5 Stocks Insiders Love Right Now

THC GTE ASYS MRVC RH 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.

Tenet Healthcare Group

THC ChartTHC data by YCharts

One stock that insiders are snapping up a large amount of stock in here is Tenet Healthcare Group  (THC), which primarily operates acute care hospitals and related health care facilities in the U.S. Insiders are buying this stock into strength, since shares have advanced by 11.5% over the last six months.

Tenet Healthcare Group has a market cap of $5.7 billion and an enterprise value of $17.8 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 63.8 and a forward price-to-earnings of 20.6. Its estimated growth rate for this year is 51.4%, and for next year it's pegged at 28.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $185 million and its total debt is $12.33 billion.

A beneficial owner just bought 979,482 shares, or about $53.80 million worth of stock, at $54.30 to $55.92 per share.

From a technical perspective, Tenet Healthcare Group is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently exploded to the upside right off both of those key moving averages with heavy upside volume flows. Since that move, this stock has pulled back a bit, but it's now setting up to break out above some key near-term overhead resistance levels.

If you're bullish on Tenet Healthcare Group, then I would look for long-biased trades as long as this stock is trending above some near-term support at around $56 and then once it breaks out above some key overhead resistance levels at $59.21 to around $60 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 1.69 million shares. If that breakout triggers soon, then shares of Tenet Healthcare Group will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $63.61 a share.

Gran Tierra Energy

GTE Chart
GTE data by YCharts

Another stock that insiders are warming up too here is Gran Tierra Energy  (GTE), which engages in the acquisition, exploration, development, and production of oil and gas properties in Colombia, Peru, and Brazil. Insiders are buying this stock into notable weakness, since shares have slumped by 21.1% over the last six months.

Gran Tierra Energy has a market cap of $853 million and an enterprise value of $670 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 24.8. Its estimated growth rate for this year is 75%, and for next year it's pegged at 180%. This is a cash-rich company, since the total cash position on its balance sheet is $211.46 million and its total debt is zero.

A director just bought 88,000 shares, or about $272,000 worth of stock, at $3.09 per share.

From a technical perspective, Gran Tierra Energy is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways and consolidating over the last month and change, with shares moving between $2.83 on the downside and $3.31 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern could trigger a big breakout trade for shares of Gran Tierra Energy.

If you're in the bull camp on Gran Tierra Energy, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $2.82 to $2.83 and then once it breaks out above some key near-term overhead resistance levels at $3.08 to $3.20 and then above its 50-day at $3.30 to $3.31 a share with volume that hits near or above its three-month average action of 1.85 million shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $3.59 to $3.80 a share, or even $4 to $4.50 a share.



Amtech Systems

ASYS ChartASYS data by YCharts

One technology stock that insiders are jumping into here is Amtech Systems  (ASYS), which designs, assembles, sells and installs capital equipment and related consumables used in the manufacture of wafers, primarily for the solar and semiconductor industries worldwide. Insiders are buying this stock into modest strength, since shares have trended higher by 7.6% over the last six months.

Amtech Systems has a market cap of $135 million and an enterprise value of $110 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 15. Its estimated growth rate for this year is 42.5%, and for next year it's pegged at 189.6%. This is a cash-rich company, since the total cash position on its balance sheet is $32.61 million and its total debt is $9.22 million.

A beneficial owner just bought 25,000 shares, or about $256,000 worth of stock, at $10.25 per share.

From a technical perspective, Amtech Systems is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. Shares of Amtech Systems jumped higher on Tuesday back above its 200-day moving average with strong upside volume flows. That move is now quickly pushing shares of Amtech Systems within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on Amtech Systems, then I would look for long-biased trades as long as this stock is trending above its recent low of $9.84 and then once it breaks out above some near-term overhead resistance levels at $10.92 to its 50-day moving average of $11.12 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 71,938 shares. If that breakout gets started soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $12.20 to its 52-week high of $12.93 a share. Any high-volume move above those levels will then give Amtech Systems a chance to tag $14 a share.

MRV Communications

MRVC ChartMRVC data by YCharts

Another technology stock that insiders are loading up on here is MRV Communications  (MRVC), which provides communications solutions to telecommunications service providers, enterprises and governments worldwide. Insiders are buying this stock into massive strength, since shares have exploded by 73.7% over the last three months.

MRV Communications has a market cap of $85 million and an enterprise value of $71 million. This stock trades at a cheap valuation, with a price-to-sales of 0.49 and a price-to-book of 1.90. This is a cash-rich company, since the total cash position on its balance sheet is $14.22 million and its total debt is $2.12 million.

A beneficial owner just bought 601,200 shares, or about $6.61 million worth of stock, at $10.44 per share.

From a technical perspective, MRV Communications 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 soaring higher from its low of $6.38 to its recent high of $12.35 a share. During that uptrend, shares of MRV Communications have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a big breakout trade.

If you're bullish on MRV Communications, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average of $10.08 a share and then once it breaks out above some key overhead resistance levels at $12.50 to $12.80 a share and then over $13 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 26,486 shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $14.55 to $15.31 a share, or even $16.60 a share.

Restoration Hardware

RH ChartRH data by YCharts

One final stock with some large insider buying is Restoration Hardware  (RH), which engages in the retail of home furnishings. Insiders are buying this stock into marginal weakness, since shares have dropped by 1.4% over the last three months.

Restoration Hardware has a market cap of $3.9 billion and an enterprise value of $4.2 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 42.1 and a forward price-to-earnings of 25.1. Its estimated growth rate for this year is 31.8%, and for next year it's pegged at 25.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $179.27 million and its total debt is $486.92 million.

A director just bought 20,830 shares, or about $1.99 million worth of stock, at $96.01 per share. From a technical perspective, Restoration Hardware 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 two months, with shares moving higher from its low of $85.52 to its recent high of $100.80 a share. During that uptrend, shares of Restoration Hardware has been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a major breakout trade.

If you're bullish on Restoration Hardware, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $92.05 a share and then once it breaks out above some near-term overhead resistance levels at $100.80 to its all-time high of $102 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 682,329 shares. If that breakout kicks off soon, then this stock will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move $110 to $120 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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