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When a stock's price reaches its 52-week high and insiders keep buying, that's a sign that something big is going on, Jim Cramer told viewers of his "Mad Money" TV show Tuesday. "The stock is undervalued, and you need to make your move," he said.

Insider selling happens all the time for many different reasons, but insiders only buy for one reason, Cramer said: "They think their stock is going higher." The problem here is that of course insiders believe in their companies -- you need to discern which companies are the good ones.

Therefore, narrowing it down, Cramer said the rare case when investors should want to piggyback off the insiders is when they're buying their own stock at or near its 52-week high.

Not every insider has the guts to buy a stock that's at or near its peak, he said.

Buying at the high is like "putting your money where your mouth is" and saying, "My stock is way too cheap even here."

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Cramer said he has two stocks that fall into this "rare" category. The first one he named was

L-3 Communications

(LLL) - Get Report


LLL is an archetypal high-tech defense contractor, Cramer said. Back in February it had two directors buy thousands of shares. First, Peter Cohen, a director, bought 15,000 shares, and then Robert Miller, another director, bought 45,000 shares. The highest they paid was $87.20; now LLL is trading at $93.91, Cramer said.

At the time when the insiders bought it, LLL was at its 52-week high. Now the high's been pushed much higher. "It clearly has much more room to run," Cramer said.

The insiders could be buying for the following two reasons: It's possible LLL could be sold, and there's a wrong perception that the defense stocks are going down because of the Democrats. However, Cramer believes that the Democrats are scared of being called soft on defense and will spend in this sector.

Many analysts are sitting on the sidelines, and the upgrades should come soon, he added. Though LLL recently raised its guidance, it seems as if the company is still setting its expectations low, he said.

The Inside Scoop

An even better version of the same story is

Enterprise Products Partners

(EPD) - Get Report

, a midstream energy company, Cramer went on.

Even though the stock may seem boring, this is a stock that will let you sleep soundly at night, he said.

When EDP's co-founder and chairman, Dan Duncan, who's also the 34th richest American, bought 177,000 shares in January -- when the stock was at its 52-week high -- then bought 35,500 more shares the next day and again picked up 5,200 shares the next day, Cramer woke up.

Duncan even bought more (1,935) shares on Feb.3, when the stock was higher, he added.

And against all of Duncan's insider buying, there was no insider selling, Cramer said. "To buy this much of your own stock when it's flying high means you think it's too cheap."

EPD has a 5.8% dividend yield, which is better than the Treasuries, and has increased its dividend for 11 straight quarters. Cramer called it a "conservative play with real upside at the same time" and suggested that people consider getting into it.

Put Some More Nickel In

Right now there is a bull market in nickel, Cramer told viewers.

The prices for the commodity have tripled, and small nickel companies are being bought left and right, he said.


(RIO) - Get Report

, the largest nickel producer in the world, has become No. 1 and retained its position through acquisitions.

Consolidation is key in the nickel market right now, and Cramer's speculative play here is

North American Palladium



The company has 22% nickel by revenue, and there is no analyst coverage of it, which means no one other than Cramer is paying attention, he said. "It is the single best play on nickel around."

Last year, PAL's realized price for nickel was $11.65 a pound, he said. Now nickel is trading at $23.85 a pound. This means that even if PAL didn't increase its nickel production at all, it would almost double its nickel revenues, Cramer explained.

In addition, PAL's exposure to nickel is unhedged, so it stands to gain with spot market prices, he said. And as nickel prices continue to escalate, PAL's production prices are going down. Someone should be willing to bid for this company, and market players should consider buying it, Cramer said.

However, people must only use limit orders when buying the stock, or they will be in pain, he stressed. And they should also space out their buys, Cramer advised. "There will not be a takeover tonight ... so take your time and do it right."

Mad Mail

In his "Mad Mail" segment, Cramer told a mailer he would not sell


(HPQ) - Get Report

, which he owns for his charitable trust,

Action Alerts PLUS.

The company raised its fiscal second-quarter expectations Tuesday, and people who are in it got an upside surprise with it, he said.

Responding to another mailer, Cramer said he considers

American Eagle Outfitters

(AEO) - Get Report




to be "really hard stocks" to own here as they are difficult to predict.

He said he'd rather see people in

J.C. Penney

(JCP) - Get Report


Federated Department Stores


. However, Cramer said not to get into either until they report same-store sales.

During the "Sudden Death" round, Cramer was bullish on

Level 3 Communications




(EBAY) - Get Report


He was bearish on




Hansen Medical



Lightning Round

Cramer was bullish on





(DEO) - Get Report


Jefferies Group

(JEF) - Get Report





Kinross Gold

(KGC) - Get Report


Yamana Gold

(AUY) - Get Report


Golden Star Resources

(GSS) - Get Report


First Solar

(FSLR) - Get Report


Charter Communications

(CHTR) - Get Report


Goldman Sachs

(GS) - Get Report


Allegheny Technologies

(ATI) - Get Report


Brookfield Asset Management

(BAM) - Get Report


Cramer was bearish on

Tanzanian Royalty Exploration




(SBUX) - Get Report


Trina Solar



Bank of America

(BAC) - Get Report


For more of Cramer's insights during the Lightning Round, click here


Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by

clicking here


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At the time of publication, Cramer was long Diageo, Hewlett-Packard and Goldman Sachs.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

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