5 Stocks Insiders Love Right Now: Freeport-McMoRan and More

 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.

Freeport McMoRan

One stock hat insiders are falling in love with here is Freeport McMoRan (FCX) , which is engaged in the acquisition of mineral assets and oil and natural gas resources. Insiders are buying this stock into major weakness, since shares have plunged by 43% in 2014.

Freeport McMoRan has a market cap of $22 billion and an enterprise value of $46 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 9.8 and a forward price-to-earnings of 9.7. Its estimated growth rate for this year is -19.9%, and for next year it's pegged at 2.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $658 million and its total debt is a whopping $19.74 billion. This stock currently sports a dividend yield of 5.2%.

A vice president just bought 50,000 shares, or about $ 1.10 million worth of stock, at $22.15 per share. This same vice president also just bought 500,000 shares, or $11.80 million worth of stock, at $23.60 per share.

From a technical perspective, FCX is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly over the last six months, with shares falling sharply from over $38 a share to its new 52-week low of $20.94 a share. During that downtrend, shares of FCX have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of FCX have now entered extremely oversold territory, since its current relative strength index reading is 19.73.

If you're bullish on FCX, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $20.94 a share and then once it breaks out above some near-term overhead resistance levels at $22 to $24 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 13.55 million shares. If that breakout hits soon, then FCX will set up to re-test or possibly take out its next major overhead resistance levels $27 to its 50-day moving average of $28.13 a share, or even $30 a share.

World Acceptance

Another stock that insiders are active in here is World Acceptance WRLD, which is engaged in small-loan consumer finance business in the U.S. and Mexico. Insiders are buying this stock into notable weakness, since shares have dropped so far in 2014 by 13%.

World Acceptance has a market cap of $685 million and an enterprise value of $1.25 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 7.7 and a forward price-to-earnings of 6.4. Its estimated growth rate for this year 17.3%, and for next year it's pegged at 10.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $14.63 million and its total debt is $559.70 million.

A director just bought 12,567 shares, or around $949,000 worth of stock, at $75.56 per share.

From a technical perspective, WRLD is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has recently formed a double bottom chart pattern, since shares of WRLD found some buying interest at $75.08 to $74.77 a share. That bottom is trying to be carved out right above its 50-day moving average of $73.20 a share.

If you're in the bull camp on WRLD, then I would look for long-biased trades as long as this stock is trending above those double bottom support levels or above its 50-day at $73.20 a share and then once it breaks out above some key near-term overhead resistance levels at its 200-day of $76.84 a share to $79.77 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 139,948 shares. If that breakout kicks off soon, then WRLD will set up to re-test or possibly take out its next major overhead resistance levels at $82 to $84 a share, or even $86.58 a share.

RPC

One energy player that insiders are snapping up a large amount of stock in here is RPC (RES) , which provides oilfield services and equipment for oil and gas companies engaged in the exploration, production and development of oil and gas properties in the U.S., Africa, Canada, China, Eastern Europe, Latin America, the Middle East and New Zealand. Insiders are buying this stock into huge weakness, since shares have dropped sharply over the last six months by 46%.

RPC has a market cap of $2.7 billion and an enterprise value of $2.7 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 13.3 and a forward price-to-earnings of 10. Its estimated growth rate for this year is 44.2%, and for next year it's pegged at 12.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $8.52 million and its total debt is $152 million. This stock currently sports a dividend yield of 3.5%.

The chairman of the board just bought 563,000 shares, or about $6.84 million worth of stock, at $12.13 to $12.20 per share. This same chairman of the board also just bought 665,400 shares, or about $8.12 million worth of stock, at $12 to $12.36 per share.

From a technical perspective, RES 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 six months, with shares moving lower from its high of over $24 a share to its new 52-week low at $11.55 a share. During that downtrend, shares of RES have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of RES have now started to rebound off its new 52-week low and off oversold levels with strong upside volume flows. The current relative strength reading for shares of RES sit at 35. Oversold can always get more oversold, but it's also an area where a stock can bounce powerfully higher from.

If you're bullish on RES, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $11.55 a share and then once it breaks out above some near-term overhead resistance levels at $13 to $13.48 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 1.54 million shares. If that breakout materializes soon, then RES will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $15.31 to $17 a share.

EV Energy Partners

One energy player that insiders are jumping into here is EV Energy Partners (EVEP) , which is engaged in the acquisition, development and production of oil and natural gas properties in the U.S. Insiders are buying this stock into massive weakness, since shares have plunged by 40% over the last six months.

EV Energy Partners has a market cap of $1.1 billion and an enterprise value of $2.3 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 12.2. Its estimated growth rate for this year is 136.2%, and for next year it's pegged at 98.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $11.20 million and its total debt is $1.15 billion. This stock currently sports a dividend yield of 13.2%.

The chairman of the board just bought 80,000 shares, or about $1.85 million worth of stock, at $22.65 to $24.11 per share.

From a technical perspective, EVEP 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 four months, with shares moving lower from its high of $40.93 to its new 52-week low of $20.01 a share. During that downtrend, shares of EVEP have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on EVEP, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $20.01 a share and then once it breaks out above Tuesday's intraday high of $23.24 to some more near-term resistance at $25 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 372,797 shares. If that breakout triggers soon, then EVEP will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $29.27 to around $32 a share.

Hi-Crush Partners LP

One final stock with some decent insider buying is Hi-Crush Partners LP (HCLP) , which operates as a producer and supplier of monocrystalline sand. Insiders are buying this stock into massive weakness, since shares have trended sharply lower by 49% over the last three months.

Hi-Crush Partners LP has a market cap of $1.1 billion and an enterprise value of $1.3 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 10.4 and a forward price-to-earnings of 7.4. Its estimated growth rate for this year is 46.2%, and for next year it's pegged at 40.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $20.62 million and its total debt is $197.12 million. This stock currently sports a dividend yield of 7.8%.

A director just bought 50,000 shares, or about $1.59 million worth of stock, at $31.84 per share. From a technical perspective, HCLP is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly over the last three months and change, with shares moving lower from its high of $70.98 to its new 52-week low of $28.92 a share. During that downtrend, shares of HCLP have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of HCLP have now started to bounce higher right above its 52-week low of $28.92 a share and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on HCLP, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $28.92 a share and then once it breaks out above some near-term overhead resistance levels at $33.38 to $35 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 711,655 shares. If that breakout develops soon, then HCLP will set up to re-test or possibly take out its next major overhead resistance levels at $40 to its 50-day moving average of $42.68 a share.

-- 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.

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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