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5 Stocks Insiders Are Jumping Into

Kinder Morgan

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A stock in the natural gas utilities complex that insiders are jumping into here is Kinder Morgan (KMI - Get Report), which owns and manages a diversified portfolio of energy transportation and storage assets in the U.S. and Canada. Insiders are buying this stock into some modest strength since shares are up around 8% in the last six months.

Kinder Morgan has a market cap of $22.88 billion and an enterprise value of $39.46 billion. This stock trades at a rich valuation, with a trailing price-to-earnings of 65.11 and a forward price-to-earnings of 24.33. Its estimated growth rate for this year is 16.3%, and for next year it's pegged at 24.3%. This is far from a cash-rich company, since the total cash position on its balance sheet is $495 million and its total debt is $17.44 billion. Kinder Morgan currently sports a dividend yield of 4%.

A director just bought 10,000 shares, or about $314,000 worth of stock, at $31.40 per share.

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From a technical perspective, KMI is currently trading below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This sock has been downtrending hard since April, with shares sliding lower from a high of $39.89 to a recent low of $31.02 a share. During that sharp move lower, shares of KMI have consistently made lower highs and lower lows, which is bearish technical price action. That said, the stock just bounced off its 200-day moving average of around $31 and could bet setting up to reverse its downtrend.

If you're in the bull camp on KMI, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $33 to $34.33 a share with high-volume. Look for volume on that move that hits near or above its three-month average action of 6 million shares. A move over $34.33 would also put KMI above its 50-day moving average of $34.22 a share. If we get that action soon, then KMI could easily re-test or take out its next significant overhead resistance level at $37.21 a share.

On the flipside, I would avoid KMI or look for short-biased trades if it fails to trigger that move, and then drops below some near-term support at $31.02 a share with heavy volume. A move below $31.02 would also push KMI back below its 200-day moving average of $31.44, which would be bearish price action. A new low below $31.02 would also continue the recent downtrend price action for shares of KMI.
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