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TheStreet Open House

5 Stocks With Huge Insider Buying

Nanosphere

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One medical equipment and supplies player that insiders are loading up on here is Nanosphere (NSPH), which develops, manufactures and markets an advanced molecular diagnostics platform, the Verigene System, which enables simple, low cost, and highly sensitive genomic and protein testing on a single platform. Insiders are loading up on this stock into strength, since shares are huge by over 90% so far in 2012.

Nanosphere has a market cap of $125.90 million and an enterprise value of $94.14 million. This stock trades at a premium valuation, with a price-to-sales of 39.44 and a price-to-book of 3.30. Its estimated growth rate for this year is 22.3%, and for next year it's pegged at 23.3%. This is a cash-rich company, since the total cash position on its balance sheet is $31.76 million, and its total debt is zero.

A director and beneficial owner just bough 1 million shares, or $2.4 million worth of stock, at $2.40 per share.

>>5 Biotech Stocks Under $10 Set to Soar

From a technical perspective, NSPH is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently triggered a major breakout when it cleared some overhead resistance at $2.07 to $2.21 with monster volume. Following that breakout, shares of NSPH went on to hit a high of $3.57 a share. Since hitting that high, the stock has pulled back to a recent low of $2.55 a share.

If you're bullish on NSPH, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $3 to $3.20 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 792,902 shares. If we get that move soon, then NSPH will have an excellent chance of re-testing and taking out its previous high of $3.57 a share. This stock could easily tag $4.50 to $5 a share if clear $3.57 soon with volume.

I would avoid NSPH or look for short-baized trades if it fails to trigger that breakout, and then drops back below that major near-term support level at $2.55 a share with high volume. If we get that action, then NSPH is likely to re-test and possibly drop below its 50-day moving average of $2.22 a share.

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