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5 Stocks Insiders Are Loading Up On

Stocks in this article: NIHDZIOPALXAFGPCHTP

Chelsea Therapeutics

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One more stock in the biotechnology and drugs complex whose insiders are buying up shares of Is Chelsea Therapeutics (CHTP), a development stage pharmaceutical company that focuses on acquiring, developing and commercializing products for the treatment of a variety of human diseases. This stock is off to a weak start in 2012, with shares down by around 10%.

Chelsea Therapeutics has a market cap of $287 million and an enterprise value of $223 million. This stock trades at a high valuation, with a price-to-book of 6.19. Its estimated growth rate for this year is -5.5%, and for next year it's pegged at 24%. This is a cash-rich company, since the total cash position on its balance sheet is $57.61 million and its total debt is zero.

A beneficial owner just bought 40,000 shares, or about $192,000 worth of stock, at $4.80 per share. Back in November, the chief medical officer also bought 45,141 shares, or around $200,000 worth of stock, at $4.46 per share.

From a technical standpoint, CHTP is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock hit a recent bottom at $3.25 in October, and since then it has trended higher towards its current price of $4.60. This stock is now approaching a bullish trade setup if it can manage to clear its 200-day moving average.

If you're bullish on CHTP, I would look to be a buyer on a sustained high-volume move or close back above its 200-day moving average of $4.65 a share. Look for volume that's tracking in close to or above its three-month average action of 469,229 shares. If we get that action, I would then look to add to any long positions once CHTP takes out its 50-day moving average of $4.99 with volume.

To see more stocks with notable insider buying like Senesco Technologies (CNT), MRV Communications (MRVC) and Geoeye (GEOY), 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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