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.


Sequenom

One stock that insiders are loading up on here is Sequenom  (SQNM) , which develops and commercializes molecular diagnostics testing services for the women's health and oncology markets in the U.S. and internationally. Insiders are buying this stock into large weakness, since shares have crashed by 56% over the last six months.

Sequenom has a market cap of $220 million and an enterprise value of $268 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 12.4. Its estimated growth rate for this year is 0%, and for next year it's pegged at 6.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $86.77 million and its total debt is $134.75 million.

A beneficial owner just bought 1,650,090 shares, or about $3.24 million worth of stock, at $1.89 to $2.10 per share.

From a technical perspective, Sequenom is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been consolidating and trending sideways over the last two months and change, with shares moving between $1.53 on the downside and $2.53 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern soon could trigger a big breakout trade for shares of Sequenom.

If you're bullish on Sequenom, then I would look for long-biased trades as long as this stock is trending above some near-term support at $1.75 or above its recent low of $1.53 a share and then once it breaks out above some near-term overhead resistance at $2.17 to $2.46 a share and then above more resistance at $2.53 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 1.40 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 $3 to $3.30, or even $3.50 to $4 a share. 


Medgenics

Another clinical stage medical technology player that insider are active in here is Medgenics  (MDGN) , which engages in the research and development of products in the field of biotechnology and associated medical equipment in the U.S. Insiders are buying this stock into notable weakness, since shares have dropped by 23.4% over the last six months.

Medgenics has a market cap of $219 million and an enterprise value of $161 million. This stock trades at a premium valuation, with a price-to-book of 8.75. Its estimated growth rate for this year is -32.3%, and for next year it's pegged at 6.3%. This is a cash-rich company, since the total cash position on its balance sheet is $22.01 million and its total debt is zero.

A director just bought 153,846 shares, or about $999,000 worth of stock, at $6.50 per share. The CEO also just bought 38,460 shares, or about $249,000 worth of stock, at $6.50 per share.

From a technical perspective, Medgenics is currently trending below both its 50-day and 20-day moving averages, which is bearish. This stock has been uptrending over the last few weeks, with shares moving higher off its low of $6.35 to its recent high of $7.72 a share. During that uptrend, shares of Medgenics have 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 above some key near-term overhead resistance levels.

If you're in the bull camp on Medgenics, then I would look for long-biased trades as long as this stock is trending above some near-term support at $6.75 or above $6.35 a share and then once it breaks out above $7.72 to $8 a share with volume that hits near or above its three-month average action of 221,282 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $9 to $10, or even $10.25 a share.

Must Read: 3 Stocks Warren Buffett Is Buying in 2015

Spark Therapeutics

One biotechnology player that insiders are in love with here is Spark Therapeutics  (ONCE) , which focuses on the development of gene therapy products for patients suffering from debilitating genetic diseases. Insiders are buying this stock into big weakness, since shares have plunged by 35.4% over the last six months.

Spark Therapeutics has a market cap of $1.1 billion and an enterprise value of $956 million. This stock trades at a premium valuation, with a price-to-sales of 277 and a price-to-book of 5.6. Its estimated growth rate for this year is 51%, and for next year it's pegged at -11.5%. This is a cash-rich company, since the total cash position on its balance sheet is $223.05 million and its total debt is zero.

A director just bought 5,000 shares, or about $245,000 worth of stock, at $49.11 per share.

From a technical perspective, Spark Therapeutics is currently trending above both its 50-day and 20-day moving averages, which is bullish. This stock has been uptrending over the last month, with shares moving higher off its low of $38.48 to its recent high of $66 a share. During that uptrend, shares of Spark Therapeutics have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Spark Therapeutics, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $45.91 or above more near-term support at $43.85 a share and then once it breaks out above some key overhead resistance at $51 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 481,415 shares. If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $66 to $72 a share.

 


Support.com

One technology player that insiders are jumping into here is Support.com  (SPRT) , which provides cloud-based software and services in North America. Insiders are buying this stock into big weakness, since shares have fell sharply lower by 29.6% over the last six months.

Support.com has a market cap of $66 million and an enterprise value of -$5.7 million. This stock trades at a cheap valuation, with a price-to-sales of 0.78 and a price-to-book of 0.86. This is a cash-rich company, since the total cash position on its balance sheet is $71.75 million and its total debt is zero.

A beneficial owner just bought 521,739 shares, or about $627,000 worth of stock, at $1.20 to $1.21 per share. Another beneficial owner also just bought 506,750 shares, or about $609,000 worth of stock, at $1.20 to $1.21 per share.

From a technical perspective, Support.com is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending over the last few weeks, with shares ripping higher off its low of $1.05 to its recent high of $1.28 a share. During that uptrend, shares of Support.com have 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 big breakout trade above some key near-term overhead resistance levels.

If you're bullish on Support.com, then I would look for long-biased trades as long as this stock is trending above some near-term support at its 20-day moving average of $1.18 a share or above more support at $1.15 and then once it breaks out above some near-term overhead resistance levels at $1.28 to $1.33 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 350,275 shares. If that breakout gets underway soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $1.40 to $1.50, or even $1.55 to $1.65 a share.

Alimera Sciences

One final stock with some decent insider buying is pharmaceutical player Alimera Sciences  (ALIM) , which engages in the research, development, and commercialization of prescription ophthalmic pharmaceuticals in the U.S. and internationally. Insiders are buying this stock into major weakness, since shares have plunged by 42.6% over the last three months.

Alimera Sciences has a market cap of $119 million and an enterprise value of $116 million. This stock trades at a reasonable valuation, with a price-to-sales of 9.3. Its estimated growth rate for this year is 11%, and for next year it's pegged at 82.7%. This is just barely a cash-rich company, since the total cash position on its balance sheet is $48.14 million and its total debt is $34.56 million.

A beneficial owner just bought 321,785 shares, or about $779,000 worth of stock, at $2.30 to $2.53 per share. From a technical perspective, Alimera Sciences is currently trending below both its 50-day and 200-day moving averages, which is bearish technical price action. This stock has been trending strongly to the upside over the last few weeks, with shares soaring higher off its low of $1.94 to its recent high of $3.45 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Alimera Sciences, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $2.45 or above more support at $2.30 a share and then once it breaks out above some near-term overhead resistance levels at $3.15 to $3.50 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 174,465 shares. If that breakout materializes soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $4 to $4.40, or even $5 a share. 

 

 

Disclosure: 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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