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5 Stocks With Notable Insider Buying

Overstock.com

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One more stock that insiders are purchasing is Overstock.com (OSTK), an online retailer offering discount brand- name, non-brand-name and closeout merchandise, including home decor, kitchenware, watches and jewelry, and electronics and computers. Insiders have spotted a potential bargain here since the stock is off by over 50% in the last six months.

Overstock.com has a market cap of $167.82 million and an enterprise value of $133.18. This stock trades at a price-to-sales of 0.16 and a price-to-book of 10.92. Its estimated growth rate for this year is -140.7%, and for next year it's pegged at 54.2%. This is a cash-rich company, with a total cash position on its balance sheet of $79.14 million and total debt of $37.52 million.

A beneficial owner just bought 38,290 shares, or about 294,000 worth of stock, at $7.75 per share.

From a technical standpoint, OSTK is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a bearish downtrend since it formed a double top at $15.93 back in July of last year. During this downtrend, the stock has been consistently making lower highs and lower lows, which is bearish price action.

If you're bullish on OSTK, I would wait until the price of this stock stabilizes and starts to trend sideways. Buying shares of OSTK right now is basically trying to catch a falling knife since the stock has just broken some near-term support at $7.75 a share. That said, the stock is nearing an oversold condition since its current RSI reading is 32. Wait for this stock to stabilize and start making higher lows before you jump in for a quick rebound trade.

To see more stocks with notable insider buying, including Kronos Worldwide (KRO), Image Sensing Systems (ISNS) and Support.com (SPRT), 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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