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.

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.

CBRE Group

One property management player that insiders are loading up on here is CBRE Group (CBG) , which operates as a commercial real estate services and investment company worldwide. Insiders are buying this stock into modest weakness, since shares have fallen by 5.4% over the last six months.

CBRE Group has a market cap of $9 billion and an enterprise value of $13 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 19 and a forward price-to-earnings of 11.5. Its estimated growth rate for this year is 6.8%, and for next year it's pegged at 7.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $446.35 million and its total debt is $4.36 billion.

A director just bought 1,200,000 shares, or about $32.33 million worth of stock, at $26.84 to $26.97 per share.

From a technical perspective, CBRE Group is currently trending above its 50-day moving average and just 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 $25.40 a share to its intraday high on Thursday of $28.12 a share. During that uptrend, shares of CBRE Group 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 CBRE Group then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $26.91 a share or above some more near-term support at $26 a share and then once it breaks out above some near-term overhead resistance levels at its 200-day moving average of $28.13 a share to $28.55 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 2.62 million 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 $29.50 to $30.40, or even $31.50 to $34 a share.

Gogo

Another technology player that insiders are active in here is Gogo (GOGO) , which provides communications services to the commercial and business aviation markets in the U.S. and internationally. Insiders are buying this stock into notable weakness, since shares are off by 11.9% over the last six months.

Gogo has a market cap of $773 million and an enterprise value of $1.08 billion. This stock trades at a fair valuation, with a price-to-sales of 1.34. Its estimated growth rate for this year is -14.1%, and for next year it's pegged at 1.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $485.55 million and its total debt is $801.08 million.

A director just bought 300,000 shares, or about $2.90 million worth of stock, at $9.69 per share.

From a technical perspective, Gogo 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 month and change, with shares moving lower off its high of $13.28 a share to its intraday low on Thursday of $8.64 a share. During that downtrend, shares of Gogo have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on Gogo then I would look for long-biased trades as long as this stock is trending above some near-term support at $8.20 a share and then once it breaks out above some near-term overhead resistance levels at $9.10 to $9.50 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 1.14 million 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 its 20-day moving average of $10.14 a share to its 200-day moving average of $10.61 a share, or even its 50-day moving average of $11.12 a share.

Hertz Global Holdings

One services player that insiders are jumping into big here is Hertz Global Holdings (HTZ) , which engages in the car rental business in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East, and New Zealand. Insiders are buying this stock into massive weakness, since shares have collapsed by 95.7% over the last six months.

Hertz Global Holdings has a market cap of $2.4 billion and an enterprise value of $16.4 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 3.5 and a forward price-to-earnings of 6.6. Its estimated growth rate for this year is 67.8%, and for next year it's pegged at 48.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.33 billion and its total debt is $15.39 billion.

A beneficial owner just bought 15,080,442 shares, or about $353.32 million worth of stock, at $22.64 per share.

From a technical perspective, Hertz Global Holdings is currently trending below both its 50-day and 20-day moving averages, which is bearish. This stock has been uptrending over the last few trading sessions, with shares ripping higher off its new 52-week low of $17.20 a share to its intraday high on Wednesday of $29.36 a share with heavy volume flows. That high-volume move has now pushed shares of Hertz Global Holdings within range of triggering a big breakout trade above some key overhead resistance levels.

If you're in the bull camp on Hertz Global Holdings, then I would look for long-biased trades as long as this stock is trending above $25.50 a share and then once it breaks out above some near-term overhead resistance levels at $29.36 to $30 a share with volume that registers near or above its three-month average action of 3.18 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 earlier this month that started at $35.75 a share.

Sears Hometown and Outlet Stores

One department stores player that insiders are in love with here is Sears Hometown and Outlet Stores (SHOS) , which engages in the retail sale of home appliances, lawn and garden equipment, tools, and hardware in the U.S. Insiders are buying this stock into notable weakness, since shares have dropped by 17.1% over the last six months.

Sears Hometown and Outlet Stores has a market cap of $126 million and an enterprise value of $176 million. This stock trades at a reasonable valuation, with a price-to-sales of 0.06 and a price-to-book of 0.30. This is not a cash-rich company, since the total cash position on its balance sheet is $18.69 million and its total debt is $70.40 million.

A beneficial owner just bought 699,015 shares, or about $3.40 million worth of stock, at $4.87 per share.

From a technical perspective, Sears Hometown and Outlet Stores is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trend wise. This stock has been uptrending over the last few weeks, with shares moving higher off its low of $4.75 a share to its recent high of $5.70 a share. During that uptrend, shares of Sears Hometown and Outlet Stores has been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on Sears Hometown and Outlet Stores, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $5.23 a share or above its 20-day moving average of $5.05 a share and then once it breaks out above some near-term resistance at around $5.70 to $5.80 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 71,479 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 its 200-day moving average of $6.07 a share to $6.85 a share.

Fluidigm

My final stock with some decent insider buying is healthcare player Fluidigm (FLDM) , which creates, manufactures, and markets technologies and life science tools focused on the exploration and analysis of single cells, as well as the industrial application of genomics. Insiders are buying this stock into big weakness, since shares have dropped by 39.6% over the last six months.

Fluidigm a market cap of $161 million and an enterprise value of $237 million. This stock trades at a reasonable valuation, with a price-to-sales of 1.34 and a price-to-book of 1.85. Its estimated growth rate for this year is -39.2%, and for next year it's pegged at 22.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $86.41 million and its total debt is $194.81 million.

A beneficial owner just bought 159,200 shares, or about $706,000 worth of stock, at $4.38 per share.

From a technical perspective, Fluidigm 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 $4.31 to $4.33 a share over the last month. Following that potential bottom, shares of Fluidigm have now started to uptrend and move back above its 20-day moving average of $4.76 a share. That uptrend is now quickly pushing this stock within range of triggering a big breakout trade.

If you're bullish on Fluidigm, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $4.76 a share and then once it breaks out above some near-term overhead resistance at $5.64 a share with volume that registers near or above its three-month average action of 270,523 shares. If that breakout triggers soon, then this stock will set up to re-fill some of its previous gap-down-day zone from October that started near $7.25 a share.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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