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.

Walmart Stores

One specialty retailer that insiders are active in here is Walmart Stores  (WMT - Get Report) , which operates retail stores in various formats worldwide. Insiders are buying this stock into major weakness, since shares have fallen by 30.9% over the last six months.

Wal-Mart Stores has a market cap of $191 billion and an enterprise value of $239 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 12.7 and a forward price-to-earnings of 14.2. Its estimated growth rate for this year is -9.9%, and for next year it's pegged at -8.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $6.99 billion and its total debt is a whopping $52.46 billion. This stock currently sports a dividend yield of 3.2%.

A director just bought 10,000 shares, or about $584,000 worth of stock, at $58.46 per share.

From a technical perspective, Wal-Mart Stores 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 few weeks, with shares moving between $58.16 on the downside and $60.96 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 Wal-Mart Stores.

If you're bullish on Wal-Mart Stores, then I would look for long-biased trades as long as this stock is trending above some near-term support at $58.16 a share and then once it breaks out above its 50-day moving average of $59.82 a share and then above more key resistance levels at $60.73 to $60.96 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 12.15 million shares. If that breakout develops soon, then this stock will set up to re-fill some of its previous gap-down-day zone from October that started at $67.39 a share.

Nymox Pharmaceutical

Another biopharmaceutical player that insider are in love with here is Nymox Pharmaceutical  (NYMX - Get Report) , which engages in the research and development of novel drugs and diagnostic products for the aging population. Insiders are buying this stock into large strength, since shares have ripped higher by 44% over the last three months.

Nymox Pharmaceutical has a market cap of $150 million and an enterprise value of $123 million. This stock trades at a premium valuation, with a price-to-sales of 30.1. This is barely a cash-rich company, since the total cash position on its balance sheet is $872,450 and its total debt is $765,840.

A director just bought 110,000 shares, or about $378,000 worth of stock, at $3.28 to $3.49 per share.

From a technical perspective, Nymox Pharmaceutical is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has just started to trend to the upside right off both its 50-day moving average of $3.30 a share and its 20-day moving average of $3.34 a share. That spike higher is now starting to push shares of Nymox Pharmaceutical within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're in the bull camp on Nymox Pharmaceutical, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $3.20 to $3.10 a share and then once it breaks out above some near-term overhead resistance levels at $3.75 to $3.95 a share with volume that registers near or above its three-month average action of 419,278 shares. If that breakout takes hold soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $4.37 to $5.50 a share.

Intrexon

One biotechnology player that insiders are loading up on here is Intrexon  (XON - Get Report) , which operates in the synthetic biology field in the U.S. Insiders are buying this stock into notable weakness, since shares have dropped by 29.8% over the last six months.

Intrexon has a market cap of $3.8 billion and an enterprise value of $3.5 billion. This stock trades at a premium valuation, with a price-to-sales of 23.1 and a price-to-book of 5.2. Its estimated growth rate for this year is 24.1%, and for next year it's pegged at 4.8%. This is a cash-rich company, since the total cash position on its balance sheet is $216.30 million and its total debt is just $9.59 million.

The CEO just bought 237,525 shares, or about $7.28 million worth of stock, at $30.69 per share.

From a technical perspective, Intrexon is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $29.35 to $30 a share. Following that bottom, shares of Intrexon have started to trend a bit higher and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on Intrexon, then I would look for long-biased trades as long as this stock is trending above those double bottom support levels and then once it breaks out above its 50-day moving average of $34.81 and its 20-day moving average of $35.20 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 volume of 2.10 million 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 $37.62 to $39.29, or even $43 a share.

DSW

One apparel stores player that insiders are jumping into here is DSW  (DSW) , which operates as a branded footwear and accessories retailer in the U.S. Insiders are buying this stock into large weakness, since shares have dropped sharply by 32.2% over the last six months.

DSW has a market cap of $2.05 billion and an enterprise value of $1.93 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 13.6 and a forward price-to-earnings of 14.6. Its estimated growth rate for this year -13%, and for next year it's pegged at 9.5%. This is a cash-rich company, since the total cash position on its balance sheet is $90.02 million and its total debt is zero. This stock currently sports a dividend yield of 3.3%.

The chairman of the board just bought 500,000 shares, or about $11.43 million worth of stock, at $22.79 to $23.06 per share.

From a technical perspective, DSW is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly over the last six months, with shares falling from its high of $34.96 to its recent low of $21.23 a share. During that downtrend, shares of DSW have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to bounce off that $21.23 low and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on DSW, then I would look for long-biased trades as long as this stock is trending above some near-term support at $22.25 a share and then once it breaks out above its 50-day moving average of $24.09 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 2.31 million 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 $25.46 to $26.45, or even $28 to $30 a share.

3D Systems

One final stock with some large insider buying is player 3D Systems  (DDD - Get Report) , which operates as a provider of 3D printing centric design-to-manufacturing solutions in the Americas, Germany and the Asia-Pacific, as well as other European, the Middle East and African countries. Insiders are buying this stock into massive weakness, since shares have plunged by 54.8% over the last six months.

3D Systems has a market cap of $1.09 billion and an enterprise value of $901 million. This stock trades at a premium valuation, with a forward price-to-earnings of 33.1. Its estimated growth rate for this year is -81.4%, and for next year it's pegged at 123.10%. This is a cash-rich company, since the total cash position on its balance sheet is $157.45 million and its total debt is $8.90 million.

A director just bought 70,400 shares, or about $635,000 worth of stock, at $8.91 to $8.96 per share. From a technical perspective, 3D Systems is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending over the last month, with shares moving higher from its low of $8.44 to its recent high of $9.80 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of 3D Systems within range of triggering a near-term breakout trade.

If you're bullish on 3D Systems, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $9 or above more near-term support at $8.80 a share and then once it breaks out above some near-term overhead resistance at $10 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 2.77 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 50-day moving average of $10.57 to $11.50, or even $12.45 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.