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5 Stocks Insiders Love Right Now

Stocks in this article: XCO PLCE SUMR HERO UTHR

Summer Infant

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Insiders are also warming up to Summer Infant (SUMR), a designer, marketer, and distributor of juvenile health, safety and wellness products, which are sold to North American and U.K. retailers. Insiders are sniffing out some deep value here since this stock is down a whopping 54% so far in 2012.

Summer Infant has a market cap of $56.98 million and an enterprise value of $121.97 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 15.21 and a forward price-to-earnings of 5.35. Its estimated growth rate for this year is -2.2%, and for next year it's pegged at 36.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.71 million and its total debt is $69.36 million.

A beneficial owner just bought 465,752 shares, or about $1.3 million worth of stock, at $2.75 to $2.76 per share.

>>4 Stocks Poised to Break Out

From a technical perspective, SUMR is currently trading below both its 50-day and 200-day moving averages, which is bearish. The sellers have absolutely destroyed this stock during the last six months, with shares plunging from a high of $6.33 to a recent low of $2.71 a share. During that downtrend, shares of SUMR have consistently made lower highs and lower lows, which is bearish technical price action. That said, this stock has started to find some buying interest right off that $2.71 low, and now it's moving within range of a near-term breakout trade.

If you're bullish on SUMR, then I would look for long-biased trades once this stock triggers a near-term break out above $3.52, and then above its 50-day moving average of $3.89 with high-volume. In fact, traders can also look for long setups as long as SUMR is trending above $3.14 with strong volume. I would consider volume that registers near or above its three-month average action of 136,536 shares as bullish. If we get that action soon, then SUMR could re-fill a previous gap-down and trade up towards $4.75 to $5 a share.

On the flipside, I would avoid SUMR if its trending below $3.14 and below Tuesday's low of $2.89 a share with heavy volume. If this stock starts to trend below those levels with volume, then it could easily setup to take out that recent low of $2.71 a share. I want to play this name into strength, so it's important it stays above $3.14 and challenges those breakout levels soon.

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