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.

Sears Holdings

One stock that insiders are jumping into here is Sears Holdings  (SHLD), which operates as a retailer in the U.S. Insiders are buying this stock into major strength, since shares have ripped to the upside by 23.9% over the last three months.

Sears Holdings has a market cap of $4.4 billion and an enterprise value of $7.9 billion. This stock trades at a reasonable valuation, with a price-to-sales of 0.14. Its estimated growth rate for this year is -12.3%, and for next year it's pegged at -5.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $250 million and its total debt is $3.80 billion.

A beneficial owner just bought 158,800 shares, or about $6.28 million worth of stock, at $39.07 to $40.36 per share.

From a technical perspective, SHLD is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending a bit over the for the last few weeks, with shares moving higher from its low of $38.78 to its intraday high on Tuesday of $42.14 a share. During that uptrend, shares of SHLD have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SHLD within range of triggering a near-term breakout trade.

If you're bullish on SHLD, then I would look for long-biased trades as long as this stock is trending above that recent low of $38.78 a share and then once it breaks out above some near-term overhead resistance levels $44.44 to $46.23 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 637,757 shares. If that breakout begins soon, then SHLD will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $48.25 to $50 a share, or even $54.50 a share.

Advaxis

Another stock that insiders are loading up on here is Advaxis  (ADXS), which focuses on the discovery, development and commercialization of Lm-LLO cancer immunotherapies in the U.S. Insiders are buying this stock into monster strength, since shares have exploded higher by 484.7% over the last six months.

Advaxis has a market cap of $482 million and an enterprise value of $611 million. This stock trades at a premium valuation, with a price-to-sales of 492.19 and a price-to-book of 13.84. Its estimated growth rate for this year is -14.4%, and for next year it's pegged at -11.7%. This is a cash-rich company, since the total cash position on its balance sheet is $30.58 million and its total debt is $62,000.

A beneficial owner just bought 500,000 shares, or about $9.50 million worth of stock, at $19 per share.

From a technical perspective, ADXS is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last three months, with shares moving higher from its low of $6.87 to its recent high of $24.48 a share. During that uptrend, shares of ADXS have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on ADXS, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $15.35 a share and then once it breaks out above some near-term overhead resistance levels at $20 to $22.50 a share with volume that registers near or above its three-month average action of 1.47 million shares. If that breakout hits soon, then ADXS will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $24.48 a share to $27 a share.

Walgreens Boots Alliance

Another stock that insiders are active in here is Walgreens Boots Alliance  (WBA), which provides consumer goods and services, pharmacy and health and wellness services through drugstores, as well as through mail and by telephone and online. Insiders are buying this stock into decent strength, since shares have moved higher by 11.1% over the last three months.

Walgreens Boots Alliance has a market cap of $90.6 billion and an enterprise value of $108 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 24.1 and a forward price-to-earnings of 18.8. Its estimated growth rate for this year is 11%, and for next year it's pegged at 21.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $3.08 billion and its total debt is $17.06 billion. This stock currently sports a dividend yield of 1.5%.

A director just bought 10,000 shares, or about $849,000 worth of stock, at $85.00 per share.

From a technical perspective, WBA 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 downtrending over the last month, with shares moving lower from its high of $93.42 a share to its recent low of $82.53 a share. During that downtrend, shares of WBA have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on WBA, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $82.53 to $80 a share and then once it breaks out above its 50-day moving average of $85.75 a share to more near-term resistance at $87.50 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 5.52 million shares. If that breakout takes hold soon, then WBA will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $93.42 a share. Any high-volume move above that level will then give WBA a chance to tag $100 a share.

Air Products & Chemicals

One basic materials player that insiders are in love with here is Air Products & Chemicals  (APD), which provides atmospheric gases, process and specialty gases, performance materials, equipment and services worldwide. Insiders are buying this stock into slight strength, since shares have trend to the upside by 8.5% over the last six months.

Air Products & Chemicals has a market cap of $31.1 billion and an enterprise value of $37.4 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 30.5 and a forward price-to-earnings of 19.9. Its estimated growth rate for this year is 11.4%, and for next year it's pegged at 13%. This is not a cash-rich company, since the total cash position on its balance sheet is $264.30 million and its total debt is $6.12 billion. This stock currently sports a dividend yield of 2.1%.

The CEO just bought 20,000 shares, or about $2.91 million worth of stock, at $145.38 to $146.22 per share.

From a technical perspective, APD is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last two months, with shares moving lower from its high of $157.36 to its recent low of $142.27 a share. During that downtrend, shares of APD have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on APD, then I would look for long-biased trades as long as this stock is trending above that recent low of $142.27 or above its 200-day moving average of $140.06 a share and then once it breaks out above some near-term overhead resistance levels at $149 a share to its 50-day moving average of $151.99 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 995,282 shares. If that breakout develops soon, then APD will set up to re-test or possibly take out its next major overhead resistance levels at $154 to $154.55 a share, or even $157.36 to its 52-week high of $158.20 a share.

Ultratech

One final stock with some large insider buying activity is technology player Ultratech  (UTEK), which develops, manufactures and markets photolithography, laser thermal processing, and inspection equipment. Insiders are buying this stock into notable strength, since shares have jumped to the upside by 11.9% over the last three months.

Ultratech has a market cap of $546.3 million and an enterprise value of $271 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 24. Its estimated growth rate for this year is 129.9%, and for next year it's pegged at 315%. This is a cash-rich company, since the total cash position on its balance sheet is $269.73 million and its total debt is just $7.32 million.

A beneficial owner just bought 437,556 shares, or about $8.07 million worth of stock, at $17.18 to $19.52 per share. From a technical perspective, UTEK is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last three months, with shares moving higher from its low of $15.59 to its recent high of $20.72 a share. During that uptrend, shares of UTEK have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on UTEK, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $19 to its 50-day moving average of $18.33 a share and then once it breaks out above some key overhead resistance levels at $20.72 to $22.50 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 volume of 286,082 shares. If that breakout takes hold soon, then UTEK will set up to re-test or possibly take out its next major overhead resistance levels at $25 to its 52-week high of $27.72 a share.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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