5 Stocks Insiders Love Right Now

Tickers in this article: AKAM ALKS FSL LTM NFLX

WINDERMERE, Fla. (Stockpickr) -- 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.

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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.

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 where insiders have been doing some big buying in per SEC filings.

Akamai Technologies

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One technology player that insiders have snapped up a large amount of stock in is Akamai Technologies , which provides content delivery and cloud infrastructure services for accelerating and improving applications over the Internet in the U.S. and internationally. Insiders are buying this stock into modest strength since shares are up just over 4% so far in 2012.

Akamai Technologies has a market cap of $5.96 billion and an enterprise value of $5.43 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 31.67 and a forward price-to-earnings of 17.89. Its estimated growth rate for this year is 7.2%, and for next year it's pegged at 14.1%. This is a cash-rich company, since the total cash position on its balance sheet is $404.54 million and its total debt is zero.

A director just bought 100,000 shares, or $3.31 million worth of stock, at $33.14 per share.

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From a technical perspective , AKAM is currently trading below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock recently formed a double top at around $39.14 to $39.09 a share, and subsequently plunged to a low of $32.20 a share. Shares of AKAM have found some buying interest during the past three months whenever the stock has traded down to $31 to $32 a share.

If you're in the bull camp on AKAM, I would look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $34.48 a share with high volume. Look for volume on that move that's near or well above its three-month average action of 3,567,380 shares. If we get that move soon, then I would look to add to any long positions once AKAM closes back above its 50-day moving average of $36.43 with high volume.

I would avoid any long trades in AKAM if this stock fails to trigger that breakout and then drops back below some near-term support at $32.20 to $31.01 a share with heavy volume. A move below those levels and below its 200-day moving average of $29.42 with heavy volume would have me looking for short-biased trades. Alkermes

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Another name that insiders are actively doing some buying in is biotechnology and drugs player Alkermes , which is engaged in the business of developing, manufacturing and commercializing medicines for the treatment of prevalent, chronic diseases. This stock is trading virtually flat on the year with shares up just 1% so far.

Alkermes has a market cap of $2.29 billion and an enterprise value of $2.48 billion. This stock trades at a premium valuation, with a price-to-sales of 7.37 and a price-to-book of 2.52. Its estimated growth rate for this year is -29.2%, and for next year it's pegged at 53.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $213.43 million and its total debt is $445.19 million. After you back out the cash, Alkermes has $231.76 million of total debt on its balance sheet.

A director just bought 20,000 shares, or about $352,000 worth of stock, at $17.59 per share.

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From a technical perspective, ALKS is currently trading right at its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock racked up a solid move higher during the last six months, with shares moving from a low of $13.88 to a recent high of $19.87 a share. After hitting that high, AKLS has started to trend lower and make lower highs, which is bearish technical price action.

If you're bullish on ALKS, then I would look for long-biased trades once it manages to trigger a major breakout trade on a move above $18.84 to $20 a share with high volume Look for volume on that move that's near or well above its three-month average action of 1.1 million shares. If we get that action soon, then this stock could trend back towards its next significant overhead resistance level near $25 a share.

I would simply avoid any long trades in ALKS if it fails to trigger that breakout and then drops below its 200-day moving average of $16.78, and below some near-term support at $16.06 a share with high-volume. A high-volume move below those levels will set ALKS up for short-biased trades since the next significant support levels are near $15 to $13.88 a share. Life Time Fitness

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Another stock that insiders love right now is Life Time Fitness , which operates multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment. This stock has pretty much done nothing so far in 2012, with shares off by just 1.8%.

Life Time Fitness has a market cap of $1.90 billion and an enterprise value of $2.57 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 19.31 and a forward price-to-earnings of 14.63. Its estimated growth rate for this year is 21.7%, and for next year it's pegged at 13.8%. This is far from a cash-rich company, since the total cash position on its balance sheet is just $10.80 million and its total debt is a whopping $650.48 million.

The CEO and chairman of the board just bought 16,905 shares, or $745,000 worth of stock, at $44.07 per share.

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From a technical perspective, LTM is currently trading above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock formed a triple top just a few months ago, between $52.14, $52.26 and $52.68 a share. After running into heavy selling resistance at those levels, shares of LTM have dropped back below its 50-day moving average on monster volume. Also, during the last month and change LTM has been making lower highs and lower lows, which is bearish technical price action.

If you're a bullish on LTM, I would look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $47.57 to $49.88 a share with high volume. Look for volume on that move that's near or well above its three-month average action of 455,465 shares. If we get that action soon, then LTM could challenge its recent high of $52.68 a share.

I would avoid this stock or look for short-biased trades if LTM moves back below its 200-day moving average of $43.55 and below some near-term support at $43.15 a share with high-volume. A high-volume move below those levels would continue the near-term downtrend pattern for LTM, and it would possibly push the stock towards its next significant support zones at $39.04 to $37.55 a share.

Life Time Fitness shows up on a list of 10 Small-Cap Stocks Safe for Skittish Investors. Netflix

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One beaten-down video broadcasting player whose insiders are snapping up a notable amount of stock is Netflix , an Internet subscription service streaming television shows and movies. Insiders are buying this stock into some extreme weakness since shares are off by around 34% in the last three months.

Netflix has a market cap of $4.58 billion and an enterprise value of $4.04 billion. This stock trades at a premium valuation, with a trailing price-to-earnings 27.90 and a forward price-to-earnings of 37.47. Its estimated growth rate for this year is -98.1%, and for next year it's pegged at 2,650%. This is a cash-rich company, since the total cash position on its balance sheet is $804.53 million and its total debt is $400 million. After you back out the debt, Netflix has $404.53 million in cash on its balance sheet.

A director just bought 6,000 shares, or $510,000 worth of stock, at $85.05 per share.

From a technical perspective, NFLX is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stock in a nasty downtrend for the past two months, with shares consistently making lower highs and lower lows, which is bearish technical price action. This stock recently gapped down big from over $100 to below $90 a share on heavy volume. That gap-down didn't stop the stock from continuing its slide lower, since NFLX hit a low of $79 a share just a few days ago.

If you're a bullish on NFLX, you could look for long-biased trades here and simply put a stop right below that recent low of $79 a share. This stock is starting to get oversold since its current relative strength index (RSI) reading is 25.15. A tradable bounce could be setting up for NFLX if it can hold that $79 level. That said, oversold can always get more oversold so make sure you see high-volume strength before you look for an oversold bounce. I would consider any notable upside volume day that registers volume of near or above 6.08 million shares as bullish.

Another bullish trade to watch for in NFLX is if this stock can manage to sustain a move or close above its gap down day high of $90 a share with high-volume. Any high-volume move back into that gap could easily spike this stock significantly.

I would simply avoid NFLX or look for short-biased trades if it takes out that near-term support at $79 a share with high-volume. A high-volume selloff below $79 could setup a continuation of its current downtrend pattern towards its next significant support zones at $67 to $62.37 a share.

I also featured Netflix, one of 4 Battleground Stocks Fought Over by the Biggest Investors, recently in "5 Stocks Set to Soar on Bullish Earnings." Freescale Semiconductor

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One final stock in the semiconductor complex whose insiders are doing some active buying is Freescale Semiconductor , a provider of embedded processing solutions. An embedded processing solution is the combination of embedded processors, semiconductor devices and software. This stock hasn't done much so far in 2012, with shares off by just 2.3%.

Freescale Semiconductor has a market cap of $3.05 billion and an enterprise value of $8.89 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 8.03. Its estimated growth rate for this year is -55.2%, and for next year it's pegged at 258%. This is far from a cash-rich company, since the total cash position on its balance sheet is $760 million and its total debt is a whopping $6.58 billion.

A director just bought 40,300 shares, or about $500,000 worth of stock, at $12.24 per share.

From a technical perspective, FSL is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently put in a double top chart pattern at around $17.84 to $17.76 a share. After forming that top, shares of FSL have been downtrending badly and making lower highs and lower lows, which is bearish technical price action. That said, the stock is now starting to find some mild buying support near some previous support zones at $11.30 to $12 a share.

If you're bullish on FSL, I would only look for long-biased trades if this stock can hold support at $12 and then break out above some near-term overhead resistance at $12.81 a share high-volume. Look for volume on that move that's near or well above its three-month average action of 823,169 shares. If we get that action soon, look for FSL to spike higher back towards its 200-day moving average of $13.64 a share or possibly above its 50-day moving average of $14.70 a share.

Traders should avoid FSL from the long side or look for short-biased trades if the stock takes out $12 to $11.30 a share with high-volume. A high-volume move below those levels could easily set this stock up to trend down towards $10 or even its all-time low at $9.43 a share.

To see more stocks with notable insider buying, including Och-Ziff Capital Management Group , Basic Energy Services and AutoNation , check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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Tickers in this article: AKAM ALKS FSL LTM NFLX