Stock Quotes in this Article: CALX, NEON, SHLD, URRE, AMRS

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

Calix

One stock that insiders are snapping up here is Calix (CALX), a provider in North America of broadband communications access systems and software for fiber- and copper-based network architectures that enable communications service providers to connect to their residential and business subscribers. Insiders are buying this stock into some decent weakness, since shares are down over 35% in the last six months.

Calix has a market cap of $283 million and an enterprise value of $211 million. This stock trades at reasonable valuation, with a forward price-to-earnings of 16.25. Its estimated growth rate for this year is -70, and for next year it’s pegged at 200%. This is a cash-rich company, since the total cash position on its balance sheet is $53.08 million, and its total debt is zero.

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The CFO and director just bought 50,000 shares, or about $278,000 worth of stock, at $5.57 per share.

From a technical perspective, CALX is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock gapped down big in July from around $6.50 to below $5 a share. After that gap down, shares of CALX went on to hit a 52-week low of $4.25 a share. That said, the stock has started to rebound during the last month to around $6 a share, and it’s moving within range of a near-term breakout trade.

If you’re bullish on CALX, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance levels at $6 to $6.19 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 708,544 shares. If we get that action, then CALX will have a solid chance to re-fill some of that previous gap and possibly hit its next significant overhead resistance levels at $7.50 to $8.40 a share.

On the flip side, I would avoid this stock or look for short-biased trades if it fails to trigger that breakout and then drops below its 50-day moving average at $5.34 a share and more significant support at $5 a share with high volume.

Neonode

Another stock that insiders are jumping into here is Neonode (NEON), which provides optical infrared touchscreen solutions for handheld and small to midsized consumer and industrial electronic devices.

Neonode has a market cap of $133 million and an enterprise value of $121 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 16.83. Its estimated growth rate for this year is 81.2%, and for next year it’s pegged at 300%. This is a cash-rich company, since the total cash position on its balance sheet is $11.27 million, and its total debt is zero.

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A director and beneficial owner just bought 200,000 shares, or $600,000 worth of stock, at $3.30 per share.

From a technical perspective, NEON is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently plunged from its July high of $7.40 to a recent low of $3.19 a share. During that sharp move lower, shares of NEON were consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has started to rebound of $3.19 and its moving within range of a near-term breakout trade.

If you’re in the bull camp on NEON, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance levels at $4.12 to $4.38, and then once it takes out its 200-day at $4.58 and its 50-day at $4.70 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 471,022 shares. If that breakout triggers soon, then NEON will setup to re-test or possibly take out its next significant overhead resistance levels at $5.59 to $6.50 a share.

Sears Holdings

Another stock that insiders are loading up on here is Sears Holdings (SHLD), which operates as a specialty retailer in the U.S. and Canada. Insiders are buying this stock into some solid strength, since shares are up a whopping 84% so far in 2012.

Sears Holdings has a market cap of $6.21 billion and an enterprise value of $8.59 billion. This stock trades at a reasonable valuation, with a price-to-sales of 0.15 and a price-to-book of 1.35. Its estimated growth rate for this year is 60.3%, and for next year it’s pegged at -41.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $730 million, and its total debt is a whopping $3.3 billion.

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Billionaire hedge fund manager Eddie Lampert, who’s also a beneficial owner and director just bought 2.4 million shares, or around $126.59 million worth of stock, at $52.75 per share.

From a technical perspective, SHLD is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been trading range bound for the past month or so, with shares moving between $50.25 on the downside and $61 on the upside. A move outside of that range soon will likely setup the next major trend for SHLD.

If you‘re bullish on SHLD, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $59.17 to $61 a share, and then above more resistance at $62.95 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 887,381 shares. If that breakout triggers soon, then look for SHLD to re-test and possibly take out its next major overhead resistance level at $65.70 a share.

I also featured Sears recently in " 5 Stocks Rising on Unusual Volume."

Uranium Resources

Another name that insiders are finding attractive here is metal mining player Uranium Resources (URRE), which is engaged in the business of acquiring, exploring, developing and mining uranium properties, using the in-situ recovery or solution mining process. Insiders are sniffing out some deep value here, since shares are down by over 45% in the last six months.

Uranium Resources has a market cap of $56 million and an enterprise value of $52 million. This stock trades at a reasonable valuation, with a price-to-book of 1.92. This is a cash-rich company, since the total cash position on its balance sheet is $2.82 million, and its total debt is around $562,000.

A director just bought 34,330,472 shares, or about $24.99 million worth of stock, at 52 cents per share.

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From a technical perspective, URRE is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a nasty downtrend for the last six months, with shares plunging from around $1 a share to its recent low of 39 cents per share. That downtrend has seen URRE make mostly lower highs and lower lows, which is bearish technical price action. There was a one-day spike from around 50 cents to 85 cents in July, but following that move URRE went on to re-enter its downtrend. That said, URRE is now moving within range of triggering a near-term breakout trade.

If you’re in the bull camp on URRE, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at 52 to 55 cents per 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 1.1 million shares. If that breakout triggers soon, then URRE will have a chance to re-test or possibly take out its next significant overhead resistance levels at 63 cents to 73 cents per share, or possibly even 78 cents to 85 cents per share.

Amyris

One more stock to consider with some decent insider buying is chemical manufacturing player Amyris (AMRS), an integrated renewable products company that provides alternatives to a range of petroleum-sourced products used in specialty chemical and transportation fuel markets worldwide. Insiders are buying this stock into extreme weakness here, since shares are down by around 70% so far in 2012.

Amyris has a market cap of $203 million and an enterprise value of $208 million. This stock trades at reasonable valuation, with a price-to-sales of 1.60 and a price-to-book of 2.20. Its estimated growth rate for this year is 18.4%, and for next year it’s pegged at 38.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $67.12 million, and its total debt is $85.93 million.

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A director just bought 270,270 shares, or $999,999 worth of stock, at $3.70 per share.

From a technical perspective, AMRS is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending inside of a sideways trading pattern for the last two months, with shares moving between $4.50 on the upside and around $3 to $2.74 on the downside. A move outside of that range soon will likely setup the next major trend for AMRS.

If you’re bullish on AMRS, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $3.53 to $3.60 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 691,031 shares. If that breakout triggers soon, then AMRS will have an excellent chance of re-testing or possibly taking out its next significant overhead resistance levels at $3.93 to $4.56 a share. Any high-volume move above $4.56 will setup AMRS to re-test or possibly take out its 200-day moving average at $5.56 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 Winderemere, Fla.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.