5 Stocks Insiders Love Right Now

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share.

But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.

At the end of the day, it's institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity but twice as important to make sure the trend of the stock coincides with the insider buying.

Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look five stocks whose insiders have been doing some big buying per SEC filings.

eHealth

One insurance broker that insiders are loading up on here is eHealth (EHTH), which provides online health insurance services for individuals, families, and small businesses in the U.S. Insiders are buying this stock into major weakness, since shares are down 53% so far in 2014.

eHealth has a market cap of $412 million and an enterprise value of $339 million. This stock trades at a fair valuation, with a forward price-to-earnings of 58.68. Its estimated growth rate for this year is -22.2%, and for next year it's pegged at 428.6%. This is a cash-rich company, since the total cash position on its balance sheet is $70.38 million and its total debt is zero.

A beneficial owner just bought 329,540 shares, or about $6.55 million worth of stock, at $19.04 to $20.99 per share.

From a technical perspective, EHTH is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply lower from $31.92 to $18.70 a share with heavy downside volume. Following that gap, shares of EHTH have started to rebound higher off that $18.70 low and it's quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

If you're bullish on EHTH, then I would look for long-biased trades as long as this stock is trending above some near-term support at $20 or above that recent low of $18.70 and then once it breaks out above some key overhead resistance levels at $22.50 to its gap-down-day high of $23.50 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 427,520 shares. If that breakout materializes soon, then EHTH will set up to re-fill some of its previous gap-down-day zone that started at $31.92 a share.

PNC Financial Services Group

Another banking player that insiders are active in here is PNC Financial Services Group (PNC), which operates as a diversified financial services company in the U.S. Insiders are buying this stock into modest strength, since shares are up around 5% so far in 2014.

PNC Financial Services Group has a market cap of $43 billion and an enterprise value of $67 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 10.9 and a forward price-to-earnings of 11. Its estimated growth rate for this year is -3.7%, and for next year it's pegged at 4.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $25.52 billion and its total debt is just $49.07 billion. This stock currently sports a dividend yield of 2.1%.

A director just bought 25,000 shares, or about $2.04 million worth of stock, at $81.86 per share.

From a technical perspective, PNC is currently trending below its 50-day moving average and just above its 200-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last month, with shares moving lower from its high of $89.51 to its recent low of $80.43 a share. During that move, shares of PNC have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of PNC have now started to bounce off its recent low of $80.43 a share.

If you're in the bull camp on PNC, then I would look for long-biased trades as long as this stock is trending above that recent low $80.43 and then once it takes out above some near-term overhead resistance at $83 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 1.99 million shares. If that move gets underway soon, then PNC will set up to re-test or possibly take out its next major overhead resistance levels at $84 to $85 a share, or even its 50-day moving average of $86.13 a share. Any high-volume moves above its 50-day will then give PNC a chance to tag $87 to $88 a share.

Mallinckrodt

One health care player that insiders are snapping up a huge amount of stock in here is Mallinckrodt (MNK), which manufactures, markets and distributes branded and generic specialty pharmaceuticals, active pharmaceutical ingredients and diagnostic imaging agents worldwide. Insiders are buying this stock into modest weakness, since shares are down by 6.2% over the last three months.

Mallinckrodt has a market cap of $4 billion and an enterprise value of $6 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 63 and a forward price-to-earnings of 11. Its estimated growth rate for this year is 11.4%, and for next year it's pegged at 75.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $344.90 million and its total debt is $2.22 billion.

A beneficial owner just bought 275,000 shares, or about $19.13 million worth of stock, at $69.45 per share.

From a technical perspective, MNK is currently trending below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last month, with shares sliding lower from its high of $83.20 to its recent low of $68.42 a share. During that downtrend, shares of MNK have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on MNK, then I would look for long-biased trades as long as this stock is trending above some near-term support at $68.42 and then once it breaks out above some near-term overhead resistance at $71.19 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 volume of 1.65 million shares. If that breakout gets underway soon, then MNK will set up to re-test or possibly take out its next major overhead resistance levels at $75 to its 50-day moving average of $75.79, or even $77.50 a share.

Intevac

One technology player that insiders are jumping into here in a big way is Intevac (IVAC), which provides process manufacturing equipment solutions to the hard disk drive and photovoltaic industries. Insiders are buying this stock into weakness, since shares are down by 12% so far in 2014.

Intevac has a market cap of $153 million and an enterprise value of $96 million. This stock trades at a cheap valuation, with a price-to-sales of 2.17 and a price-to-book of 1.28. Its estimated growth rate for this year is 33.3%, and for next year it's pegged at 48.1%. This is a cash-rich company, since the total cash position on its balance sheet is $58.23 million and its total debt is zero.

A director just bought 486,928 shares, or about $3.08 million worth of stock, at $6.30 per share.

From a technical perspective, IVAC 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 month, with shares moving lower from its high of $8.75 to its recent low of $5.98 a share. During that move, shares of IVAC have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of IVAC have now started to rebound off that $5.98 low and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on IVAC, then I would look for long-biased trades as long as this stock is trending above that recent low of $5.98 and then once it breaks out above some near-term overhead resistance at $6.69 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 204,202 shares. If that breakout triggers soon, then IVAC will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $7.43 to its 200-day moving average at $7.48 a share.

Armstrong World Industries

One final stock with some monster insider buying is Armstrong World Industries (AWI), which designs, manufactures, and sells flooring products and ceiling systems worldwide. Insiders are buying this stock into modest strength, since shares are up by 6% over the last three months.

Armstrong World Industries has a market cap of $3 billion and an enterprise value of $3.9 billion. This stock trades at a reasonable valuation, with a trialing price-to-earnings of 29 and a forward price-to-earnings of 18. Its estimated growth rate for this year is 11.8%, and for next year it's pegged at 32.9%.This is not a cash-rich company, since the total cash position on its balance sheet is $152.60 million and its total debt is $1.13 billion.

A beneficial owner just bought 1 million shares, or about $49.10 million worth of stock, at $48.73 per share.

From a technical perspective, AWI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $48.35 to its intraday high of $55.49 a share. During that move, shares of AWI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AWI within range of triggering a near-term breakout trade.

If you're bullish on AWI, then look for long-biased trades as long as this stock is trending above some near-term support levels at $53 or above $52 and then once it breaks out above some near-term overhead resistance at $55.81 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 1.08 million shares. If that breakout kicks off soon, then AWI will set up to re-test or possibly take out its next major overhead resistance levels at $58 to $58.28 a share. Any high-volume move above those levels will then give AWI a chance to tag its 52-week high at $61.90 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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