print portion of the printing industry, with related product and service offerings designed to offer customers complete solutions for communicating their messages to target audiences. It looks like insiders see some value here; the stock is off by 22% in 2011.

R.R. Donnelley has a market cap of $2.54 billion and an enterprise value of $6.21 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 22 and a forward price-to-earnings of 6.5. R.R. Donnelley's estimated growth rate for this year is 5.6%, and for next year it's pegged at 10.10%. This is not a cash-rich company; the total cash position on its balance sheet is $363 million, and its total debt is a whopping $4.08 billion. This stock sports an attractive dividend yield of 7.4%, making it one of the highest-yeidling diversified services stocks.

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A director just bought 206,200 shares, or about $3 million worth of stock at $13.99 to $14.68 per share.

From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. The stock collapsed and gapped down from its July high of $20.30 to a recent low of $12.90 a share. Since that big fall, the stock has started to trade in a sideways trading pattern between $13 and $15.30 a share. A move out of this pattern to the upside or downside is going to set this stock up for its next big trend.

The way I would play this stock is to be a buyer once it trades above its 50-day moving average of $14.82 a share and then above $15.39 on big volume. Look for volume that's tracking in close to or above its three-month average action of 3.6 million shares. A move above those levels should set this stock up to test its 200-day moving average of $17.59 a share. Keep in mind you could also buy this stock on weakness and simply use a mental stop just below $12.90 a share, since shares are trading at around $13.50 right now.

This is a heavily shorted stock, with over 10% of the tradable float currently sold short by the bears. If you see big volume start to move into this stock as it approaches a breakout above the upper end of the sideways trading pattern, then look to get long and play a short squeeze. Remember, the bears have cleaned up on this stock in the past few months, so a short-covering really could easily kick off as they lock in some profits.

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