5 Stocks With Key Insider Buying

Flowserve

One final stock in the capital goods complex whose insiders are snapping up shares is Flowserve (FLS), a manufacturer and aftermarket service provider of flow control systems. Insiders are finding some value here since they are buying, with shares off by around 20% so far in 2011.

Flowserve has a market cap of $5.27 billion and an enterprise value of $5.84 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 12.84 and forward price-to-earnings of 10.81. Flowserve's estimated growth rate for this year is 11.9%, and for next year it's pegged at 14%. This is far from a cash-rich company, since the total cash position on its balance sheet is $227.89 million and its total debt is $510.05 million.

The CEO and president just bought 7,000 shares, or $639,463 worth of stock, at $91.35 per share.

From a technical standpoint, this stock is currently trading above its 50-day moving average and below its 200-day moving average, which is natural trendwise. This stock just ran into some stiff resistance at around $100 a share and it now looks ready to drop back towards some previous support near $87 or at its 50-day moving average of $85.69.

If you're bullish on this stock, I would hold off on buying it right here since it looks ready to downtrend back toward the 50-day. I would wait and see if it can find buying support near either $87 or $85.69, its 50-day moving average, before getting long. If the downtrend stops near those levels, then look to buy it with a tight mental stop just below the 50-day. If the 50-day doesn't hold, this stock will trend much lower, so key off that area to determine how low it could fall. The next significant support zones below the 50-day are at $79.50 and then $66.84 a share.

To see more stocks with notable insider buying, including Gentiva Health Services (GTIV), Navarre (NAVR) and Colfax (CFX), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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