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.

BeiGene

One biopharmaceutical player that insiders are loading up on here is BeiGene (BGNE), which discovers and develops molecularly-targeted and immuno-oncology drugs for the treatment of cancer. Insiders are buying this stock into notable strength, since shares have jumped 14.1% over the last six months.

BeiGene has a market cap of $1.2 billion and an enterprise value of $850 million. This stock trades at a premium valuation, with a price-to-sales of 145.29 and a price-to-book of 4.71. Its estimated growth rate for this year is 41%, and for next year it's pegged at 8.6%. This is a cash-rich company, since the total cash position on its balance sheet is $203.62 million and its total debt is $18.03 million.

A director just bought 165,824 shares, or about $5.30 million worth of stock, at $32 per share.

From a technical perspective, BeiGene is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $31 to $31.20 a share. Following that potential bottom, shares of BeiGene have now started to spike a bit higher and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on BeiGene then I would look for long-biased trades as long as this stock is trending above those recent double bottom support levels, or above its 200-day moving average of $29.66 a share and then once it breaks out above both its 50-day moving average of $32.25 a share and its 20-day moving average of $33.16 a share and then above more near-term resistance at $34 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 114,392 shares. If that breakout triggers soon, then this stock will set up to re-fill some of its previous gap-down-day zone that stared near $38 a share.

Baker Hughes

Another energy player that insiders are jumping into here is Baker Hughes (BHI), which supplies oilfield services, products, technology, and systems to the oil and natural gas industry worldwide. Insiders are buying this stock into large strength, since shares have ripped up by 37.8% over the last six months.

Baker Hughes has a market cap of $26 billion and an enterprise value of $25 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 140.3. Its estimated growth rate for this year is -235.4%, and for next year it's pegged at 127.3%. This is a cash-rich company, since the total cash position on its balance sheet is $3.74 billion and its total debt is $3.02 billion. This stock currently sports a dividend yield of 1.12%.

A director just bought 85,000 shares, or about $5 million worth of stock, at $58.84 per share.

From a technical perspective, Baker Hughes is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last five months, with shares moving higher off its low of $41.46 a share to its recent high of $62.40 a share. During that uptrend, shares of Baker Hughes have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Baker Hughes then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $58.73 a share and then once it breaks out above its new 52-week high of $62.40 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 4.21 million shares. If that breakout hits soon, then this stock will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $65 to $70, or even $75 a share.

Calithera Biosciences

One biopharmaceutical player that insiders are active in here is Calithera Biosciences (CALA), which focuses on discovering and developing small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer in the U.S. Insiders are buying this stock into large weakness, since shares have dropped sharply by 27% over the last six months.

Calithera Biosciences has a market cap of $68 million and an enterprise value of $14 million. This stock trades at a reasonable valuation, with a price-to-book of 1.27. Its estimated growth rate for this year is -9.9%, and for next year it's pegged at 22.6%. This is a cash-rich company, since the total cash position on its balance sheet is $56.27 million and its total debt is zero.

A beneficial owner just bought 500,000 shares, or about $1.57 million worth of stock, at $3.15 per share.

From a technical perspective, Calithera Biosciences 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 and change, with shares moving higher off its low of $2.20 a share to its recent high of $3.50 a share. During that uptrend, shares of Calithera Biosciences have been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed this stock within range of triggering a big breakout trade above some key overhead resistance levels.

If you're in the bull camp on Calithera Biosciences, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $3.01 a share or above its 20-day moving average of $2.95 a share and then once it breaks out above some near-term overhead resistance levels at $3.50 to $3.66 a share with volume that hits near or above its three-month average action of 189,631 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 $3.86 to $4.11, or even its 200-day moving average of $4.20 to $4.50 a share.

Papa Murphy's

One specialty eateries player that insiders are in love with here is Papa Murphy's (FRSH), which owns, operates, and franchises Take N Bake pizza stores. Insiders are buying this stock into large weakness, since shares have dropped by 37.5% over the last six months.

Papa Murphy's has a market cap of $80 million and an enterprise value of $193 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 21 and a forward price-to-earnings of 59. Its estimated growth rate for this year is -78.7%, and for this year it's pegged at -20%. This is not a cash-rich company, since the total cash position on its balance sheet is $508,000 and its total debt is $112.06 million.

A director just bought 100,000 shares, or about $441,000 worth of stock, at $3.90 to $4.68 per share.

From a technical perspective, Papa Murphy's 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 $3.56 a share to its recent high of $4.84 a share. During that uptrend, shares of Papa Murphy's 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 big breakout trade above some key overhead resistance levels.

If you're bullish on Papa Murphy's, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $4.43 or at $4.30 a share and then once it breaks out above some near-term overhead resistance levels at $4.84 to $5 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 138,537 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 its 50-day moving average of $5.62 to $5.79, or even $6 a share.

Home Depot

My final stock with some big insider buying is home improvement stores player Home Depot (HD), which operates as a home improvement retailer. Insiders are buying this stock into modest weakness, since shares have fallen by 3.6% over the last three months.

Home Depot a market cap of $162 billion and an enterprise value of $179 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 21.3 and a forward price-to-earnings of 18.2. Its estimated growth rate for this year is 17.4%, and for next year it's pegged at 13.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $3.59 billion and its total debt is $22.88 billion. This stock currently sports a dividend yield of 2.1%.

A director just bought 10,000 shares, or about $1.28 million worth of stock, at $128.27 per share.

From a technical perspective, Home Depot is currently above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last month, with shares moving higher off its low of $119.20 a share to its recent high of $131.99 a share. During that uptrend, shares of Home Depot have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Home Depot, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average of $129.63 a share or above its 50-day moving average of $12.28 a share and then once it breaks out above some near-term overhead resistance levels at $132 to $133 a share with volume that hits near or above its three-month average action of 5.26 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 $136 to $138, or even its 52-week high of $139 to $140 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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