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5 Stocks That Insiders Love Right Now

Enphase Energy

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Insiders are also doing some big time buying in semiconductor player Enphase Energy (ENPH), which designs, develops and sells microinverter systems for the solar photovoltaic industry. Insiders are buying into some modest weakness here since shares are off by around 8% so far in 2012.

Enphase Energy has a market cap of $280 million and an enterprise value of $260 million. This stock trades at a reasonable valuation, with a price-to-sales of 1.86. This is a cash-rich company, since the total cash position on its balance sheet is $51.52 million and its total debt is $33.88 million. After you back out the debt, Enphase Energy has $17.37 million in cash on its books.

Third Point hedge fund manager Daniel Loeb, who is also a beneficial owner and director at ENPH just bought 919,890 shares, or $7.38 million worth of stock, at $8.02 per share.

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Another beneficial owner also just bought 2.3 million shares, or $13.75 million worth of stock, at $6 per share as part of a private placement.

This stock recently IPOed, so at this time there's very little technical information to decipher. What we can see on the chart here is that ENPH has been trading within a range since coming public between $8.24 on the upside and $6.62 on the downside.

If you're a bullish on ENPH, I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $7.89 to $8.20 a share with high volume. Look for volume that's near or above 500,000 shares, which is the second-highest volume day since the stock came public. If we get a sustained move and close above those levels, then this stock should start a march towards $10 or higher.

Keep in mind that whenever an IPO makes a new high it tends to continue its trend higher for some time. The reason for this is because the stock has no more overhead resistance to contend with. Due to that fact, I would only look to play ENPH off a high-volume breakout versus buying this off weakness. Buying ENPH off weakness is risky because if it makes a new low there's no previous support for the stock.

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