5 Stocks With Big Insider Buying

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.

Southern Copper

One basic materials player that insiders are snapping up a large amount of stock in here is Southern Copper (SCCO) , which is engaged in the mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Chile, and Ecuador.  Insiders are buying this stock into notable strength, since shares are up 13% so far in 2014.

Southern Copper has a market cap of $27 billion and an enterprise value of $29 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 18.8 and a forward price-to-earnings of 15.5. Its estimated growth rate for this year is -8.9%, and for next year it's pegged at 20%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.63 billion and its total debt is $4.21 billion. This stock currently sports a dividend yield of 1.4%.

The chairman of the board just bought 150,000 shares, or about $4.76 million worth of stock, at $31.53 to $31.89 per share.

From a technical perspective, SCCO is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways and consolidating for the last two months and change, with shares moving between $30.83 on the downside and $33.77 on the upside. Shares of SCCO are now starting to spike higher and flirt with its 50-day moving average and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on SCCO, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $31.23 to $30.83 and then once it breaks out above some near-term overhead resistance levels at $33.05 to $33.67 and then above its 52-week high at $33.90 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 1.77 million shares. If that breakout hits soon, then SCCO will set up to re-test or possibly take out its next major overhead resistance level at $40.73 a share.

Titan Machinery

An agricultural machinery player that insiders are jumping into here is Titan Machinery (TITN) , which owns and operates a network of full service agricultural and construction equipment stores in the U.S. and Europe. Insiders are buying this stock into major weakness, since shares are down large by 24% so far in 2014.

Titan Machinery has a market cap of $281 million and an enterprise value of $1.2 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 58 and a forward price-to-earnings of 19. Its estimated growth rate for this year is -47.4%, and for next year it's pegged at 65.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $89.71 million and its total debt is just $1.08 billion.

The CEO just bought 90,250 shares, or about $1.17 million worth of stock, at $13.01 per share.

From a technical perspective, TITN 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 three months and change, with shares moving lower from its high of $18.25 to its recent low of $12.12 a share. During that downtrend, shares of TITN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of TITN have now started to spike higher off that $12.12 low and it's starting to move within range of triggering a near-term breakout trade.

If you're in the bull camp on TITN, then I would look for long-biased trades as long as this stock is trending above its recent low of $12.12 and then once it breaks out above some near-term overhead resistance levels at $14.07 to $14.73 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 206,059 shares. If that breakout kicks off soon, then TITN will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $15.91 to $16.50, or even $17 a share.

Heartware International

One medical device player that insiders are active in here is Heartware International (HTWR) , which is engaged in developing and manufacturing miniaturized implantable heart pumps or ventricular assist devices for the treatment of advanced heart failure in the U.S. and internationally. Insiders are buying into notable weakness, since shares are off by 12% so far in 2014.

Heartware International has a market cap of $1.39 billion and an enterprise value of $1.3 billion. This stock trades at a reasonable valuation, with a price-to-sales of 5.62 and a price-to-book of 6.74. Its estimated growth rate for this year is 40.1%, and for next year it's pegged at 20.8%. This is a cash-rich company, since the total cash position on its balance sheet is $182.70 million and its total debt is $110.85 million.

A beneficial owner just bought 90,000 shares, or $6.93 million worth of stock, at $76.90 to $77.39 per share.

From a technical perspective, HTWR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has just started to spike higher off its recent low of $76.19 a share with decent upside volume flows. That spike is now starting to push shares of HTWR within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on HTWR, then I would look for long-biased trades as long as this stock is trending above some near-term support at $80 or at $76.19 a share and then once it breaks out above some key near-term overhead resistance levels at its 50-day moving average at $83.06 to $83.92 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 150,241 shares. If that breakout gets started soon, then HTWR will set up to re-fill some of its previous gap-down-day zone from July that started at $93.73 a share.

Halozyme Therapeutics

One biopharmaceutical player that insiders are in love with here is Halozyme Therapeutics (HALO) , which researches, develops, and commercializes human enzymes. Insiders are buying this stock into major weakness, since shares have plunged lower by 36% so far in 2014.

Halozyme Therapeutics has a market cap of $1.1 billion and an enterprise value of $1 billion. This stock trades at a premium valuation, with a price-to-sales of 19 and a price-to-book of 20. Its estimated growth rate for this year is 16.2%, and for next year it's pegged at 53.2%. This is a cash-rich company, since the total cash position on its balance sheet is $147.65 million and its total debt is $49.82 million.

The CEO just bought 50,000 shares, or about $446,000 worth of stock, at $8.92 per share. The CFO also just bought 25,000 shares, or about $222,000 worth of stock, at $8.90 per share.

From a technical perspective, HALO is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has found buying interest over the last two months and change each time its pulled back to just under $9 a share. Shares of HALO are now starting to spike higher off those support levels and it's starting to move within range of triggering a big breakout trade above some key overhead resistance levels.

If you're bullish on HALO, then I would look for long-biased trades as long as this stock is trending above some key support levels at $8.75 to $8.58 a share and then once it breaks out above some near-term overhead resistance levels at $9.90 to $10.11 a share and then above $10.31 to $10.70 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 1.29 million shares. If that breakout develops soon, then HALO will set up to re-test or possibly take out its next major overhead resistance levels at $13 to $14 a share.

Brixmor Property Group

One final stock with some decent insider buying is Brixmor Property Group (BRX) , which operates various grocery-anchored community and neighborhood shopping centers in the U.S. Insiders are buying this stock into notable strength, since shares have gone up by around 14% so far in 2014.

Brixmor Property Group has a market cap of $5.6 billion and an enterprise value of $11.6 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 46. Its estimated growth rate for this year is 191.7%, and for next year it's pegged at 42.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $61.83 million and its total debt is $6.07 billion. This stock currently sports a dividend yield of 2.4%.

A director just bought 20,950 shares, or about $493,000 worth of stock, at $23.55 per share. The CEO also just bought 15,000 shares, or about $349,000 worth of stock, at $23.33 per share. From a technical perspective, BRX is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending over the last six months, with shares moving higher from its low of $20.25 to its recent high of $24.10 a share. During that uptrend, shares of BRX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BRX within range of triggering a near-term breakout trade.

If you're bullish on BRX, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $22.45 to its 200-day at $21.65 and then once it breaks out above its 50-day moving average of $23.41 to its all-time high at $24.10 a share with high volume. Look for a sustained move or close above the levels with volume that registers near or above its three-month average action of 1 million shares. If that breakout gets underway soon, then BRX will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 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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