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.

Immune Design

One clinical-stage immunotherapy player that insiders are loading up on here is Immune Design  (IMDZ) , which engages in the research and development of in vivo immunotherapy treatments. Insiders are buying this stock into big weakness, since shares have dropped sharply by 32.7% over the last six months.

Immune Design has a market cap of $191 million and an enterprise value of $65 million. This stock trades at a premium valuation, with a price-to-sales of 17.9 and a price-to-book of 1.81. Its estimated growth rate for this year is -31.1%, 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 $92.59 million and its total debt is zero.

A director just bought 800,000 shares, or about $5 million worth of stock at $6.25 per share. From a technical perspective, Immune Design 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 over the last few weeks, with shares moving higher off its low of $6.02 a share to its recent high of $8.36 a share. During that uptrend, shares of Immune Design 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 Immune Design then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $7.21 a share or above more near-term support at $7 a share and then once it breaks out above some key overhead resistance levels at $8 to $8.36 a share and then above more resistance levels at $8.44 to $9 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 97,352 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 $10.50 to its 200-day moving average of $11.15, or even $12 a share.

Impac Mortgage

Another mortgage investment player that insiders are in love with here is Impac Mortgage  (IMH) , which operates as an independent residential mortgage lender in the U.S. Insiders are buying this stock into notable weakness, since shares have dropped notably by 11.3% over the last three months.

Impac Mortgage has a market cap of $206 million and an enterprise value of $5.2 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 3.9 and a forward price-to-earnings of 5.5. Its estimated growth rate for next year is -44.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $39.55 million and its total debt is $5.08 billion.

A beneficial owner just bought 300,000 shares, or about $3.9 million worth of stock, at $13 per share. Another beneficial owner also just bought 200,000 shares, or about $2.6 million worth of stock, at $13 per share.

From a technical perspective, Impac Mortgage is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped-down sharply lower from around $15 a share to $13 a share with heavy downside volume flows. Following that move, shares of Impac Mortgage have now started to rebound a bit off that $13 low, and it's beginning to push within range of triggering a big breakout trade.

If you're bullish on Impac Mortgage then I would look for long-biased trades as long as this stock is trending above that recent low of $13 a share and then once it breaks out above some near-term overhead resistance levels at $13.50 to $13.84 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 59,314 shares. If that breakout develops soon, then this stock will set up to re-fill some of its previous gap-down-day zone from earlier this month that started near $15 a share.

Cheniere Energy

One energy player that insiders are active in 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 risen sharply by 26.6% over the last six months.

Cheniere Energy has a market cap of $9.8 billion and an enterprise value of $28.4 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 323. Its estimated growth rate for this year 54.4%, and for next year it's pegged at 106.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.05 billion and its total debt is $19.83 billion.

The CEO just bought 35,063 shares, or about $1.49 million worth of stock, at $42.78 per share.

From a technical perspective, Cheniere Energy 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 over the last four months, with shares moving higher off its low of $31.02 a share to its recent high of $46 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 above some key overhead resistance levels.

If you're in the bull camp on Cheniere Energy, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $41.72 a share or around $40 a share and then once it breaks out above both its 50-day moving average of $42.93 a share and its 20-day moving average of $43.67 a share and then above more key resistance at $46 a share with volume that registers near or above its three-month average action of 2.10 million 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 $52 to its 52-week high of $54.95 a share.

HD Supply Holdings

One services player that insiders are jumping into here is HD Supply Holdings  (HDS) . which operates as an industrial distributor in North America. Insiders are buying this stock into modest weakness, since shares have dropped by 4.5% over the last six months.

HD Supply Holdings has a market cap of $6.2 billion and an enterprise value of $10.3 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 5.2 and a forward price-to-earnings of 10. Its estimated growth rate for this year is 46.6%, and for next year it's pegged at 20.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $313 million and its total debt is $4.31 billion.

The CEO just bought 32,100 shares, or about $997,000 worth of stock, at $31.07 per share.

From a technical perspective, HD Supply Holdings is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped-down sharply lower from $36.97 a share to under $32 a share with heavy downside volume flows. Following that move, this stock went on to put in a potential double bottom, after shares found some buying interest at $30.05 to $30.16 a share.

If you're bullish on HD Supply Holdings, then I would look for long-biased trades as long as this stock is trending above those recent double bottom support levels and then once it breaks out above its 200-day moving average of $31.99 a share to $32.20 a share and then above its 20-day moving average of $32.33 a share to $32.50 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 action of 2.30 million shares. If that breakout kicks off soon, then this stock will set up to re-fill some of its previous gap-down-day zone from earlier this month that started at $36.97 a share.

Enphase Energy

My final stock with some decent insider buying is technology player Enphase Energy  (ENPH) , which designs, develops and sells microinverter systems for residential and commercial markets in the U.S. and internationally. Insiders are buying this stock into large weakness, since shares have fallen sharply by 43.6% over the last six months.

Enphase Energy a market cap of $55.6 million and an enterprise value of $60.3 million. This stock trades at a fair valuation, with a price-to-sales of 0.18 and a price-to-book of 4.51. Its estimated growth rate for this year is -483.3%, and for next year it's pegged at 58.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $8.24 million and its total debt is $12.45 million.

A director just bought 600,000 shares, or about $720,000 worth of stock, at $1.20 per share.

From a technical perspective, Enphase Energy is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped-down sharply from $1.72 a share to $1.16 a share with monster downside volume flows. Following that move, shares of Enphase Energy have now started to stabilize a bit and move sideways between $1.16 on the downside and $1.25 on the upside.

If you're bullish on Enphase Energy, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $1.16 a share and then once it breaks out above some near-term overhead resistance levels at $1.25 a share to its gap-down-day high of $1.26 a share with volume that registers near or above its three-month average action of 440,098 shares. If that breakout triggers soon, then this stock will set up to re-fill some of its previous gap-down-day zone from earlier this month which started at $1.72 a share.

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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