5 Stocks With Big Insider Buying

Tickers in this article: SIRI UAL UGI VVUS ZIP

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.

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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, 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 several stocks that insiders have been buying, according to SEC filings.
Vivus

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One biotechnology and drugs player that insiders are loading up on here is Vivus , which is engaged in the development and commercialization of therapeutic drugs for underserved markets, including obesity and related morbidities, such as sleep apnea and diabetes, and men's sexual health. Insiders are buying this stock into strength, since shares are up a whopping 134% so far in 2012.

Vivus has a market cap of $2.31 billion and an enterprise value of $2.02 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 57.62. Its estimated growth rate for this year is -75%, and for next year it's pegged at 140.8%. This is a cash-rich company, since the total cash position on its balance sheet is $310.39 million, and its total debt is zero.

A director just bought 20,000 shares, or about $434,000 worth of stock, at $21.50 per share.

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From a technical perspective, VVUS is currently trading below both its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock recently sold off after it printed its 52-week high of $31.21 a share to its August low of $19.75 a share. Since hitting that low, shares of VVUS have been trading range bound between $19.75 on the downside and $23.52 on the upside. A move outside of that range will likely setup the next major trend for VVUS.

If you're bullish on VVUS, then I would look for long-biased trades once this stock triggers a breakout above some near-term overhead resistance at $23.52 to its 50-day moving average of $25.09 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 4.9 million shares. If that breakout triggers soon, then VVUS could setup to re-test its 52-week high of $31.21.

On the flipside, I would avoid VVUS or look for short-biased trades if this stock fails to trigger that breakout soon and then drops back below some major support levels at $21.31 to $19.75 a share, and then below its 200-day moving average of $18.57 a share with heavy volume. Any high-volume move below those levels will set this stock up for a decent fall. UGI

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A stock in the natural gas utilities complex that insiders are snapping up here is UGI , which, through its subsidiaries, distributes and markets energy products and related services in the U.S. and internationally. Insiders are buying this stock into some modest strength here, since shares are up 14% in the last six months.

UGI has a market cap of $3.49 billion and an enterprise value of $6.89 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 18.35 and a forward price-to-earnings of 12.41. Its estimated growth rate for this year is -13.8%, and for next year it's pegged at 38.1%. This is far from a cash-rich company, since the total cash position on its balance sheet is $402.40 million and its total debt is a whopping $3.8 billion. This company currently sports a dividend yield of 3.6%.

A director just bought 35,000 shares, or about $1.06 million worth of stock, at $30.36 per share.

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From a technical perspective, UGI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last four months, with shares soaring from $26.06 to its 52-week high of $31.51 a share. During that uptrend, shares of UGI have been mostly making higher lows and higher highs, which is bullish price action. That move has now pushed UGI within range of triggering a near-term breakout trade.

If you're in the bull camp on UGI, then I would look for long-biased trades once this stock manages to trigger a near-term breakout trade above $31.28 to $31.51 a share, and then above its 2011 high of $32.04 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 694,123 shares. If that breakout triggers soon, then look for UGI to hit $35 a share or higher. Keep in mind you can buy UGI off any weakness with a stop just below its 50-day at $29.94, and simply anticipate that breakout.

I would avoid UGI or look for short-biased trades if it fails to trigger that breakout soon, and then drops back below its 50-day moving average of $29.94 a share, and below more near-term support at $29.72 with heavy volume. If we get that action, then UGI could easily setup to re-test its 200-day moving average of $28.29 a share, or possible trend much lower. United Continental

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One airline player that insiders are warming up too here is United Continental , which transports people and cargo through its mainline operations, which utilize jet aircraft with at least 110 seats, and its regional operations. Insiders are buying this stock into some decent weakness here, since shares are off by around 21% so far in the last six months.

United Continental has a market cap of $6.05 billion and an enterprise value of $10.74 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 15.56 and a forward price-to-earnings of 3.53. Its estimated growth rate for this year is 1.7%, and for next year it's pegged at 45.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $7.7 billion and its total debt is $12.45 billion.

The CEO and president just bought 55,600 shares, or about $1 million worth of stock, at $18.00 per share. The vice president also just bought 13,500 shares, or about $247,000 worth of stock, at $18.30 per share.

From a technical perspective, UAL is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a triple top chart pattern at around $24.79 to $24.95 a share. Following that top, shares of UAL plunged dramatically all the way down to its recent low of $17.45 a share. During that massive slide lower, shares of UAL were consistently making lower highs and lower lows, which is bearish technical price action.

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If you're bullish on UAL, then I would only look for long-biased trades once this stock manages to trigger a near-term breakout trade above some overhead resistance at $18.37 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5.3 million shares. If that breakout triggers soon, then I would look for a tradable bounce back towards its 50-day moving average of $21.05 a share.

On the flipside, I would avoid UAL or look for short-biased trades if this stock fails to gain any traction on the upside, and then drops below some major near-term support at $17.45 with high volume. Any high-volume moves below $17.45 a share should setup UAL to re-test its 52-week low of $15.51 a share. Zipcar

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Another name that insiders find attractive here is car sharing network player Zipcar , which provides over 400,000 members with self-service vehicles that are located in reserved parking spaces throughout the neighborhoods where they live and work.

Insiders are buying this stock into some extreme weakness here, since shares are down around 38% so far in 2012. Zipcar has a market cap of $324.47 million. Its estimated growth rate for this year is 108.3%, and for next year it's pegged at 750%.

A director and beneficial owner just bought 265,976 shares, or around $2.04 million worth of stock, at $7.55 to $7.74 per share. That same director also just bought 61,700 shares, or around $489,000 worth of stock, at $7.94 per share.

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From a technical perspective, ZIP is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock just gapped down a few weeks ago from around $11 to $6.50 a share with huge volume. Following that sharp gap lower, shares of ZIP immediately started to spike higher and run towards its current price of $8.20 a share.

If you're in the bull camp on ZIP, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance at $8.69 a share with high volume. Look for a sustained move or close above that level with volume that's near or above its three-month average action of 441,025 shares. If that breakout triggers soon, then look for ZIP to re-test and possibly take out its 50-day moving average of $10.40 a share.

On the flipside, I would avoid ZIP or look for short-biased trades if it fails to trigger that breakout soon, and then if it drops below some near-term support at $8 a share with heavy volume. A move below $8 could setup ZIP to re-test $7 to $6.50 a share in the near future. Sirius XM Radio

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One more stockwith some monster insider buying is satellite radio player Sirius XM Radio , which broadcasts its music, sports, entertainment, comedy, talk, news, traffic and weather channels in the U.S. on a subscription fee basis through its two satellite radio systems. Insiders are buying this stock into some decent strength here, since shares are up over 37% so far in 2012.

Sirius XM Radio has a market cap of $9.64 billion and an enterprise value of $11.69 billion. This stock trades at reasonable valuation, with a trailing price-to-earnings of 4.66 and a forward price-to-earnings of 25.20. Its estimated growth rate for this year is 685%, and for next year it's pegged at -81.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $868.33 million and its total debt is $2.88 billion.

A beneficial owner just bought 89.97 million shares, or around $223.32 million worth of stock, at $2.45 per share.

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From a technical perspective, SIRI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently triggered a major breakout, once it cleared $2.16 a share with monster upside volume flows. Following that breakout, shares of SIRI have soared and ran up to its recent high of $2.57 a share. That move has started to push SIRI into overbought territory, since its current relative strength index reading is now 72.45. This stock also just triggered another breakout above $$2.41 to $2.44 a share.

If you're bullish on SIRI, then I would let this stock work off some of its overbought conditions before entering from the long side. Look to buy SIRI off any weakness as long as it doesn't trade back below $2.16 a share, or back below its 50-day and 200-day moving averages. That being said, I would consider any high-volume trend above $2.41 to $2.44 a share as bullish technical price action. I would consider any upside volume day that registers near or above its three-month average action of 52,897,500 shares as bullish.

If SIRI can hold that trend after working off its overbought condition, then its stock should easily be on its way north of $3 a share. Again, I would only avoid this stock from the long side if it moves back below $2.16 or those key moving averages with heavy volume.

To see more stocks with notable insider buying, including Facebook , Dole Food and Pacific Biosciences of California , 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: SIRI UAL UGI VVUS ZIP