Stock Quotes in this Article: AGCO, BRKR, NS, ODP, RGDX

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.

Agco

One stock that insiders are buying up here is Agco (AGCO), which sells a range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment and implements. Insiders are buying this stock into some modest strength, since shares are up over 10% so far in 2012.

Agco has a market cap of $4.63 billion and an enterprise value of $5.71 billion. This stock trades at cheap valuation, with a trailing price-to-earnings of 6.73 and a forward price-to-earnings of 8.25. Its estimated growth rate for this year is 27.7, and for next year it’s pegged at 0.90%. This is not a cash-rich company, since the total cash position on its balance sheet is $393.40 million and its total debt is $1.53 billion.

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A director just bought 103,466 shares, or about $4.67 million worth of stock, at $44.58 per share. That same director also just bought 114,079 shares, or about $5.06 million worth of stock, at $44.24 to $44.56 per share.

From a technical perspective, AGCO is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently traded back above both of those key moving averages with heavy upside volume. That move has now pushed AGCO within range of triggering a near-term breakout trade.

If you’re bullish on AGCO, then I would look for long-biased trades once it breaks out above some near-term overhead resistance levels at $48 a share with high volume. Look for a sustained move or close above $48 with volume that hits near or above its three-month average action of 1.3 million shares. If that breakout triggers soon, then look for AGCO to re-test or possibly take out its next major overhead resistance levels at $51.25 to $52.37 a share, or even $54 a share.

On the flip side, I would avoid AGCO or look for short-biased trades if it fails to trigger that breakout, and then drops below its 200-day moving average at $45.57 a share with heavy volume. If we get that move, then AGCO will setup to re-test or possibly take out its 50-day at $43.69 a share.

Office Depot

Another stock that insiders are loading up on here is Office Depot (ODP), a global supplier of office products and services. Insiders are buying this stock into some decent strength here, since shares are up over 20% so far in 2012.

Office Depot has a market cap of $747 million and an enterprise value of $990 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 9.18 and a forward price-to-earnings of 32.81. Its estimated growth rate for the next quarter is 33.3%, and for next year it’s pegged at 366.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $422.68 million and its total debt is 674.55 million.

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A beneficial owner just bought 6.9 million shares, or about $15.83 million worth of stock, at $2.16 to $2.45 per share.

From a technical perspective, ODP 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 month, with shares soaring from a low of $1.51 to its recent high of $2.85 a share. That move has pushed ODP into overbought territory, since its current relative strength index reading is 82. Overbought can always get more overbought, so ODP still might be setting up to trend higher.

If you’re in the bull camp on ODP, then I would look for long-biased trades once it manages to break out above some near-term overhead resistance at $2.85 a share with high volume. Look for a sustained move or close above $2.85 a share with volume that registers near or above its three-month average action of 5.5 million shares. If that breakout triggers soon, then ODP will have a great chance of re-testing or possibly taking out its nest major overhead resistance levels at $3.20 to $3.40 a share

On the flip side, I would avoid ODP if it fails to trigger that breakout, and then moves back below its 200-day moving average of $2.46 a share with heavy volume. A high-volume move below $2.46 will setup ODP to re-test some near-term support at $2.20 a share.

NuStar Energy

Another stock that insiders are loading up on here is NuStar Energy (NS), which is engaged in the terminalling and storage of petroleum products, the transportation of petroleum products and anhydrous ammonia, and petroleum refining and marketing. Insiders are finding some value here, since shares are down by over 10% in the last six months.

NuStar Energy has a market cap of $3.56 billion and an enterprise value of $6.18 billion. This stock trades at a reasonable valuation, with a forward price-to-earnings of 17.99. Its estimated growth rate for this year is -46.4%, and for next year it’s pegged at 87.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $34.15 million and its total debt is a whopping $2.66 billion.

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A director just bought 490,000 shares, or around $23.98 million worth of stock, at $48.94 per share.

From a technical perspective, NS is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently topped out at around $54 a share, and subsequently plunged to its recent low of $48.44 a share. That plunge also included a large gap down with monster volume. Since that sharp move lower, shares of NS have started to rebound and it filled that gap towards its current price of near $50 a share. That move has now pushed NS within range of triggering a near-term breakout trade.

If you‘re bullish on NS, then I would look for long-biased trades once it manages to break out above some near-term overhead resistance at $50.65 a share and then above its 50-day at $51.74 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 295,928 shares. If that breakout triggers soon, then NS will have a great chance of re-testing or possibly taking out its 200-day moving average of $53.37 a share, and that stiff overhead resistance area at $54 a share.

Response Genetics

Another stock that insiders are finding attractive here is biotechnology and drugs player Response Genetics (RGDX), a life sciences company engaged in the research and development of clinical diagnostic tests for cancer. Insiders are sniffing out some deep value here, since shares are down by over 30% in the last six months.

Response Genetics has a market cap of $31 million and an enterprise value of $30.99 million. This stock trades at a reasonable valuation, with a price-to-sales of 1.80. Its estimated growth rate for the next quarter is 50%, and for this year it’s pegged at -43.3%. This is barley a cash-rich company, since the total cash position on its balance sheet is $2.56 million and its total debt is $1.32 million.

A beneficial owner just bought 3 million shares, or about $3.3 million worth of stock, at $1.10 per share.

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From a technical perspective, RGDX is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently gapped up and soared from around $1 to its recent high of $1.42 a share with heavy upside volume. During that move, shares of RGDX made higher lows and higher highs, which is bullish technical price action. Since that move, RGDX has now started to selloff after the stock ran into resistance near its 200-day at $1.47 a share.

If you’re in the bull camp on RGDX, then I would look for long-biased trades off weakness if RGDX can hold some near-term support at $1.10 a share off any pullback. If RGDX holds $1.10, then look for it to break at above $1.42 to $1.47 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 19,450 shares. If we get that move, then RGDX will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $1.60 to $2.05 a share.

Bruker

One more stock that's been seeing with some decent insider buying is Bruker (BRKR), a global manufacturer of scientific instruments that address the needs of an array of customers in life science, pharmaceutical, biotechnology, clinical and molecular diagnostics research, as well as in materials and chemical analysis in various industries and government applications. Insiders are buying this stock into some modest strength, since shares are up 8% so far in 2012.

Bruker has a market cap of $2.25 billion and an enterprise value of $2.31 billion. This stock trades at reasonable valuation, with a trailing price-to-earnings of 27.06 and a forward price-to-earnings of 16.11. Its estimated growth rate for this year is -18.3%, and for next year it’s pegged at 25.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $240.30 million and its total debt is $321.40 million.

A director and beneficial owner just bought 100,000 shares, or $1.3 million worth of stock, at $13 per share. The CEO also just bought 100,000 shares, or $1.3 million worth of stock, at $13 per share.

From a technical perspective, BRKR is currently trading 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 $14 to a low of $9.91 a share with massive volume. Since that gap down, shares of BRKR have been uptrending towards its current price of $13.50 a share. During that uptrend, shares of BRKR have mostly made higher lows and higher highs, which is bullish technical price action. That move has now pushed BRKR within range of triggering a near-term breakout trade.

If you’re bullish on BRKR, then I would look for long-biased trades once it manages to break out above some near-term overhead resistance levels at $13.96 to $14.29 a share with high volume. Look for a sustained move or close above those levels with volume that tracks in close to or above its three-month average action of 778,623 shares. If that breakout triggers soon, then BRKR will have a great chance of re-testing or possibly taking out its next significant overhead resistance level at $15.75 a share.

On the flip side, I would avoid BRKR or look for short-biased trades if it fails to trigger that breakout, and then drops back below its 50-day at $12.50 with heavy volume. If we get that move, then BRKR will setup to re-test or possibly take out its next major support levels at $11.50 to $11 a share.

To see more stocks with notable insider buying like Sirius XM Radio (SIRI), Tuesday Morning (TUES) and Hot Topic (HOTT), 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.