5 Stocks With Big Insider Buying

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.

Skechers

One consumer goods player that insiders are active in here is Skechers (SKX) , which designs, develops, markets, and distributes footwear for men, women, and children; and performance footwear for men and women under the Skechers GO brand name worldwide. Insiders are buying this stock into notable weakness, since shares have fallen by 14% over the last six months.

Skechers has a market cap of $4.2 billion and an enterprise value of $3.5 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 15.6 and a forward price-to-earnings of 14.6. Its estimated growth rate for this year is 9.3%, 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 $665.29 million and its total debt is $74.50 million.

The CEO just bought 500,000 shares, or about $10.98 million worth of stock, at $21.75 per share.

From a technical perspective, Skechers 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 strong over the last month and change, with shares moving higher off its low of $18.18 a share to its intraday high on Wednesday of $26.98 a share. During that uptrend, shares of Skechers have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on Skechers then I would look for long-biased trades as long as this stock is trending above some near-term support around $24.50 a share and then once it breaks out above its 200-day moving average of $27.05 a share to its gap-down-day high from July at $27.39 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 3.47 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 that started near $33 a share.

NuStar Energy

Another energy player that insiders are loading up on here is NuStar Energy  (NS) , which engages in the terminalling, storage, and marketing of petroleum products; and transportation of petroleum products and anhydrous ammonia. Insiders are buying this stock into modest weakness, since shares have dropped by 7.7% over the last six months.

NuStar Energy has a market cap of $3.8 billion and an enterprise value of $6.9 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 22.3 and a forward price-to-earnings of 20.2. Its estimated growth rate for this year is -35.5%, and for next year it's pegged at 12.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $32.66 million and its total debt is $3.21 billion. This stock currently sports a dividend yield of 9.1%.

A director just bought 20,000 shares, or about $934,000 worth of stock, at $46.74 per share.

From a technical perspective, NuStar 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 month and change, with shares moving higher off its low of $43.32 a share to its recent high of $48.80 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. This move has now pushed shares of NuStar Energy within range of triggering a near-term breakout trade.

If you're bullish on NuStar Energy then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $47.08 a share or above its 50-day moving average of $46.70 a share and then once it breaks out above some near-term overhead resistance levels at $48.80 to $49.08 a share and above $49.34 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 288,158 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 $51.03 to its 52-week high of $53.47, or even $55 to $60 a share.

Jamba

One restaurants player that insiders are jumping into here is Jamba (JMBA) , which owns, operates, and franchises Jamba Juice stores. Insiders are buying this stock into notable weakness, since shares have fallen by 8.4% over the last six months.

Jamba has a market cap of $154 million and an enterprise value of $139 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 24. Its estimated growth rate for the next quarter is 87.5%, and for this year it's pegged at 92.3%. This is a cash-rich company, since the total cash position on its balance sheet is $14.26 million and its total debt is zero.

A director just bought 135,000 shares, or about $1.36 million worth of stock, at $10.04 to $10.17 per share.

From a technical perspective, Jamba is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been consolidating and trending sideways over the last month and change, with shares moving between $9.25 on the downside and $10.38 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern could trigger a near-term breakout trade for shares of Jamba.

If you're in the bull camp on Jamba, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $9.65 to $9.25 a share and then once it breaks out above some near-term overhead resistance levels at $10.38 to $10.70 a share with volume that hits near or above its three-month average action of 69,356 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 $11.05 to its 200-day moving average of $11.25 a share, or even $11.60 to $12.50 a share.

Sohu.com

One technology player that insiders are active in here is Sohu.com (SOHU) , which provides online media, search, and game services on personal computers, mobile devices, and tablets in the People's Republic of China. Insiders are buying this stock into notable weakness, since shares are off by 14.7% over the last six months.

Sohu.com has a market cap of $1.36 billion and an enterprise value of -$44.09 million. This stock trades at a reasonable valuation, with a price-to-sales of 0.77 and a price-to-book of 1.21. Its estimated growth rate for the next quarter is -181.80%, and for next year it's pegged at 28.8%. This is a cash-rich company, since the total cash position on its balance sheet is $1.36 billion and its total debt is zero.

The CEO just bought 16,000 shares, or about $537,000 worth of stock, at $33.55 to $33.65 per share.

From a technical perspective, Sohu.com 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 two months and change, with shares falling sharply off its high of $45.84 a share to its recent low of $32.60 a share. During that downtrend, shares of Sohu.com have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now started rebound off that $32.60 low, and it's quickly trending within range of triggering a near-term breakout trade.

If you're bullish on Sohu.com, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $34 or at $32.60 a share and then once it breaks out above some near-term overhead resistance levels at $35.50 to $36 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 243,033 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 50-day moving average of $38.47 a share to $39.72, or even its 200-day moving average of $41.53 a share.

Edward Lifesciences

My final stock with some big insider buying is healthcare player Edward Lifesciences (EW) , which provides products and technologies to treat structural heart disease and critically ill patients worldwide. Insiders are buying this stock into notable weakness, since shares have trended lower by 18.3% over the last six months.

Edward Lifesciences a market cap of $17.7 billion and an enterprise value of $17.1 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 32.7 and a forward price-to-earnings of 24.3. Its estimated growth rate for this year is 25.8%, and for next year it's pegged at 18.1%. This is a cash-rich company, since the total cash position on its balance sheet is $1.20 billion and its total debt is $600.60 million.

A vice president just bought 12,870 shares, or about $1.07 million worth of stock, at $83.33 to $83.47 per share.

From a technical perspective, Edward Lifesciences 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 two months and change, with shares falling sharply off its high of $121.75 a share to its recent low of $81.12 a share. During that downtrend, shares of Edward Lifesciences have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on Edward Lifesciences, then I would look for long-biased trades as long as this stock is trending above its recent low of $81.12 a share and then once it breaks out above some near-term overhead resistance levels at $84.66 to its 20-day moving average of $86.59 a share with volume that hits near or above its three-month average action of 2.12 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 $91 to $93.89, or even its 50-day moving average of $100.42 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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