Monday, October 1, 2012

5 Stocks With Huge 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.

See if (APEI) is in our portfolio

>>5 Low-Risk Stocks to Buy for 2012Other 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, large institutional money managers running big mutual funds and hedge funds 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 it's 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. Here's a look at some stocks whose insiders have been doing some big buying per SEC filings.

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American Public Education Content on this page requires a newer version of Adobe Flash Player.

One stock whose insiders are doing some monster buying is American Public Education(APEI), a provider of online postsecondary education for the needs of the military and public service communities. This stock has pretty much done nothing in 2011, with shares up by only 2.9%.

American Public Education has a market cap of $683.78 million and an enterprise value of $559.36 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 18.75 and forward price-to-earnings of 15.64. Its estimated growth rate for this year is 30.8%, and for next year, it's pegged at 17.8%. This is a cash-rich company; it has a total cash position on its balance sheet of $107.31 million and total debt of zero. A director just bought 344,600 shares, or about $12.65 million worth of stock, at $36.68 to $36.70 per share.From a technical standpoint, this stock is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently sold off hard on huge volume, from around $38 a share to its recent low of $27.20. After hitting that low, the stock rebounded sharply to its current price of $38.32. That rebound has now sent shares of APEI into breakout territory. If you're bullish on this stock, I would look to buy some stock off any weakness as long as it continues to trend above $38.24. That said, I would also kook for some better volume to flow into APEI in the next couple of trading sessions to signal it wants to go higher. I would suggest looking for the stock to close near or above $38.24 with volume that's well above its three-month average action of 233,580 shares. I would simply use a mental stop a few percentage points below $38.24 if you get long. I would then add aggressively to any long positions if APEI moves back above its 200-day at $40.72 on high volume. Target a run back toward $42 to $43.28 a share if the bulls continue to control this stock in the near future.

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Sirona Dental Systems Content on this page requires a newer version of Adobe Flash Player.

Another stock that insiders are snapping up is Sirona Dental Systems(SIRO), a manufacturer of dental equipment. Insiders are paying up just a bit here to own shares since the stock is up by around 5.6% so far in 2011.

Sirona Dental Systems has a market cap of $2.48 billion and an enterprise value of $2.41 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 20.86 and forward price-to-earnings of 13.23. Its estimated growth rate for this year is 0.70%, and for next year it's pegged at 11.3%. This is not a cash-rich company; the total cash position on its balance sheet is $345.86 million, and its total debt is $368.40 million. >>5 Cash-Rich, Low-P/E StocksThe CEO and chairman of the board just bought 25,000 shares, or $998,250 worth of stock, at $39.93 per share. The CFO also just bought 18,750 shares, or $748,286 worth of stock, at $39.91 per share.From a technical standpoint, this stock is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock just found some big buying interest off of some previous support zones at around $39.15 a share. Any time the stock has traded near $39 to $38.70 in the past couple of months, shares have rallied sharply. This stock has also just started to move back above its 50-day moving average of $43.82 on decent volume. If you're bullish on this name, you could be a buyer off any weakness and simply use a mental stop a few percentage points below the 50-day. Look for this stock to make a run back toward its 200-day moving average of $48.86 -- or possibly higher -- if that 50-day isn't taken out to the downside in the near future.

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Transition Therapeutics Content on this page requires a newer version of Adobe Flash Player.

One biotechnology and drugs player whose insiders are buying up a large amount of stock is Transition Therapeutics(TTHI), a product-focused biopharmaceutical company developing therapeutics for disease indications with large markets. Insiders are buying into weakness here; the stock is off by around 20% so far this year.

Transition Therapeutics has a market cap of $35.17 million and an enterprise value of $16.23 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 2.82. Its estimated growth rate for this year is -269%, and for next year it's pegged at 10.5%. This is a cash-rich company; the total cash position on its balance sheet is just $21.71 million, and it has zero debt. >>13 Biotech Stocks With Recent Hedge Fund ActionA beneficial owner just bought about 1.9 million shares, or $2.6 million worth of stock, at $1.35 per share From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in nasty downtrend since July, with shares constantly hitting lower highs and lower lows, which is also bearish. That said, the stock recently found some big buying support at around $1.43 to $1.42 and ran up sharply to $1.85 a share. If you're bullish on this stock, I would look buy some shares near that major support zone at $1.43 to $1.42. I would simply use a mental stop just below those prices in case TTHI wants to continue on its downtrend. If you get long near those levels, and the stock holds, then look to add aggressively once the next major overhead resistance level at $1.84 to $1.85 is taken out with volume.

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Merge Healthcare Content on this page requires a newer version of Adobe Flash Player.

In the software and programming complex, insiders have snapped up a large amount of stock in Merge Healthcare(MRGE), which develops health care information software solutions and delivers related services. Insiders are buying into strength to own shares here since the stock is up around 45% so far in 2011.

Merge Healthcare has a market cap of $489.63 million and an enterprise value of $673.62 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 19.96. Its estimated growth rate for this year is 90%, and for next year it's pegged at 42.1%. This is not a cash-rich company; it has a total cash position of $43.98 million and total debt of $249.69 million.A beneficial owner just bought 87,000 shares, or $435,000 worth of stock, at $5 per share. This same beneficial owner also just bought 146,500 shares, or $654,855 worth of stock, at $4.47 per share.From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently plunged after hitting some big overhead resistance at $7.16 to $7.23 a share, to a low of $4.32. If this stock can now move back above those key moving averages, it could then re-test that overhead resistance at $7.16 to $7.23. >>7 Stocks Under $10 Moving HigherIf you're bullish on this stock, I would look to buy some sharers once it moves back above its 200-day moving average of $5.51 on heavy volume. Look for volume that's tracking in close to or above its three-month average action of 1,030,400 shares. I would then add to any long position once the stock trades back above its 50-day moving average at $6.09 on high-volume. Use a mental stop at around $5.25 if you get long once the 200-day is taken out with volume.

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Myrexis Content on this page requires a newer version of Adobe Flash Player.

In the biotechnology and drugs complex, insiders are doing some active buying in Myrexis(MYRX), which is focused on the development of small molecule compounds with chemical structures and distinct mechanisms of action. Myrexis has a pipeline of differentiated product candidates in oncology and autoimmune diseases. Insiders are finding some deep value here since this stock has been pounded lower by over 35% in 2011.

Myrexis has a market cap of $69.39 million and an enterprise value of -$38.86 million. The company's estimated growth rate for the next quarter is 38%, and for this year it's pegged at 16.4%. This is a cash-rich company, with a total cash position on its balance sheet of $105.64 million and zero debt. The stock is currently trading at less than the amount of cash per share on their books, which currently sits at $4.05 of cash per share. >>3 Small-Cap Stocks on Insiders' RadarA director just bought 106,761 shares, or $270,780 worth of stock, at $2.51 to $2.55 per share. This same director also just bought 79,199 shares, or $196,259 worth of stock, at $2.47 to $2.49 per share. Another director also recently bought 40,300 shares, or $99,740 worth of stock, at $2.47 per share. From a technical standpoint, this stock is currently trading right below its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock was trading as high as $3.70 in July and it recently hit a low of $2.41. Shares of MYRX are now quickly approaching a major breakout if it can manage to clear some past overhead resistance levels. If you're bullish on this stock, you should look for a high-volume move in the near future back above its 50-day moving average of $2.70. Traders should look for volume to register close to or above its three-month average action of 139,289 on any move back above the 50-day. You could be a buyer on that move and simply use a mental stop at around $2.60. I would then add to any long position aggressively if MYRX triggers an even bigger breakout above $2.87 to $3 a share on high-volume. If that bigger breakout hits, then this stock could easily run toward $3.40 (200-day) to $3.70. To see more stocks with notable insider buying, includingPharmacyclics(PCYC), and Vector Group(VGR), check out the Stocks With Big Insider Buying portfolio on Stockpickr. Follow Stockpickr on Twitter and become a fan on Facebook.

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