Editors' Pick: Originally published March 23.

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.

Cara Therapeutics

One clinical-stage biopharmaceutical player that insiders are active in here isCara Therapeutics (CARA - Get Report) , which focuses on developing and commercializing chemical entities designed to alleviate pain and pruritus by selectively targeting kappa opioid receptors. Insiders are buying this stock into massive weakness, since shares have plunged lower by 66.6% over the last six months.

Cara Therapeutics has a market cap of $170 million and an enterprise value of $66 million. This stock trades at a premium valuation, with a price-to-sales of 37.64 and a price-to-book of 1.56. Its estimated growth rate for this year is -63%, and for next year it's pegged at -19%. This is a cash-rich company, since the total cash position on its balance sheet is $111.12 million and its total debt is zero.

A director just bought 400,000 shares, or about $1.94 million worth of stock, at $4.78 to $4.93 per share.

From a technical perspective, Cara Therapeutics 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 moving higher off its low of $4.5 to its intraday high on Wednesday of $6.75 a share. During that uptrend, shares of Cara Therapeutics have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on Cara Therapeutics then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $5.40 a share and then once it breaks out above Wednesday's intraday high of $6.75 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 566,092 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 its 50-day moving average of $7.64 to $7.84, or even $8.30 to around $9 a share.

Flamel Technologies

Another specialty pharmaceutical player that insiders are in love with here is Flamel Technologies  (FLML) , which develops and commercializes pharmaceutical products based on its proprietary polymer-based technology primarily in the U.S., France and Ireland. Insiders are buying this stock into large weakness, since shares have fallen sharply by 44.3% over the last six months.

Flamel Technologies has a market cap of $455 million and an enterprise value of $487 million. This stock trades at a fair valuation, with a forward price-to-earnings of 24.7. Its estimated growth rate for this year -67.7%, and for next year it's pegged at 53.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $116.12 million and its total debt is $150.03 million.

A director just bought 100,000 shares, or about $1.03 million worth of stock, at $10.39 per share. An officer also just bought 10,000 shares, or about $111,000 worth of stock, at $11.10 per share.

From a technical perspective, Flamel Technologies is currently trending above its 50-day moving average and well below its 200-day moving average, which is neural trendwise. This stock has been uptrending strong over the last month, with shares moving higher off its new 52-week low of $7.56 to its intraday high on Wednesday of $11.70 a share. During that uptrend, shares of Flamel Technologies have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on Flamel Technologies, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $9.49 a share and then once it breaks out above some near-term overhead resistance levels at $11.70 to $12 a share with volume that hits near or above its three-month average action of 350,533 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 $13 to $14, or even $15 to $15.50 a share.

Incyte

One biotechnology player that insiders are loading up on here is Incyte  (INCY - Get Report) , which focuses on the discovery, development and commercialization of proprietary therapeutics in oncology. Insiders are buying this stock into big weakness, since shares have dropped by 39.6% over the last six months.

Incyte has a market cap of $13.1 billion and an enterprise value of $12.8 billion. This stock trades at a reasonable valuation, with a forward price-to-earnings of 55.4. Its estimated growth rate for this year is 866.7%, and for next year it's pegged at 337.9%. This is barely a cash-rich company, since the total cash position on its balance sheet is $707.78 million and its total debt is $619.89 million.

A director just bought 800,000 shares, or about $51.18 million worth of stock, at $60.85 to $62.59 per share.

From a technical perspective, Incyte is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending a bit over the last few weeks, with shares moving higher off its low of $60.30 to its intraday high on Wednesday of $71.33 a share. During that uptrend, shares of Incyte 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 near-term breakout trade above some key overhead resistance levels.

If you're bullish on Incyte, then I would look for long-biased trades as long as this stock is trending above some near-term support at $65 a share and then once it breaks out above some near-term overhead resistance levels at $72 a share to its 50-day moving average of $72.14 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 2.44 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 $74 to $75, or even $76.50 to $80 a share.

Essent Group

One financial player that insiders are jumping into here is Essent Group  (ESNT - Get Report) , which provides private mortgage insurance and reinsurance for mortgages secured by residential properties located in the U.S. Insiders are buying this stock into notable weakness, since shares have traded off by 23.8% over the last six months.

Essent Group has a market cap of $1.8 billion and an enterprise value of $1.7 billion. This stock trades at a cheap valuation, with trailing price-to-earnings of 11.6 and a forward price-to-earnings of 7.7. Its estimated growth rate for this year is 25.6%, and for next year it's pegged at 19.9%. This is a cash-rich company, since the total cash position on its balance sheet is $110.60 million and its total debt is zero.

A beneficial owner just bought 265,017 shares, or about $5.18 million worth of stock, at $19.56 per share.

From a technical perspective, Essent Group is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last two months, with shares moving higher off its new 52-week low of $16.49 to its recent high of $20.59 a share. During that uptrend, shares of Essent Group have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now started to push this stock within range of triggering a near-term breakout trade.

If you're bullish on Essent Group, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $18.80 a share and then once it breaks out above some near-term overhead resistance levels at $20.59 to $21 a share with volume that hits near or above its three-month average action of 614,869 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 $22 to $23, or even its 200-day moving average of $24.04 to $25 a share.

Relypsa

One final stock with some decent insider buying is biotechnology player Relypsa  (RLYP) , which focuses on the discovery, development and commercialization of polymeric medicines for patients with conditions that are overlooked and undertreated and can be addressed in the gastrointestinal tract primarily in the U.S. Insiders are buying this stock into massive weakness, since shares have dropped sharply by 52% over the last three months.

Relypsa has a market cap of $581 million and an enterprise value of $373 million. This stock trades at a premium valuation, with a price-to-sales of 32.27 and a price-to-book of 3.14. Its estimated growth rate for this year is -29.6%, and for next year it's pegged at 26.9%. This is a cash-rich company, since the total cash position on its balance sheet is $240.72 million and its total debt is $15.89 million.

A director just bought 30,000 shares, or about $401,000 worth of stock at $13.39 per share.

From a technical perspective, Relypsa is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been attempting to carve out a double bottom over the last few weeks, with shares finding some buying interest $11.60 to $12 a share. Following that potential bottom, this stock has now started to uptrend and flirt with its 20-day moving average of $13.65 a share. That uptrend has now pushed shares of Relypsa within range of triggering a near-term breakout trade.

If you're bullish on Relypsa, then I would look for long-biased trades as long as this stock is trending above its recent low of $11.60 a share and then once it breaks out above some near-term overhead resistance levels at $14.18 to $14.58 a share and then above $15.06 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 2.29 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 $16.59 to $18, or even $19 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.