5 Stocks Insiders Love Right Now

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.

Stocks with notable insider activity is something that I tweet about on a regular basis. These are also the exact type of stocks that I love to trade and alert in real-time.

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.

pdvWireless

One technology player that insiders are jumping into here is pdvWireless  (PDVW) , which operates as a private wireless communications carrier and provider of mobile workforce communication and location based solutions in the U.S. Insiders are buying this stock into notable weakness, since shares have fallen by 23.2% over the last six months.

pdvWireless has a market cap of $295 million and an enterprise value of $152 million. This stock trades at a premium valuation, with a price-to-sales of 85.96 and a price-to-book of 1.16. Its estimated growth rate for this year is 5.2%, and for next year it's pegged at 11.6%. This is a cash-rich company, since the total cash position on its balance sheet is $153.46 million and its total debt is $991,000.

A beneficial owner just bought 77,311 shares, or about $1.54 million worth of stock at $19.54 to $20.73 per share. That same beneficial owner also just bought 21,838 shares, or about $466,497 worth of stock at $20.91 to $21.24 per share. From a technical perspective, pdvWireless 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 $19.27 a share to its recent high of $22.47 a share. During that uptrend, shares of pdvWireless 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 above some key overhead resistance levels.

If you're bullish on pdvWireless, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $20 or at $19.27 a share and then once it breaks out above some near-term overhead resistance levels at $22.47 to just above $24 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 107,114 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 $27 to its 50-day moving average of $28.58 a share.

Paratek Pharmaceuticals

Another clinical stage biopharmaceutical player that insiders are loading up on here is Paratek Pharmaceuticals  (PRTK) , which focuses on the development and commercialization of therapeutics based upon tetracycline chemistry in the U.S. Insiders are buying this stock into notable weakness, since shares have dropped by 24.8% over the last six months.

Paratek Pharmaceuticals has a market cap of $298 million and an enterprise value of $151 million. This stock trades at a reasonable valuation, with a price-to-book of 3.32. This is a cash-rich company, since the total cash position on its balance sheet is $112.26 million and its total debt is $19.59 million.

A director just bought 461,538 shares, or about $5.99 million worth of stock, at $13.00 per share.

From a technical perspective, Paratek Pharmaceuticals 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 $12.05 a share to its recent high of $14.34 a share. During that uptrend, this stock has been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of Paratek Pharmaceuticals within range of triggering a big breakout trade.

If you're bullish on Paratek Pharmaceuticals then I would look for long-biased trades as long as this stock is trending above some near-term support at $13 a share and then once it breaks out above some near-term overhead resistance levels at $14.34 to its 50-day moving average of $14.51 a share and then above its 20-day moving average of $14.80 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 266,322 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 $16 to its 200-day moving average of $16.61, or even $17.50 to $19 a share.

Accelerate Diagnostics

One in vitro diagnostics player that insiders are active in here is Accelerate Diagnostics  (AXDX) , which provides solutions for the diagnosis of serious infections in the U.S. Insiders are buying this stock into notable weakness, since shares have trended lower by 21.7% over the last six months.

Accelerate Diagnostics has a market cap of $832 million and an enterprise value of $716 million. This stock trades at a fair valuation, with a price-to-book of 6.96. Its estimated growth rate for this year -25.7%, and for next year it's pegged at -7.1%. This is a cash-rich company, since the total cash position on its balance sheet is $116.66 million and its total debt is zero.

A director just bought 90,147 shares, or about $1.25 million worth of stock, at $13.94 to $13.99 per share.

From a technical perspective, Accelerate Diagnostics is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $13.50 to $13.65 a share. Following that potential bottom, shares of Accelerate Diagnostics have now started to uptrend back above both its 20-day moving average and its 200-day moving average. That spike is quickly pushing this stock within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're in the bull camp on Accelerate Diagnostics, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $15.15 a share or above those recent double bottom support levels and then once it breaks out above some near-term overhead resistance levels at $17 to $17.17 a share with volume that hits near or above its three-month average action of 256,898 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 $18 to $20, or even $22 to $23 a share.

NuStar GP Holdings

One energy player that insiders are jumping into here is NuStar GP Holdings  (NSH) , which engages in the transportation of petroleum products and anhydrous ammonia. Insiders are buying this stock into strength, since shares have ripped higher by 21.9% over the last six months.

NuStar GP Holdings has a market cap of $1.05 billion and an enterprise value of $1.09 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 16.94 and a forward price-to-earnings of 15.02. Its estimated growth rate for this year is -7.7, and for next year it's pegged at 5.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $3.12 million and its total debt is $30 million.

A director just bought 40,000 shares, or about $1 million worth of stock, at $24.70 to $25.27 per share.

From a technical perspective, NuStar GP Holdings is currently trending below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been consolidating and trending sideways over the last two months, with shares moving between $23.13 on the downside and $27.07 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 NuStar GP Holdings.

If you're bullish in NuStar GP Holdings, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $23.33 to $23.13 a share and then once it breaks out above its 20-day moving average of $25.28 a share to more near-term resistance levels at $26.10 to $26.22 a share and above $27.07 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 123,973 shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $29.23 to $30, or even $32.50 a share.

Hawaiian Telcom Holdco

My final stock with some decent insider buying is technology player Hawaiian Telcom Holdco  (HCOM) , which provides communications services and products to residential and business customers in Hawaii. Insiders are buying this stock into notable weakness, since shares have dropped by 15.4% over the last six months.

Hawaiian Telcom Holdco a market cap of $245 million and an enterprise value of $510 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 97.14. Its estimated growth rate for this year is 10%, and for next year it's pegged at 100%. This is not a cash-rich company, since the total cash position on its balance sheet is $20.85 million and its total debt is $286.79 million.

A director just bought 24,573 shares, or about $509,000 worth of stock, at $20.45 to $21.01 per share.

From a technical perspective, Hawaiian Telcom Holdco is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the last month, with shares moving higher off its low of $19 a share to its recent high of $21.78 a share. During that uptrend, shares of Hawaiian Telcom Holdco 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 Hawaiian Telcom Holdco, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $20.70 a share or above more near-term support at $20.06 a share and then once it breaks out above some near-term overhead resistance levels at $21.73 to $21.78 a share with volume that hits near or above its three-month average action of 32,443 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 $22.42 to its 200-day moving average of $22.72, or even $23.50 to $25 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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