5 Stocks With Major Insider Buying: Agios Pharmaceuticals 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.

Clean Harbors

One waste management player that insiders are active in here is Clean Harbors (CLH) , which provides environmental, energy, and industrial services primarily in the U.S., Puerto Rico, and Canada. Insiders are buying this stock into notable weakness, since shares are off by 17% in 2014.

Clean Harbors has a market cap of $2.9 billion and an enterprise value of $4 billion. This stock trades at a fair valuation, with a forward price-to-earnings of 27. Its estimated growth rate for this year is -24.9%, and for next year it's pegged at 27.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $258.02 million and its total debt is $1.40 billion.

The CEO just bought 25,000 shares, or about $1.65 million worth of stock, at $46.60 per share.

From a technical perspective, CLH is currently trending just above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $44.25 to its recent high of $51.11 a share. During that move, shares of CLH have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CLH within range of triggering a big breakout trade above some key overhead resistance levels.

If you're bullish on CLH, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $47.39 or above $46 and then once it breaks out above some near-term overhead resistance levels at $51.11 to $51.26 a share and above $52 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 848,920 shares. If that breakout gets set off soon, then CLH will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $55.68 to $57.70 a share, or even $60 to $62 a share.

Endurance Specialty

Another financial player that insiders are active in here is Endurance Specialty (ENH) , which underwrites specialty lines of personal and commercial property and casualty insurance and reinsurance worldwide. Insiders are buying this stock into strength, since shares have rallied higher by 14% over the last six months.

Endurance Specialty has a market cap of $2.6 billion and an enterprise value of $2.3 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 8.7 and a forward price-to-earnings of 10. Its estimated growth rate for this year is 0.90%, and for next year it's pegged at -9.4%. This is a cash-rich company, since the total cash position on its balance sheet is $817.77 million and its total debt is $528.48 million. This stock currently sports a dividend yield of 2.3%.

The CEO just bought 60,000 shares, or around $3.42 million worth of stock, at $56.94 to $57.70 per share.

From a technical perspective, ENH 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 $49.62 to its recent high of $59.65 a share. During that uptrend, shares of ENH have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on ENH, then I would look for long-biased trades as long as this stock is trending above its 50-day at $57.19 or above more near-term support levels at $56 to $54 a share and then once it breaks out above its 52-week high of $60 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 168,047 shares. If that breakout hits soon, then ENH 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 $80 a share.

Agios Pharmaceuticals

One biopharmaceutical player that insiders are loading up on here is Agios Pharmaceuticals (AGIO) , which focuses on the development and commercialization of therapeutics in the field of cancer metabolism and inborn errors of metabolism in the U.S. Insiders are buying this stock into incredible strength, since shares have exploded higher in 2014 by 404%.

Agios Pharmaceuticals has a market cap of $4.1 billion and an enterprise value of $3.9 billion. This stock trades at a premium valuation, with a price-to-sales of 72.2 and a price-to-book of 19.95. Its estimated growth rate for this year is 48.8%, and for next year it's pegged at -24.1%. This is a cash-rich company, since the total cash position on its balance sheet is $219.97 million and its total debt is zero.

A beneficial owner just bought 228,645 shares, or about $25.32 million worth of stock, at $110.75 per share.

From a technical perspective, AGIO is currently trending well 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 soaring higher from its low of $33.01 to its recent high of $124.39 a share. During that uptrend, shares of AGIO have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on AGIO, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $105.78 or $100 or above its 50-day at $90.85 a share and then once it breaks out above its all-time high of $124.39 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average volume of 954,511 million shares. If that breakout materializes soon, then AGIO will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $135 to $140 a share, or even $145 to $150 a share.

American Homes 4 Rent

One real estate investment trust that insiders are in love with here is American Homes 4 Rent (AMH) , which engages in the acquisition, renovation, leasing, and operating single-family home rental properties in the U.S. Insiders are buying this stock into modest strength, since shares are up about 7% in 2014.

American Homes 4 Rent has a market cap of $3.6 billion and an enterprise value of $4.5 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 19.5. Its estimated growth rate for the next quarter is 90%, and for next year it's pegged at 81.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $103.99 million and its total debt is $1.08 billion. This stock currently sports a dividend yield of 1.2%.

A director just bought 1,000,000 shares, or about $16.99 million worth of stock, at $16.99 per share.

From a technical perspective, AMH is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways and consolidating for the last two months, with shares moving between $16.27 on the downside and $17.65 on the upside. Shares of AMH are now starting to spike higher right above both its 50-day and 200-day moving averages and it's now quickly moving within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern.

If you're bullish on AMH, then I would look for long-biased trades as long as this stock is trending above its 50-day at $17.07 or above more near-term support at $16.67 a share and then once it breaks out above some near-term overhead resistance at $17.65 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 994,461 shares. If that breakout kicks off soon, then AMH will set up to re-test or possibly take out its next major overhead resistance levels at $18.17 to its 52-week high of $18.85 a share. Any high-volume move above those levels will then give AMH a chance to tag or trend north of $20 a share.

Hertz Global

One final stock with some huge insider buying is Hertz Global (HTZ) , which is engaged in the car and equipment rental businesses worldwide. Insiders are buying this stock into weakness, since shares have dropped by 21% over the last six months.

Hertz Global has a market cap of $10 billion and an enterprise value of $25.7 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 29 and a forward price-to-earnings of 17.8. Its estimated growth rate for this year is -54.6%, and for next year it's pegged at 71.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $583.30 million and its total debt is $16.32 billion.

A beneficial owner just bought 2.63 million shares, or about $56.24 million worth of stock, at $21.36 per share. From a technical perspective, HTZ is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock just recently started to spike higher right above its 50-day moving average of $22.22 a share. That spike is starting to push shares of HTZ within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on HTZ, then I would look for long-biased trades as long as this stock is trending above its 50-day at $22.22 or above some more key support at $20.61 a share and then once it breaks out above near-term overhead resistance at $22.96 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 11.39 million shares. If that breakout develops soon, then HTZ will set up to re-test or possibly take out its next major overhead resistance levels at $24.50 to $25.53 a share, or even its 200-day moving average of $26.41 a share. Any high-volume move above its 200-day will then give HTZ a chance to tag $28 to 30 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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