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5 Stocks With Big Insider Buying

Applied Materials

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Another stock that insiders are finding attractive here is semiconductor king Applied Materials (AMAT - Get Report), which provides manufacturing equipment, services and software to the global semiconductor, flat panel display, solar photovoltaic and related industries. Insiders are buying this stock into some modest strength here, since shares are up by 9% so far in 2012.

Applied Materials has a market cap of $14.53 billion and an enterprise value of $14.25 billion. This stock trades at a cheap valuation, with a price-to-sales of 14.09 and a price-to-book of 14.49. Its estimated growth rate for this year is -43.8%, and for next year it's pegged at 11%. This is a cash-rich company, since the total cash position on its balance sheet is $2.16 billion, and its total debt is $1.95 billion. This stock sports a dividend yield of 3.2%.

A director just bought 50,000 shares, or about $576,000 worth of stock, at $11.53 per share.

From a technical perspective, AMAT is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently bounced right off its 200-day moving average of $11.43 a share with high volume. That move has now pushed AMAT within range of triggering a near-term breakout trade.

If you're in the bull camp on AMAT, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $12.05 to $12.89 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 volume of 12,580,500 shares. If that breakout triggers soon, then AMAT will have a great chance of re-testing and possibly taking out its next major overhead resistance level at $13.82 a share.

On the flipside, I would avoid AMAT or look for short-biased trades if it fails to trigger that breakout soon, and then drops below some major near-term support at $11.45 to $11.24 a share with heavy volume. If we get that action, then AMAT will trend back below both its 50-day and 200-day moving averages, which is bearish technical price action. Some possible downside targets are $10.75 to $10 a share.
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