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5 Stocks With Unusual Insider Buying

Stocks in this article: PHPQMASIRENZOLTCBPOECLYHOO

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Masimo

The last name to look at with some interesting insider buying is medical equipment and supplies player Masimo (MASI). This is a global medical technology company that develops, manufactures and markets noninvasive patient monitoring products. Insiders are buying this stock into modest strength since shares are up just over 4% so far in 2012.

Masimo has a market cap of $1.12 billion and an enterprise value of $982 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 19.22 and a forward price-to-earnings of 14.7. Its estimated growth rate for this year is 7.6%, and for next year it's pegged at 17.7%. This is a cash-rich company, since the total cash position on its balance sheet is $128.85 million and its total debt is just $110,000.

The CEO and chairman of the board just bought 50,000 shares, or about $923,000 worth of stock, at $18.47 per share.

From a technical perspective, MASI is currently trading below its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares dropping from a high of $24.28 to a recent low of $18.20 a share. During that move, shares of MASI have been mostly making lower highs and lower lows, which is bearish technical price action. That said, the stock has started to rebound during the past week, and it now looks ready to trigger a breakout trade.

If you're bullish on MASI, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $19.93 a share with high-volume. Look for volume that's near or above its three-month average action of 475,591 shares. If we get that move, then I would look to add to any long positions once MASI takes out its 50-day at $21.06 and its 200-day at $21.23 with volume. Target a spike back toward its next significant overhead resistance level at $22.62 to $24.28 a share.

I would simply avoid MASI or look for short-biased trades if it fails to trigger that breakout and then drops back below that major near-term support at $18.20 a share with high volume. If we get that action, then MASI could setup to move back below its 52-week low of $17.62 a share.

To see more stocks with notable insider buying like China Biologic Products (CBPO), Ecolab (ECL) and Yahoo! (YHOO), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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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