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5 Stocks Insiders Love Right Now

Stocks in this article: SWI SREV MO CYCC EOX

SolarWinds

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One technology player that insiders are active in here is SolarWinds ( SWI), which designs, develops, markets, sells and supports enterprise-class IT infrastructure management software to IT professionals. Insiders are buying this stock into weakness, since shares are off by 26% over the last three months.

>>5 Rocket Stocks to Buy as Stocks Bounce

SolarWinds has a market cap of $3.1 billion and an enterprise value of $2.8 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 36.69 and a forward price-to-earnings of 22.49. Its estimated growth rate for this year is 15.4%, and for next year it's pegged at 18.5%. This is a cash-rich company, since the total cash position on its balance sheet is $265.76 million and its total debt is zero.

A director just bought 5,000 shares, or about $ 202,000 worth of stock, at $40.59 per share.

From a technical perspective, SWI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last three months, with shares falling from its high of $61.52 to its recent low of $39.95 a share. During that downtrend, shares of SWI have been mostly making lower highs and lower lows, which is bearish technical price action. That said, SWI has started to bounce off that $39.95 low and off oversold levels, since its current relative strength index reading is 34.41.

If you're bullish on SWI, then I would look for long-biased trades as long as this stock is trending above its recent low of $39.95, and then once it breaks out above some near-term overhead resistance at $42.39 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 922,790 shares. If we get that move soon, then SWI could bounce back towards its next significant overhead resistance levels at $46 to $48.62 a share.

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