DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.
>>5 Short-Squeeze Stocks Ready to Pop
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.
>>5 Stocks Set to Soar on Bullish Earnings
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, its large 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 it's twice as important to make sure the trend of the stock coincides with the insider buying.
>>5 Dividend Stocks That Want to Pay You More
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 five stocks whose insiders have been doing some big buying per SEC filings.
Copart
One stock that insiders are snapping up a huge amount of is Copart (CPRT), a provider of online auctions and vehicle remarketing services in the U.S., Canada and the U.K. Insiders are buying this stock into modest strength, since shares are up 10.9% so far in 2013.
Copart market cap of 4.12 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 23.11 and a forward price-to-earnings of 17.65. Its estimated growth rate for this year is 15.1%, and for next year it's pegged at 15.6%.
>>5 Rocket Stocks Worth Buying This Week
The chairman of the board just bought 227,900 shares, or about $7.05 million worth of stock, at $30.73 to $31.08 a share.
From a technical perspective, CPRT is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock recently gapped down sharply from $34.71 to around $30.50 a share with heavy downside volume. Following that gap down, shares of CPRT have started to rebound sharply and trend back into that gap area.
If you're bullish on CPRT, then I would look for long-biased trades as long as this stock is trending above some near-term support at $32 or at $31.50, and then once breaks out above its 200-day moving average of $33.23 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 714,997 shares. If that breakout hits soon, then CPRT will set up to re-test or possibly take out its next major overhead resistance levels at $35 to $37 a share.
Weatherford International
Another stock that insiders are in love with here is Weatherford International (WFT), a global provider of products and services that span the drilling, evaluation, completion, production and intervention cycles of oil and natural gas wells. Insiders are buying this stock into big time strength, since shares are up 41% so far in 2013.
Weatherford International has a market cap of $12.15 billion. This stock trades at a reasonable valuation, with a forward price-to-earnings of 12.35. Its estimated growth rate for this year is 43.1%, and for next year it's pegged at 55.4%.
>>5 Stocks Poised for Breakouts
A director just bought 78,000 shares, or about $1.18 million worth of stock, at $15.36 per share.
From a technical perspective, WFT is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares soaring higher from its low of $11.66 to its recent high of $16 a share. During that uptrend, shares of WFT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of WFT within range of triggering a near-term breakout trade.
If you're in the bull camp on WFT, then look for long-biased trades as long as this stock is trending above is 50-day at $14.89, and then once it breaks out above its 52-week high at $16 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 6.65 million shares. If we get that move soon, then WFT will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $18 to $22 a share.
Synageva BioPharma
One biopharmaceutical player that insiders are loading up on here is Synageva BioPharma (GEVA), which is focused on the discovery, development and commercialization of therapeutic products for patients with life-threatening rare diseases and unmet medical need. Insiders are buying this stock into solid strength, since shares are up 43% so far in 2013.
Synageva BioPharma has a market cap of $1.97 billion. Its estimated growth rate for this year is -73.2%, and for next year it's pegged at -22.8%.
>>4 Biotech Stocks Under $10 Making Big Moves
A director just bought 1.05 million shares, or about $59.46 million worth of stock, at $56.63 per share.
From a technical perspective, GEVA is currently trending well above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last month and change, with shares soaring higher from its low of $44.52 to its intraday high of $68.25 a share. During that uptrend, shares of GEVA have been consistently making higher lows and higher highs, which is bullish technical price action. That said, shares of GEVA have now entered extremely overbought territory, since its current relative strength index reading is 89.
If you're bullish on GEVA, then look for long-biased trades after this stock has cooled off and worked off some of its overbought conditions. I would look for a pullback back toward $62.50 or $60 a share to potentially get long shares of GEVA. Keep in mind that as long as GEVA is trending above its key breakout level of $55, then it remains in a very bullish uptrend.
NuStar GP
An energy player that insiders are jumping into here is NuStar GP (NSH), which is a refiner, marketer, and operator of petroleum product terminals and petroleum liquids pipelines. Insiders are buying this stock into notable weakness, since shares are off by 18.9% so far in 2013.
NuStar GP has a market cap of $954 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 20.12 and a forward price-to-earnings of 15.27. Its estimated growth rate for the next quarter is 183.3%, and for next year it's pegged at 21.1%.
>>5 Stocks Rising on Big Volume
A director just bought 50,000 shares, or about $1.02 million worth of stock, at $20.45 to $20.77 per share.
From a technical perspective, NSH is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock had been downtrending badly for the last six months, with shares falling sharply lower from its high of $31.09 to its recent low of $19.34 a share. During that downtrend, shares of NSH have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of NSH have now started to rebound off that $19.34 low and it has entered a new uptrend. That move is pushing shares of NSH within range of triggering a near-term breakout trade.
If you're bullish on NSH, then look for long-biased trades as long as this stock is trending above some key near-term support at $21.80 or at $21 and then once it breaks out above some near-term overhead resistance levels at $22.70 to its 50-day at $23.22 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 205,620 shares. If that breakout hits, then NSH will set up to re-test or possibly take out its next major overhead resistance levels at $26 to its 200-day at $27.20 a share.
Chef's Warehouse
One final name with some decent insider buying is Chef's Warehouse (CHEF), which supplies products such as specialty cheeses, truffles, seafood, cooking oils and flour to restaurants, country clubs, hotels, caterers, culinary schools and specialty food stores. Insiders are buying this stock into bullish strength, since shares are up 44% so far in 2013.
Chef's Warehouse has a market cap of $486.80 million. This stock trades at a fair valuation, with a trailing price-to-earnings of 31.78 and a forward price-to-earnings of 22.46. Its estimated growth rate for this year is 15%, and for next year it's pegged at 12%.
>>5 Hated Earnings Stocks You Should Love
A director just bought 30,000 shares, or $630,000 worth of stock, at $21 per share.
From a technical perspective, CHEF is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $16.29 to its recent high of $24.10 a share. During that uptrend, shares of CHEF have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CHEF within range of triggering a big breakout trade.
If you're bullish on CHEF, then look for long-biased trades as long as this stock is trending above its 50-day at $22.28 or above more near-term support at $20.95, and then once it breaks out above its 52-week high at $24.10 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 o 123,609 shares. If that breakout triggers soon, then CHEF will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $26 to its all-time high of $27.26 a share.
To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
RELATED LINKS:
>>4 Stocks Under $10 to Watch for Breakouts
>>4 Tech Stocks Spiking on Unusual Volume
>>5 Trades to Take for October Gains
Follow Stockpickr on Twitter and become a fan on Facebook.
At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including
CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.
No comments:
Post a Comment