5 Stocks With Big Insider Buying

Quality Systems

Another name in the technology complex that insiders are snapping up shares in is Quality Systems (QSII). This company develops and markets healthcare information systems in the U.S. Insiders are sniffing out some deep value here, since this stock has plunged by over 53% so far in 2012.

Quality Systems has a market cap of $1.01 billion and an enterprise value of $824 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 13.98 and a forward price-to-earnings of 12.01. Its estimated growth rate for this year is -3.1%, and for next year it's pegged at 14.5%. This is a cash-rich company, since the total cash position on its balance sheet is $134.90 million, and its total debt is zero. This stock sports a dividend yield of 4.4%.

A director just bought 10,000 shares, or about $160,000 worth of stock, at $16.06 per share. Another director also just bought 10,000 shares, or about $160,000 worth of stock, at $16.02 per share.

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From a technical perspective, QSII is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a nasty downtrend for the past six months, with shares plunging from over $44 to its recent low of $15.04 a share. During that downtrend, shares of QSII have been consistently making lower highs and lower lows, which is bearish technical price action. This stock also just gapped down huge from around $24 to $15.04 a share on massive volume. Since that plunge, shares of QSII have held that $15.04 bottom.

If you're in the bull camp on QSII, then I would look for long-biased trades as long as QSII is trending above $16.98 a share with strong upside volume flows. I would consider any upside volume day that registers near or above 983,175 shares as bullish. I would also consider looking for long trades once QSII takes out its gap-down day low of $19 a share with volume. A move over $19 could spark a big pop since QSII will then move into that gap.

I would simply avoid this stock entirely or look for short-biased trades if it moves below $15.94 to $15.04 with high volume. A high-volume move below those levels would setup QSII to enter new 52-week low territory, which is bearish technical price action.

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