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.

Calamos Asset Management

One financial player that insiders are loading up on here is Calamos Asset Management (CLMS) , which publicly owned investment manager. Insiders are buying this stock into notable strength, since shares have moved up by 20.9% over the last six months.

Calamos Asset Management has a market cap of $141 million and an enterprise value of -$564 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 188 and a forward price-to-earnings of 70.4. Its estimated growth rate for this year is -77.8%, and for next year it's pegged at 200%. This is a cash-rich company, since the total cash position on its balance sheet is $737.57 million and its total debt is zero. This stock currently sports a dividend yield of 7.1%.

A beneficial owner just bought 197,305 shares, or about $1.65 million worth of stock, at $8.35 to $8.40 per share.

From a technical perspective, Calamos Asset Management is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been consolidating and trending sideways over the last month and change, with shares moving between $8 a share on the downside and $8.87 a share on the upside. Any high-volume above the upper-end of its recent sideways trending chart pattern could trigger a big breakout trade for shares of Calamos Asset Management.

If you're bullish on Calamos Asset Management then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $8 or at its 50-day moving average of $7.89 a share and then once it breaks out above some near-term overhead resistance levels at $8.60 to $8.87 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 170,213 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 $9.37 to its 52-week high of $9.50 a share, or even $10 to $10.50 a share.

Alliance Data Systems

Another business services player that insiders are active in here is Alliance Data Systems (ADS) , which provides marketing and loyalty solutions in the U.S. and internationally. Insiders are buying this stock into notable strength, since shares have risen by 13.4% over the last three months.

Alliance Data Systems has a market cap of $13 billion and an enterprise value of $32 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 31 and a forward price-to-earnings of 10.8. Its estimated growth rate for this year is 9.3%, and for next year it's pegged at 14.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.86 billion and its total debt is $20.95 billion. This stock currently sports a dividend yield of 0.94%.

A beneficial owner just bought 57,400 shares, or about $12.54 million worth of stock, at $217.57 to $219.80 per share.

From a technical perspective, Alliance Data Systems 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 few weeks, with shares moving higher off its low of $214.68 a share to its intraday high on Wednesday of $230.54 a share. During that uptrend, shares of Alliance Data Systems 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 near-term breakout trade above some key overhead resistance levels.

If you're bullish on Alliance Data Systems then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $225 or $220 a share and then once it breaks out above both its 50-day moving average of $230.68 a share and its 20-day moving average of $231.22 a share and then above more near-term resistance around $232.50 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 593,132 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 $238 to its 52-week high of $241.69 a share, or even $245 to $250 a share.

Opko Health

One biopharmaceutical and diagnostics player that insiders are jumping into here is Opko Health (OPK) , which engages in the discovery, development, and commercialization of novel and proprietary technologies in the U.S., Ireland, Chile, Spain, Israel, and Mexico. Insiders are buying this stock into notable weakness, since shares have fallen by 13.6% over the last six months.

Opko Health has a market cap of $4.8 billion and an enterprise value of $4.8 billion. This stock trades at a fair valuation, with a price-to-sales of 3.96 and a price-to-book of 2.30. Its estimated growth rate for this year is -16.7%, and for next year it's pegged at 85.7%. This is a cash-rich company, since the total cash position on its balance sheet is $144.65 million and its total debt is $112.70 million.

The CEO just bought 12,000 shares, or about $103,000 worth of stock, at $8.42 to $8.69 per share. That same CEO also just bought 10,000 shares, or about $85,000 worth of stock, at $8.34 to $8.71 per share.

From a technical perspective, Opko Health 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, with shares moving lower off its high of $12.15 a share to its recent low of $8.30 a share. During that downtrend, shares of Opko Health have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has now formed a double bottom at $8.33 to $8.30 a share, and it's starting to trend within range of triggering a near-term breakout trade.

If you're in the bull camp on Opko Health, 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 some near-term overhead resistance levels at $8.76 to its 20-day moving average of $8.90 a share with volume that hits near or above its three-month average action of 4.91 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 $9.20 to $9.55, or even its 200-day moving average of $9.99 a share to its 50-day moving average of $10.16 a share.

Comerica

One money center banking player that insiders are active in here is Comerica (CMA) , which provides various financial products and services. Insiders are buying this stock into major strength, since shares have ripped higher by 53.8% over the last six months.

Comerica has a market cap of $12 billion and an enterprise value of $9.8 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 25.6 and a forward price-to-earnings of 14.6. Its estimated growth rate for this year is 48.5%, and for next year it's pegged at 18.3%. This is a cash-rich company, since the total cash position on its balance sheet is $7.22 billion and its total debt is $5.18 billion. This stock currently sports a dividend yield of 1.3%.

A director just bought 5,000 shares, or about $345,000 worth of stock, at $69.07 per share.

From a technical perspective, Comerica 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 three months, with shares moving higher off its low of $49.64 a share to its recent high of $71.20 a share. During that uptrend, shares of Comerica have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Comerica, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $66.88 or $64.91 a share and then once it breaks out above some near-term overhead resistance levels at $69.92 to its 52-week high of $71.20 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 2.16 million shares. If that breakout materializes 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 breakout are $75 to $80, or even $85 a share.

Mirati Therapeutics

My final stock with some decent insider buying is clinical-stage biopharmaceutical player Mirati Therapeutics (MRTX) , which develops a pipeline of products targeting oncology. Insiders are buying this stock into modest strength, since shares have traded up 7.3% over the last six months.

Mirati Therapeutics has a market cap of $149 million and an enterprise value of $27.7 million. This stock trades at a reasonable valuation, with a price-to-book of 1.55. Its estimated growth rate for this year is -9.9, and for next year its pegged at 16%. This is a cash-rich company, since the total cash position on its balance sheet is $73.82 million and its total debt is zero.

A beneficial owner just bought 77,533 shares, or about $414,000 worth of stock, at $5.27 to $5.42 per share. That same beneficial owner also just bought 48,169 shares, or about $262,000 worth of stock, at $5.44 to $5.45 per share.

From a technical perspective, Mirati Therapeutics is currently trending below both its 50-day and 20-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $4.50 to $4.60 a share over the last six months. Following that potential bottom, shares of Mirati Therapeutics have now started to spike a bit higher and move within range of triggering a near-term breakout trade.

If you're bullish on Mirati Therapeutics, then I would look for long-biased trades as long as this stock is trending above some near-term support at $5 a share or above those recent double bottom support levels and then once it breaks out above both its 20-day moving average of $5.41 a share and its 50-day moving average of $5.42 a share and then above more resistance levels at $5.60 to $5.70 a share with volume that hits near or above its three-month average action of 173,469 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 $6 to $6.25, or even $6.80 to $7 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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