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.

Energy Transfer Equity

One energy player that insiders are jumping into here is Energy Transfer Equity (ETE) , which provides diversified energy-related services in the U.S. Insiders are buying this stock into major strength, since shares are up sharply by 47% so far in 2014.

Energy Transfer Equity has a market cap of $32 billion and an enterprise value of $58 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 123 and a forward price-to-earnings of 32. Its estimated growth rate for this year is -29.6%, and for next year it's pegged at 39.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.23 billion and its total debt is $27.20 billion. This stock currently sports a dividend yield of 2.7%.

A beneficial owner just bought 33,000 shares, or about $1.99 million worth of stock, at $60.41 per share.

From a technical perspective, ETE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $45.38 to its recent high of $65.53 a share. During that uptrend, shares of ETE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ETE within range of triggering a big breakout trade and some key near-term overhead resistance levels.

If you're bullish on ETE, then I would look for long-biased trades as long as this stock is trending above its 50-day at $58.65 or above more near-term support at $56 and then once it breaks out above some near-term overhead resistance levels at $62.81 a share to its 52-week high at $65.53 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 1.18 million shares. If that breakout triggers soon, then ETE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $75 a share.

American Eagle Outfitters

Another apparel stores player that insiders are loading up on here is American Eagle Outfitters (AEO) , which operates as a specialty retailer of clothing, accessories and personal care products in the U.S. and internationally. Insiders are buying this stock into notable strength, since shares have trended higher by 22% over the last three months.

American Eagle Outfitters has a market cap of $2.7 billion and an enterprise value of $2.5 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 47 and a forward price-to-earnings of 18. Its estimated growth rate for this year is -20.3%, and for next year it's pegged at 30.5%. This is a cash-rich company, since the total cash position on its balance sheet is $262.63 million and its total debt is zero. This stock currently sports a dividend yield of 4.8%.

The CEO just bought 148,942 shares, or about $2.10 million worth of stock, at $14.08 to $14.14 per share.

From a technical perspective, AEO is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last two months, with shares moving higher from its low of $10.18 to its recent high of $14.99 a share. During that uptrend, shares of AEO have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AEO within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're in the bull camp on AEO, then I would look for long-biased trades as long as this stock is trending above some key near-term support at $13.45 and then once it breaks out above some near-term overhead resistance levels at $15 to $15.36 a share and then above its 52-week high at $16.95 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 5.49 million shares. If that breakout develops soon, then AEO will set up to re-test or possibly take out its next major overhead resistance levels at $19.36 to $20.13 a share.

Restoration Hardware

One home furnishing stores player that insiders are active in here is Restoration Hardware (RH) , which offers merchandise assortments across a number of categories, including furniture, lighting, textiles, bath ware, decor, outdoor, garden and baby and child products. Insiders are buying this stock into major strength, since shares have soared higher by 28% over the last six months.

Restoration Hardware has a market cap of $3.1 billion and an enterprise value of $3.3 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 179 and a forward price-to-earnings of 27. Its estimated growth rate for this year is 36.8%, and for next year it's pegged at 26.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $181.49 million and its total debt is $348.11 million.

The CEO just bought 25,974 shares, or about $1.99 million worth of stock, at $76.82 per share.

From a technical perspective, RH 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 over the last month, with shares falling from its high of $90.71 to its recent low of $75.50 a share. During that downtrend, shares of RH have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of RH have now started to rebound higher off that $75.50 low and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on RH, then I would look for long-biased trades as long as this stock is trending above that recent low of $75.50 and then once it breaks out above some key near-term overhead resistance levels at its 50-day moving average at $83.14 to around $84 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 1.14 million shares. If that breakout materializes soon, then RH will set up to re-test or possibly take out its next major overhead resistance levels at $90.71 to its 52-week high at $94.50 a share.

Fisverv

One business services player that insiders are in love with here is Fiserv (FISV) , which provides financial services technology worldwide. Insiders are buying this stock into notable strength, since shares have risen by 10% so far in 2014.

Fiserv has a market cap of $16 billion and an enterprise value of $19 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 24 and a forward price-to-earnings of 17. Its estimated growth rate for this year is 12.4%, and for next year it's pegged at 11.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $329 million and its total debt is $3.85 billion.

The COO just bought 10,000 shares, or about $655,000 worth of stock, at $65.50 per share.

From a technical perspective, FISV is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $54.91 to its recent high of $66.11 a share. During that uptrend, shares of FISV have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of FISV are now starting to trend within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on FISV, then I would look for long-biased trades as long as this stock is trending above is 50-day moving average of $63.53 or above more key support around $61 and then once it breaks out above its 52-week high at $66.11 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 880,122 shares. If that breakout develops soon, then FISV will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $75 to $80 a share.

Retrophin

One final stock with some decent insider buying is Retrophin (RTRX) , which focuses on the development, acquisition, and commercialization of therapies for the treatment of serious, catastrophic, or rare diseases. Insiders are buying this stock into massive weakness, since shares have plunged lower by 42% over the last six months.

Retrophin has a market cap of $288 million and an enterprise value of $324 million. This stock trades at a premium valuation, with a price-to-sales of 49 and a price-to-book of 264. This is not a cash-rich company, since the total cash position on its balance sheet is $43.44 million and its total debt is $82.81 million.

The CEO just bought 53,000 shares, or about $590,000 worth of stock, at $10.82 per share.

From a technical perspective, RTRX is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last month, with shares moving lower from its high of $14.49 to its recent low of $10.50 a share. During that move, shares of RTRX have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of RTRX have now started to bounce higher right above some previous support at $10.36 a share.

If you're bullish on RTRX, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $10.50 to $10.36 and then once it breaks out above its 50-day moving average of $11.97 a share and its 200-day moving average of $12.88 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 268,683 shares. If that breakout kicks off soon, then RTRX will set up to re-test or possibly take out its next major overhead resistance levels at $13.81 to $14.49 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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