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.

Ariad Pharmaceuticals

One oncology stock that insiders are snapping up a large amount of stock in here is Ariad Pharmaceuticals (ARIA) , which is engaged in the discovery, development and commercialization of medicines for cancer patients. Insiders are buying this stock into extreme weakness, since shares are down by 31% over the last six months.

Ariad Pharmaceuticals has a market cap of $1.1 billion and an enterprise value of $940 million. This stock trades at a premium valuation, with a price-to-sales of 23.14 and a price-to-book of 9.22. Its estimated growth rate for this year is 22.8%, and for next year it's pegged at 38.3%. This is a cash-rich company, since the total cash position on its balance sheet is $310.04 million and its total debt is $153.12 million.

A director just bought 850,000 shares, or about $4.95 million worth of stock, at $5.83 per share.

From a technical perspective, ARIA is currently trending just above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $4.97 to $4.99 a share. Following that bottom, shares of ARIA have started to uptrend and move within range of triggering a near-term breakout trade.

If you're bullish on ARIA, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $5.50 or at $5.25 and then once it breaks out above some near-term overhead resistance levels at $6.28 to $6.71 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 8.07 million shares. If that breakout triggers soon, then ARIA will set up to re-test or possibly take out its next major overhead resistance levels at $7.06 to $7.27 a share, or even $7.73 to $7.84 a share. Any high-volume move above those levels will then give ARIA a chance to make a run at $9 a share.

GNC Holdings

Another drug store player that insiders are loading up on here is GNC Holdings (GNC) , which operates as a specialty retailer of health and wellness products. Insiders are buying this stock into major weakness, since shares are down sharply by 37% so far in 2014.

GNC Holdings has a market cap of $3.2 billion and an enterprise value of $4.3 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 13.3 and a forward price-to-earnings of 11.5. Its estimated growth rate for this year is -0.40%, and for next year it's pegged at 11.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $118.54 million and its total debt is $1.34 billion. This stock currently sports a dividend yield of 1.8%.

A director just bought 30,000 shares, or about $1.06 million worth of stock, at $35.41 per share.

From a technical perspective, GNC is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the last month, with shares moving higher from its low of $30.84 to its recent high of $38.28 a share. During that uptrend, shares of GNC have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GNC within range of triggering a major breakout trade above some key overhead resistance levels.

If you're in the bull camp on GNC, then I would look for long-biased trades as long as this stock is trending above its 50-day at $34.56 or above more support at $33 and then once it breaks out above resistance at $38.23 to its gap-down-day high from May near $40 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 2.36 million shares. If that breakout materializes soon, then GNC will set up to re-fill some of its previous gap-down-day zone from May that started near $44 a share. Any high-volume move above $44 to $45 a share will then give GNC a chance to tag $47 a share.

Novatel Wireless

One technology player that insiders are jumping into here is Novatel Wireless (NVTL) , which provides wireless broadband access solutions for the mobile communications market worldwide. Insiders are buying this stock into major strength, since shares are up sharply over the last three months by 30%.

Novatel Wireless has a market cap of $72.95 million and an enterprise value of $50.15 million. This stock trades at a reasonable valuation, with a price-to-sales of 0.31 and a price-to-book of 3.34. Its estimated growth rate for this year is -38.7%, and for next year it's pegged at 74.4%. This is a cash-rich company, since the total cash position on its balance sheet is $22.43 million and its total debt is zero.

A beneficial owner just bought 261,803 shares, or about $481,000 worth of stock, at $1.81 to $1.88 per share. That same beneficial owner also just bought 114,197 shares, or about $227,252 worth of stock, at $1.99 per share.

From a technical perspective, NVTL is currently trending below its 200-day moving average and just above its 50-day moving average, which is neutral trendwise. This stock has been uptrending a bit over the last month or so, with shares moving higher from its low of $1.67 to its recent high of $2.10 a share. During that uptrend, shares of NVTL have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NVTL within range of triggering a major breakout trade above some key overhead resistance levels.

If you're bullish on NVTL, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $1.74 to $1.67 a share and then once it breaks out above some near-term overhead resistance levels at $2.08 to $2.10 a share and then above some past resistance levels at $2.18 to $2.30 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 152,239 shares. If that breakout gets underway soon, then NVTL will set up to re-fill some of its previous gap-down-day zone from March that started at $2.85 a share.

Pacific Biosciences of California

One biotechnology player that insiders are active in here is Pacific Biosciences of California (PACB) , which develops, manufactures and markets an integrated platform for genetic analysis in the deoxyribonucleic acid sequencing market. Insiders are buying this stock into big time weakness, since shares are off sharply by 32% over the last six months.

Pacific Biosciences of California has a market cap of $341.14 million and an enterprise value of $274.54 million. This stock trades at a premium valuation, with a price-to-sales of 8.75 and a price-to-book of 5.87. Its estimated growth rate for this year is 13.7%, and for next year it's pegged at 23.4%. This is a cash-rich company, since the total cash position on its balance sheet is $105.03 million and its total debt is just $13.71 million.

A director just bought 135,155 shares, or about $687,000 worth of stock, at $5.09 per share. That same director also just bought 77,822 shares, or about $388,000 worth of stock, at $5.00 per share.

From a technical perspective, PACB is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern at $4.28 to $4.38 a share. Following that bottom, shares of PACB have started to uptrend and re-test both its 50-day moving average of $5.48 and its 200-day moving average of $5.33 a share. That move has now pushed shares of PACB within range of triggering a near-term breakout trade.

If you're bullish on PACB, then I would look for long-biased trades as long as this stock is trending above some key near-term support at $4.38 and then once it breaks out above some near-term overhead resistance levels at $5.54 to $5.64 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 612,120 shares. If that breakout starts soon, then PACB will set up to re-test or possibly take out its next major overhead resistance levels at $5.98 to $6.25 a share, or even $6.42 to $6.65 a share.

Acxiom

One final stock with some decent insider buying is Acxiom (ACXM) , which operates as an enterprise data, analytics, and software-as-a-service company in the U.S., Europe, South America, and the Asia-Pacific. Insiders are buying this stock into major weakness, since shares have plunged lower so far in 2014 by 50%.

Acxiom has a market cap of $1.4 billion and an enterprise value of $1.2 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 153 and a forward price-to-earnings of 19.8. Its estimated growth rate for this year is -12.8%, and for next year it's pegged at 22.7%. This is just barely cash-rich company, since the total cash position on its balance sheet is $392.92 million and its total debt is $310.52 million.

The CEO just bough 20,000 shares, or about $351,000 worth of stock, at $17.57 per share.

From a technical perspective, ACXM is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways and consolidating over the last month, with shares moving between $17.10 on the downside and $18.68 on the upside. This sideways action is coming after shares of ACXM were downtrending badly from its April high of $35.74 to that recent low of $17.10 a share.

If you're bullish on ACXM, then look for long-biased trades as long as this stock is trending above that recent low of $17.10 and then once it breaks out above some near-term overhead resistance levels at $18.68 to $20 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 action of 700,736 shares. If that breakout materializes soon, then ACXM will set up to re-test or possibly take out its next major overhead resistance levels at $22.32 to $23.32 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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