United Therapeutics

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Another name to look at with some interesting insider buying is biotechnology and drugs player United Therapeutics ( UTHR), which is focused on the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions. This stock hasn't done much at all so far in 2012 with shares up just under 2%.

United Therapeutics has a market cap of $2.58 billion and an enterprise value of $2.41 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 10.14 and a forward price-to-earnings of 9.60. Its estimated growth rate for this year is 27%, and for next year it's pegged at 7.7%. This is a cash-rich company, since the total cash position on its balance sheet is $408.97 million and its total debt is $268.16 million. After you back out the debt, United Therapeutics has a total of $140.81 million of cash on its books.

>>Hot Biopharma Stocks With Breakout Potential in 2012

The CEO just bought 3,960 shares, or about $189,000 worth of stock, at $47.95 per share. The same CEO also just bought 4,138 shares, or about $198,000 worth of stock, at $47.94 per share.

From a technical perspective, UTHR is currently trading above both its 50-day and 200-day moving averages, which is bullish. Since this stock hit a low of $40.34 in April, shares have started to uptrend strong and make higher highs and higher lows, which is bullish technical price action. That move is quickly pushing UTHR within range of triggering a major breakout trade.

If you're bullish on UTHR, then I would look for long-biased trades once this stock triggers a break out above some past overhead resistance at $49.13 to $49.17 a share with high-volume. Look for volume on that move that hits near or above its three-month average action of 724,127 shares. If we get that move soon, then UTHR will have a great chance of re-testing and possibly taking out its next significant overhead resistance levels at $51.12 to $51.98 a share.

I would simply avoid UTHR or look for short-biased trades if it fails to trigger that breakout, and then drops back below some near-term support at $47 to $46 a share with high-volume. If we get that action soon, then UTHR could re-test and possibly take out its 200-day moving average of $44.29, and its 50-day moving average of $43.82 a share.

United Therapeutics shows up on a list of Hot Biotech Stocks Traded by Hedge Funds.

To see more stocks with notable insider buying like Sonus Networks ( SONS), CytRx ( CYTR) and ZBB Energy ( ZBB), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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