Strategic Diagnostics

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Another name that insiders are finding attractive here is biotechnology and drugs player Strategic Diagnostics ( SDIX), which develops, commercializes and markets proprietary products, services, and solutions for human health and wellness to the pharmaceutical, biotechnology, diagnostics and food safety markets. Insiders are finding some deep value here, since this stock is down by around 25% so far in 2012.

Strategic Diagnostics has a market cap of $28.31 and an enterprise value of $18.72 million. This stock trades at a cheap valuation, with a price-to-sales of 1.22 and a price-to-book of 1.49. This is a cash-rich company, since the total cash position on its balance sheet is $9.8 million and its total debt is just $200,000.

A beneficial owner just bought 804,500 shares, or around $949,000 worth of stock, at $1.18 per share.

>>Hot Biotech Stocks Traded by Hedge Funds

From a technical perspective, SDIX is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently plunged from around $1.85 to its 52-week low of 95 cents per share. During that downtrend, shares of SDIX consistently made lower highs and lower lows, which is bearish technical price action. That said, shares of SDIX recently found some high-volume buying interest at around $1.20 a share.

If you're in the bull camp on SDIX, I would look for long-biased trades if this stock can manage to trigger a near-term breakout above some overhead resistance at $1.38 to $1.39 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 41,150 shares. If we get that action, then SDIX could take out its 50-day moving average at $1.50, and then possibly take out its 200-day at $1.76 a share. The next major overhead resistance levels that could get hit if its 50-day and 200-day get taken out are at $2.13 to $2.44 a share.

On the flipside, I would avoid SDIX if it fails to trigger that breakout, or if you want to get even more rigid just avoid this stock unless its trending above its 50-day and 200-day moving averages with strong upside volume flows. If you play the breakout, I wouldn't give this stock too much room since its coming right out of that recent downtrend.

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