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." 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.
The Inside ScoopAn 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.
Put Some More Nickel InRight 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. CVRD ( RIO), 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 ( PAL). 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.
Mad MailIn his "Mad Mail" segment, Cramer told a mailer he would not sell Hewlett-Packard ( HPQ - Get Report), which he owns for his charitable trust,