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.

Cheniere Energy

One energy player that insiders are loading up on here is Cheniere Energy  (LNG) , which engages in the liquefied-natural-gas-related business in the U.S. Insiders are buying this stock into big strength, since shares have ripped higher by 31.4% over the last six months.

Cheniere Energy has a market cap of $9.3 billion and an enterprise value of $26.3 billion. This stock trades at a reasonable valuation, with a forward price-to-earnings of 44.8. Its estimated growth rate for this year is 74%, and for next year it's pegged at 178.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.10 billion and its total debt is $18.42 billion.

The CEO just bought 37,604 shares, or about $1.49 million worth of stock at $39.89 per share. From a technical perspective, Cheniere Energy is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last two months and change, with shares moving higher off its low of $31.02 a share to its recent high of $40.32 a share. During that uptrend, shares of Cheniere Energy 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.

If you're bullish on Cheniere Energy, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $37.66 a share and then once it breaks out above some near-term overhead resistance at $40.32 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 volume of 2.50 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 $45 to $50, or even $52 to $55 a share.

Akamai Technologies

Another technology player that insiders are active in here is Akamai Technologies  (AKAM) , which provides cloud services for delivering, optimizing and securing content and business applications over the Internet in the U.S. and internationally. Insiders are buying this stock into solid strength, since shares have risen by 26.4% over the last six months.

Akamai Technologies has a market cap of $10 billion and an enterprise value of $9.8 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 32.4 and a forward price-to-earnings of 18.8. Its estimated growth rate for this year 6.7%, and for next year it's pegged at 13.4%. This is a cash-rich company, since the total cash position on its balance sheet is $837.87 million and its total debt is $623.48 million.

The CEO just bought 17,456 shares, or about $999,000 worth of stock, at $57.28 per share.

From a technical perspective, Akamai Technologies 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 and change, with shares moving higher off its low of $48.88 a share to its recent high of $58.01 a share. During that uptrend, shares of Akamai Technologies 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.

If you're bullish on Akamai Technologies then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $55.62 a share or above its 50-day moving average of $54.03 a share and then once it breaks out above some near-term overhead resistance at $58.01 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 1.71 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 level at its gap-down-day high from last October at around $64 a share. Any high-volume move above $64 will then give this stock a chance to re-fill some of that previous gap-down-day zone that started near $76 a share.

Restoration Hardware

One luxury retailer that insiders are jumping into here is Restoration Hardware  (RH) , which engages in the retail of home furnishings. Insiders are buying this stock into big weakness, since shares have plunged by 53.8% over the last six months.

Restoration Hardware has a market cap of $1.1 billion and an enterprise value of $1.5 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 17.1 and a forward price-to-earnings of 12.5. Its estimated growth rate for this year -39.3%, and for next year it's pegged at 40.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $337.25 million and its total debt is $707.20 million.

The CEO just bought 32,918 shares, or about $908,000 worth of stock, at $27.59 per share.

From a technical perspective, Restoration Hardware 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 $24.75 to $25.10 a share over the last month and change. Following that bottom, shares of Restoration Hardware have now started to uptrend a bit and move back above its 20-day moving average of $28.65 a share. 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 Restoration Hardware, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $28.65 a share or above some more near-term support at $27.23 a share and then once it breaks out above some near-term overhead resistance levels at $30.01 to its 50-day moving average of $30.32 a share and then above more key resistance at $31.98 a share with volume that hits near or above its three-month average action of 2.88 million shares. If that breakout fires off soon, then this stock will set up to re-fill some of its previous gap-down-day zone from June that started near $37 a share.

Ryman Hospitality Properties

One REIT that insiders are making moves in here is Ryman Hospitality Properties  (RHP) , which owns and operates hotels in the U.S. Insiders are buying this stock into notable strength, since shares have trended up 24.5% over the last six months.

Ryman Hospitality Properties has a market cap of $2.7 billion and an enterprise value of $4.1 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 21 and a forward price-to-earnings of 17.3. Its estimated growth rate for this year is 32.9%, and for next year it's pegged at 8.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $57.15 million and its total debt is $1.48 billion. This stock currently sports a dividend yield of 5.5%.

The CEO just bought 7,377 shares, or about $394,000 worth of stock, at $53.44 per share.

From a technical perspective, Ryman Hospitality Properties is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last month or so, with shares moving higher off its low of $46.73 a share to its recent high of $54.50 a share. During that uptrend, shares of Ryman Hospitality Properties 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 near-term breakout trade.

If you're bullish in Ryman Hospitality Properties, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $51.71 a share and then once it breaks out above some near-term overhead resistance at $54.50 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 229,700 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 $58.39 to $60, or even its 52-week high of $61.02 a share.

Actuant

My final stock with some decent insider buying is diversified machinery player Actuant  (ATU) , which designs, manufactures, and distributes a range of industrial products and systems worldwide. Insiders are buying this stock into notable strength, since shares have moved higher by 11.6% over the last six months.

Actuant a market cap of $1.4 billion and an enterprise value of $1.8 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 19.2. Its estimated growth rate for this year is -26.1%, and for next year it's pegged at 1.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $137.09 million and its total debt is $588.06 million.

The CEO just bought 10,795 shares, or about $249,000 worth of stock, at $23.14 per share.

From a technical perspective, Actuant is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending a bit over the last few weeks, with shares moving higher off its low of $21.67 a share to its recent high of $24.57 a share During that uptrend, shares of Actuant have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Actuant, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $23.20 a share or above more near-term support at $22.50 a share and then once it breaks out above some near-term overhead resistance levels at $24.57 to its 50-day moving average of $25.16 a share with volume that hits near or above its three-month average action of 645,373 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 $26.50 to its 52-week high of $27.71, or even $29 to $32 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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