TASR PCYG CBG VRX NES
Delafield, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.
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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.
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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.
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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.
Taser International
One defense player that insiders are active in here is Taser International (TASR), which is engaged in the development, manufacture and sale of electronic control devices designed for use in the law enforcement, military, corrections, private security and personal defense markets. Insiders are buying this stock into notable strength, since shares are up 38% so far in 2013.
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Taser International has a market cap of $636 million and an enterprise value of $564 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 42.74 and a forward price-to-earnings of 33.73. Its estimated growth rate for this year is 14.8%, and for next year it's pegged at 19.4%. This is a cash-rich company, since the total cash position on its balance sheet is $29.81 million and its total debt is just $120,000.
A director just bought 50,000 shares, or about $594,000 worth of stock, at $6.72 to $6.91 a share.
From a technical perspective, TASR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending extremely strong for the last month, with shares soaring higher from its low of $8.57 to its intraday high of $12.62 a share with heavy upside volume flows. During that uptrend, shares of TASR have been consistently making higher lows and higher highs, which is bullish technical price action.
If you're bullish on TASR, then I would look for long-biased trades as long as this stock is trending above some near-term support at $11.05 and then once it closes at a new 52-week high above $12.62 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 671,966 shares. If we get that move soon, then TASR will set up to re-test or possibly take out its next major overhead resistance levels at $15 to $18 a share.
Park City Group
Another technology player that insiders are jumping into here is Park City Group (PCYG), which develops and offers its software to supermarkets, convenience stores and other retailers. Insiders are buying this stock into massive strength, since shares are up 162% so far in 2013.
Park City Group has a market cap of $126 million. This stock trades at a reasonable valuation, with a price-to-sales of 11.29 and a price-to-book of 10.21. This is barely a cash-rich company, since the total cash position on its balance sheet is $4.40 million and its total debt is $2.29 million.
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A director just bought 155,039 shares, or $1 million worth of stock, at $6.45 per share. Another director also just bought 77,519 shares, or about $499,000 worth of stock, at $6.45 per share.
From a technical perspective, PCYG 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 few weeks, with shares moving higher from its low of $6.06 a share to its recent high of $8.08 a share. That uptrend is coming after shares of PCYG downtrended from its mid-July high of $8.51 a share to that $6.06 low, with shares consistently making lower highs and lower lows, which is bearish technical price action. That rebound off that $6.06 low has now pushed shares of PCYG back above its 50-day at $7.36 and within range of triggering a big breakout trade.
If you're in the bull camp on PCYG, then look for long-biased trades as long as this stock is trending above its 50-day at $7.36 or above more support at $6.75 and then once it breaks out above some near-term overhead resistance levels at $8.08 to $8.30 a share and then once it clears its 52-week high at $8.51 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 116,856 shares. If that breakout triggers soon, then PCYG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $10 to $12 a share.
CBRE Group
One real estate player that insiders are loading up on here is CBRE Group (CBG), which offers a range of services to occupiers, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estate. Insiders are buying this stock into decent strength, since shares are up 11.5% so far in 2013.
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CBRE Group has a market cap of $7.2 billion and an enterprise value of $9.2 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 22.95 and a forward price-to-earnings of 13.13. Its estimated growth rate for this year is 17.2%, and for next year it's pegged at 18.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $517.34 million and its total debt is $2.67 billion.
A director just bought 161,300 shares, or about $3.46 million worth of stock, at $21.50 per share.
From a technical perspective, CBG is currently trending just below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending for the past few weeks, with shares moving higher from its low of $21.24 to its recent high of $22.28 a share. During that move, shares of CBG have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CBG within range of triggering a near-term breakout trade.
If you're bullish on CBG, then look for long-biased trades as long as this stock is trending above that recent low of $21.24 and then once it breaks out above both its 200-day at $22.68 and its 50-day at $23.03 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 2.69 million shares. If that breakout triggers soon, then CBG will set up to re-test or possibly take out its next major overhead resistance levels at $24.50 to its 52-week high at $25.69 a share.
Valeant Pharmaceuticals
One healthcare player that insiders are snapping up a big amount of stock in here is Valeant Pharmaceuticals (VRX), which develops, manufactures and markets a range of pharmaceutical products. Insiders are buying this stock into major strength, since shares are up sharply by 67% so far in 2013.
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Valeant Pharmaceuticals has a market cap of $33 billion and an enterprise value of $41 billion. This stock trades at a reasonable valuation, with a price-to-sales of 8.21 and a price-to-book of 5.79. This is not a cash-rich company, since the total cash position on its balance sheet is $2.54 billion and its total debt is $10.79 billion.
A director just bought 51,000 shares, or about $5.04 million worth of stock, at $99.01 per share.
From a technical perspective, VRX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the last six months, with shares soaring higher from its low of $69.87 to its recent high of $105.40 a share. During that uptrend, shares of VRX have been consistently making higher lows and higher highs, which is bullish technical price action. That move now has pushed shares of VRX within range of triggering a near-term breakout trade.
If you're bullish on VRX, then look for long-biased trades as long as this stock is trending above its 50-day at $94.75 and then once it breaks out above some near-term overhead resistance levels at $102 to $103.43 a share and then once it clears its 52-week high at $105.40 a share 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 1.51 million shares. If that breakout hits, then VRX could easily tag $115 to $120, or even $130 a share.
Nuverra Environment Solutions
One final name with some large insider buying is Nuverra Environment Solutions (NES), which provides environmental solutions to protect, enhance and advance environmental sustainability. Insiders are buying this stock into big time strength, since shares are up sharply by 83% so far in 2013.
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Nuverra Environment Solutions has a market cap of $660 million and an enterprise value of $1.14 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 84.67. Its estimated growth rate for this year is 42.9%, and for next year it's pegged at 325%. This is not a cash-rich company, since the total cash position on its balance sheet is $10.24 million and its total debt is $551.58 million.
The CEO just bought 900,000 shares, or about $2.08 million worth of stock, at $2.30 to $2.32 per share.
From a technical perspective, NES is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last two months, with shares dropping from its high of $3.75 to its recent low of $2.06 a share. During that move, shares of NES have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of NES have started to bounce off that $2.06 low and it's now moving within range of triggering a big breakout trade.
If you're bullish on NES, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $2.20 to that low at $2.06, and then once it breaks out above some near-term overhead resistance levels at $2.80 to its 50-day at $2.98 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 2.39 million shares. If that breakout triggers soon, then NES will set up to re-test or possibly take out its next major overhead resistance levels at $3.50 to its 200-day at $3.62 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.
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.
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