5 Stocks Insiders Love Right Now: Vanda, Vicon 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.

Vanda Pharmaceuticals

One biopharmaceutical player that insiders are active in here is Vanda Pharmaceuticals (VNDA) , which is engaged in the development and commercialization of pharmaceutical products. Insiders are buying this stock into major strength, since shares have jumped higher by 40% over the last three months.

Vanda Pharmaceuticals has a market cap of $502 million and an enterprise value of $380 million. This stock trades at a premium valuation, with a price-to-sales of 11.68 and a price-to-book of 484.19. Its estimated growth rate for this year is -143.3%, and for next year it's pegged at 73%. This is a cash-rich company, since the total cash position on its balance sheet is $56.09 million and its total debt is zero.

A beneficial owner just bought 162,014 shares, or about $2.3 million worth of stock, at $14.23 to $14.48 per share.

From a technical perspective, VNDA 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 few weeks, with shares moving higher from is low of $11.66 to its recent high of $15.51 a share. During that move, shares of VNDA have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VNDA within range of triggering a big breakout trade.

If you're bullish on VNDA, then I would look for long-biased trades as long as this stock is trending above some near-term support just below $13.50 a share and then once it breaks out above some near-term overhead resistance levels at $15.51 a share to some past resistance at $16.50 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 761,578 shares. If that breakout materializes soon, then VNDA will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $19.25 a share.

Vicon Industries

A technology player that insiders are in love with here is Vicon Industries (VII) , which designs, assembles, manufactures and markets video management systems and system components for security, surveillance, safety and communication applications. Insiders are buying this stock into major weakness, since shares have dropped by 43% in 2014.

Vicon Industries has a market cap of $7.9 million. This stock trades at a cheap valuation, with a price-to-sales of 0.23 and a price-to-book of 0.47.

The CEO just bought 230,000 shares, or around $346,000 worth of stock, at $1.44 to $1.67 per share.

From a technical perspective, VII 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 for the last few weeks, with shares moving high from its low of $1.31 to its recent high of $1.89 a share. During that uptrend, shares of VII have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VII within range of triggering a major breakout trade above some key near-term overhead resistance levels.

If you're in the bull camp on VII, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $1.50 or at $1.45 a share and then once it breaks out above some near-term overhead resistance levels at $1.89 to $2.15 a share and above more resistance levels at $2.30 to $2.32 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 193,438 shares. If that breakout gets started soon, then VII will set up to re-test or possibly take out its next major overhead resistance levels at $3 to $3.50 a share, or even $4 a share.

Hawaiian Telcom Holdco

One telecommunications services player that insiders are loading up on here is Hawaiian Telcom Holdco (HCOM) , which provides communications services and products in Hawaii. Insiders are buying this stock into modest strength, since shares have trended higher b 6.9% over the last three months.

Hawaiian Telcom Holdco Supply has a market cap of $296 million and an enterprise value of $540 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 35.6 and a forward price-to-earnings of 38. Its estimated growth rate for this year is -26.3%, and for next year it's pegged at 4.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $31.69 million and its total debt is $292.98 million.

A beneficial owner just bought 50,000, or about $1.33 million worth of stock, at $26.61 to $26.80 per share.

From a technical perspective, HCOM is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $25.78 to its recent high of $27.89 a share. During that uptrend, shares of HCOM have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HCOM within range of triggering a near-term breakout trade.

If you're bullish on HCOM, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average at $26.62 a share and then once it breaks out above some key near-term overhead resistance levels at $27.89 to $28.20 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 42,197 shares. If that breakout develops soon, then HCOM will set up to re-test or possibly take out its 52-week high at $31.50 a share.

EOG Resources

One energy player that insiders are jumping into here is EOG Resources (EOG) , which explores for, develops, produces and markets crude oil and natural gas. Insiders are buying this stock into notable weakness, since shares have dropped by 18.5% over the last six months.

EOG Resources has a market cap of $51.6 billion and an enterprise value of $52 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 16.9 and a forward price-to-earnings of 29.3. Its estimated growth rate for this year is 28.5%, and for next year it's pegged at -39.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.48 billion and its total debt is $5.91 billion.

A director just bought 3,000 shares, or about $278,000 worth of stock, at $92.86 per share.

From a technical perspective, EOG is currently trending below its 200-day moving average and just above its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $83.66 to $83.78 a share. Following that bottom, shares of EOG have started to uptrend with the stock moving back above its 50-day moving average. That move has now pushed shares of EOG within range of triggering a near-term breakout trade.

If you're bullish on EOG, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $92.50 or above $90 a share and then once it breaks out above some near-term overhead resistance at $97.27 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 6.76 million shares. If that breakout kicks off soon, then EOG will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $101.82 to $103.04 a share, or even $106 a share.

ModusLink Global Solutions

One final stock with some decent insider buying is ModusLink Global Solutions (MLNK) , which provides supply chain business process management services and solutions worldwide. Insiders are buying this stock into major weakness, since shares have trended lower by 36% in 2014.

ModusLink Global Solutions has a market cap of $188 million and an enterprise value of $68 million. This stock trades at a reasonable valuation, with a price-to-sales of 0.27 and a price-to-book of 1.15. This is a cash-rich company, since the total cash position on its balance sheet is $176.40 million and its total debt is $74.44 million.

A beneficial owner just bought 171,958 shares, or about $614,000 worth of stock, at $3.57 per share. From a technical perspective, MLNK is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the last few weeks, with shares moving higher from its low of around $2.90 to its recent high of $3.86 a share. During that uptrend, shares of MLNK have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of MLNK within range of triggering a near-term breakout trade.

If you're bullish on MLNK, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average at $3.35 a share and then once it breaks out above some key overhead resistance levels at $3.86 to $3.97 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 187,421 shares. If that breakout triggers soon, then MLNK will set up to re-test or possibly take out its next major overhead resistance levels at $4.32 to $4.41 a share. Any high-volume move above those levels will then give MLNK a chance to re-fill some of its previous gap-down-day zone from March that started near $5 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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