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5 Stocks With Big Insider Buying

Stocks in this article: PLCM MCP HLSS HALO IMMR

Halozyme Therapeutics

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Another stock that insiders are finding attractive here is biotechnology and drugs player Halozyme Therapeutics (HALO), which develops and commercializes various products for patient care. Insiders are sniffing out some deep value here, since this stock is down by over 35% so far in 2012.

Halozyme Therapeutics has a market cap of $649.97 million and an enterprise value of $534.48 million. This stock trades at a premium valuation, with a price-to-sales of 15.70 and a price-to-book of 9.19. Its estimated growth rate for this year is -178.9%, and for next year it's pegged at 15.1%. This is a cash-rich company, since the total cash position on its balance sheet is $102.04 million and its total debt is zero.

A director just bought 20,000 shares, or about $113,000 worth of stock, at $5.70 per share.

From a technical perspective, HALO is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down big from around $9 to a low of $3.86 a share with monster volume. Following that gap down, shares of HALO have rebounded sharply to its current price of $5.77 a share. That move is quickly pushing HALO within range of triggering a near-term breakout trade.

If you're in the bull camp on HALO, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $6.17 to $6.23 a share with high volume. Look for a sustained move or close above those levels with volume that's near or above its three-month average action of 1.1 million shares. If that breakout triggers soon, then HALO will have a great chance of re-filling that gap and possibly trending back toward $7 to $9 a share. Keep in mind that you can buy HALO off weakness, and then simply use a stop just below $5.55 to $5.33 a share.

On the flip side, I would avoid HALO or look for short-biased trades if it fails to trigger that breakout soon, and then drops below some major near-term support at $5.55 to $5.23 a share with heavy volume. If we get that action, then HALO could easily trend back toward its recent low of $3.86 a share.

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