5 Stocks With Big Insider Buying

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

>>5 Hated Stocks You Should Love

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 Bargain Bin Stocks to Buy in March



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 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.

>>3 Stocks Under $10 to Trade for Breakouts

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 five stocks whose insiders have been doing some big buying per SEC filings.

Agco

One industrial player that insiders are snapping up a huge amount of stock in here is Agco (AGCO), which manufactures and distributes agricultural equipment and related replacement parts worldwide. Insiders are buying this stock into notable weakness, since shares are down by 10.5% so far in 2014.

Agco has a market cap of $4.9 billion and an enterprise value of $5.1 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 8.81 and a forward price-to-earnings of 9.98. Its estimated growth rate for this year is -8%, and for next year it's pegged at -4%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.05 billion and its total debt is $1.25 billion. This stock currently sports a dividend yield of 0.8%.

>>3 Stocks Rising on Big Volume

A director just bought 60,729 shares, or about $3.14 million worth of stock, at $51.86 per share. That same director also just bought 347,959 shares, or about $17.95 million worth of stock, at $51.60 per share.

From a technical perspective, AGCO 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 three months, with shares moving lower from its high of $61.29 to its recent low of $49.82 a share. During that downtrend, shares of AGCO have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AGCO have started to reverse that downtrend and enter an uptrend over the last month, with shares moving higher from its low of $49.82 to its recent high of $53.14 a share.

If you're bullish on AGCO, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $51 or $49.82 a share and then once breaks out above some near-term overhead resistance levels at $53.14 a share to its 50-day moving average of $54.30 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 1.44 million shares. If that breakout starts soon, then AGCO will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $56.35 to $59.29 a share.

Herbalife

Another nutrition player that insiders are loading up on here is Herbalife (HLF), which sells weight management, sports and fitness, personal care, energy and targeted nutritional products worldwide. Insiders are buying this stock into notable weakness, since shares are off by 15.9% so far in 2014.

>>5 Ways to Trade the Ukraine Crisis

Herbalife has a market cap of $6.7 billion and an enterprise value of $6.7 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 13.43 and a forward price-to-earnings of 9.42. Its estimated growth rate for this year 12.5%, and for next year it's pegged at 15.9%. This is just barley a cash-rich company, since the total cash position on its balance sheet is $972.97 million and its total debt is 931.27 million. This stock currently sports a dividend yield of 1.8%.

A beneficial owner just bought 33,515 shares, or about $2.22 million worth of stock, at $66.40 per share.

From a technical perspective, HLF is currently trending below its 50-day moving average and just above its 200-day moving average, which is neutral trendwise. This stock is just starting to spike higher right above its 200-day moving average of $63.19 a share. That spike is starting to push shares of HLF within range of triggering a big breakout trade.

If you're in the bull camp on HLF, then I would look for long-biased trades as long as this stock is trending above its 200-day at $63.19 and then once it breaks out above some key near-term support levels at $68 to $69.77 a share and then above its 50-day moving average at $70.87 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 action of 3.67 million shares. If that breakout materializes soon, then HLF will set up to re-test or possibly take out its next major overhead resistance levels at $74.49 to $80 a share.

L Brands

One specialty retailer that insiders are in love with here is L Brands (LB), which operates as a specialty retailer of women's apparel, beauty and personal care products, and accessories. Insiders are buying this stock into modest weakness, since shares are lower by 7.8% so far in 2014.

>>5 Short-Squeeze Stocks That Could Pop in March

L Brands has a market cap of $16.5 billion and an enterprise value of $20.9 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 18.69 and a forward price-to-earnings of 15.75. Its estimated growth rate for this year is 5.6%, and for next year it's pegged at 12.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $425 million and its total debt is $5.02 billion. This stock currently sports a dividend yield of 2.4%.

A director just bought 10,000 shares, or about $563,000 worth of stock, at $56.35 per share.

From a technical perspective, LB 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 month, with shares moving higher from its low of $49.55 to its recent high of $57.44 a share. During that uptrend, shares of LB have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LB within range of triggering a near-term breakout trade.

If you're bullish on LB, then I would look for long-biased trades as long as this stock is trending above its 50-day at $55.12 or above more support at $53 and then once it breaks out above some near-term overhead resistance at $57.44 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 2.07 million shares. If that breakout gets underway soon, then LB will set up to re-test or possibly take out its next major overhead resistance levels at $61.01 to $62 a share. Any high-volume move above those levels will then give LB a chance to tag $64 to $65 a share.

Titan International

One consumer goods player that insiders are loading up on here is Titan International (TWI), which manufactures and sells wheels, tires and undercarriage systems and components for off-highway vehicles used in the agricultural, construction and consumer markets in the U.S. and internationally. Insiders are buying this stock into strength, since shares are up 21% over the last six months.

>>5 Rocket Stocks to Buy in March

Titan International has a market cap of $1.04 billion and an enterprise value of $1.4 billion. This stock trades at reasonable valuation, with a trailing price-to-earnings of 30.54 and a forward price-to-earnings of 13.85. Its estimated growth rate for this year is 43.6%, and for next year it's pegged at 25%. This is not a cash-rich company, since the total cash position on its balance sheet is $189.36 million and its total debt is $572.76 million.

A beneficial owner just bought 327,100 shares, or about $5.76 million worth of stock, at $17.56 to $17.74 per share.

From a technical perspective, TWI 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 few weeks, with shares moving higher from its low of $16.22 to its recent high of $19.64 a share. During that uptrend, shares of TWI have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of TWI within range of triggering a big breakout trade.

If you're bullish on TWI, then I would look for long-biased trades as long as this stock is trending above some near-term support at $18.50 or above its 50-day at $17.75 and then once it breaks out above some key overhead resistance levels at $19.64 to $19.89 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 671,637 shares. If that breakout hits soon, then TWI will set up to re-test or possibly take out its next major overhead resistance levels at its 52-week high of $25.15 a share.

BioTime

One final stock with some large insider buying is BioTime (BTX), a biotechnology company focused on regenerative medicine and blood plasma volume expanders. Insiders are buying this stock into modest weakness, since shares are down by 7% over the last three months.

BioTime has a market cap of $250 million and an enterprise value of $192 million. This stock trades at a premium valuation, with a price-to-sales of 54.52 and a price-to-book of 15.84. This is a cash-rich company, since the total cash position on its balance sheet is $6.72 million and its total debt is zero.

A director just bought 500,000 shares, or about $1.87 million worth of stock, at $3.74 per share.
From a technical perspective, BTX is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $3.25 to $3.30 a share. Following that bottom, shares of BTX have started to spike higher and move within range of triggering a near-term breakout trade.

If you're bullish on BTX, then look for long-biased trades as long as this stock is trending above some near-term support at $3.50 and then once it breaks out above its 200-day moving average of $3.85 a share to more resistance at $3.88 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 260,351 shares. If that breakout triggers soon, then BTX will set up to re-test or possibly take out its next major overhead resistance levels at $4.14 to $4.18 a share. Any high-volume move above those levels will then give BTX a chance to tag its next major overhead resistance levels at $4.31 to its 52-week high at $4.82 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:

>>2 Biotech Stocks Under $10 to Trade

>>5 Stocks to Sell Before It's Too Late

>>5 Big Charts to Trade for 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.