Stock Quotes in this Article: DRC, FSYS, NVAX, TPLM, ADNC

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.

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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.

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.

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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.

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Audience

One semiconductor stock that insiders are active in here is Audience (ADNC), a provider of intelligent voice and audio solutions that improve voice quality and the user experience in mobile devices. Insiders are buying this stock into big time strength, since shares are up 39% so far in 2013.

Audience has a market cap of $303 million and an enterprise value of $163 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 22.38 and a forward price-to-earnings of 22.31. Its estimated growth rate for this year is -34.1%, and for next year it’s pegged at 12.1%. This is a cash-rich company, since the total cash position on its balance sheet is $127.64 million and its total debt is just $5.29 million.

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The CFO just bought 50,000 shares, or about $659,000 worth of stock, at $13.10 to $13.25 per share.

From a technical perspective, ADNC is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a double bottom chart pattern at $12.35 to $12.44 a share. Since marking that bottom, shares of ADNC have moved higher back above its 50-day and 200-day moving averages, and it’s now quickly moving within range of triggering a near-term breakout trade.

If you’re bullish on ADNC, then I would look for long-biased trades as long as it’s trending above its 50-day at $12.91 and then once it breaks out above some near-term overhead resistance at $15 a share with high volume. Look for a sustained move or close above $15 with volume that hits near or above its three-month average action of 193,508 shares. If that breakout triggers, then ADNC will set up to re-test or possibly take out its next major overhead resistance level at $16.45 a share. Any high-volume move above $16.45 will then give ADNC a chance to re-fill some of its previous gap down zone from last September that started near $19 a share.

Dresser-Rand Group

Another stock that insiders are jumping into here is Dresser-Rand Group (DRC), a supplier of custom-engineered rotating equipment solutions for long-life, critical applications in the oil, gas, chemical, petrochemical, process, power, military and other industries worldwide. Insiders are buying this stock into modest strength, since shares are up 5% so far in 2013.

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Dresser-Rand Group has a market cap of $4.49 billion and an enterprise value of $5.32 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 25.20 and a forward price-to-earnings of 13.34. Its estimated growth rate for this year is 43%, and for next year it’s pegged at 32.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $122.80 million and its total debt is $1.05 billion.

The CEO just bought 17,680 shares, or about $1 million worth of stock, at $57.02 per share.

From a technical perspective, DRC is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending modestly for the last month, with shares moving higher from its low of $55.45 to its intraday high of $59.50 a share. During that uptrend, shares of DRC have been consistently making higher lows and higher highs, which is bullish technical price action. That move has just started to push shares of DRC back above its 50-day moving average of $59.30 a share.

If you’re in the bull camp on DRC, then look for long-biased as long as it’s trending above its 50-day at $59.30 a share with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 528,130 shares as bullish. If this stock can maintain that trend, then DRC will set up to re-test or possibly take out its next major overhead resistance levels at $62.85 to $63.40.

Fuel Systems

An alternative energy stock that insiders are loading up on here is Fuel Systems (FSYS), which designs, manufactures and supplies alternative fuel components and systems for use in the transportation, industrial and power generation industries on a global basis. Insiders are buying this stock into decent strength, since shares are up 15.9% during the last three months.

Fuel Systems has a market cap of $328 million and an enterprise value of $238 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 27.76. Its estimated growth rate for this year is 64.3%, and for next year it’s pegged at 28.3%. This is a cash-rich company, since the total cash position on its balance sheet is $75.68 million and its total debt is just $1.02 million

A beneficial owner just bought 100,000 shares, or about $1.58 million worth of stock, at $15.67 to $16.10 per share.

From a technical perspective, FSYS 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 few weeks, with shares moving higher from its low of $13.38 to its intraday high of $16.58 a share. During that uptrend, shares of FSYS have been consistently making higher low and higher highs, which is bullish technical price action. That move has started to push shares of FSYS into breakout territory above $16.50 a share.

If you’re bullish on FSYS, then look for long-biased trades as long as it’s trending above its 200-day at $15.91 and then once it breaks out above some near-term overhead resistance levels at $16.50 to $16.58 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 170,674 shares. If that breakout triggers soon, then FSYS will set up to re-test or possibly take out its next major overhead resistance levels at $17.50 to $19 a share.

Triangle Petroleum

Another stock that insiders are buying a huge amount of stock in is Triangle Petroleum (TPLM), which is engaged in the acquisition, exploration and development of oil and gas resource properties. Insiders are buying this stock into solid strength, since shares are up 16.6% so far in 2013.

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Triangle Petroleum has a market cap of $311 million and an enterprise value $382 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 11.32. Its estimated growth rate for this year is 81.8%, and for next year it’s pegged at 875%. This is not a cash-rich company, since the total cash position on its balance sheet is $45.04 million and its total debt is $121.50 million.

A director and beneficial owner just bought 9,300,000 shares, or $55.8 million worth of stock, at $6 per share.

From a technical perspective, TPLM 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 few weeks, with shares moving higher from its low of $6 to its recent high of $7.20 a share. During that uptrend, shares of TPLM have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of TPLM within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in TPLM as long as it’s trending above its 50-day at $6.47 and then once it breaks out above some near-term overhead resistance levels at $7.20 to $7.32 a share and then above some past resistance at $7.47 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 509,000 shares. If that breakout triggers soon, then TPLM will set up to re-test or possibly take out its next major overhead resistance levels at $7.91 to $8.26 a share. Any high-volume move above $8.26 will then put $9 to $9.73 into range for shares of TPLM.

Novavax

One more stock to consider today is Novavax (NVAX), a clinical-stage biopharmaceutical company focused on creating differentiated, value- upon current preventive options for a range of infectious diseases. Insiders are buying this stock into strength, since shares are up 15% during the last three months.

Novavax has a market cap of $278 million and an enterprise value of $250 million. This stock trades at a premium valuation, with a price-to-sales of 12.55 and a price-to-book of 4.51. Its estimated growth rate for this year is 8.7%, and for next year it’s pegged at 19%. This is a cash-rich company, since the total cash position on its balance sheet is $28.41 million and its total debt is just $1.26 million.

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A director just bought 100,000 shares, or $203,000 worth of stock, at $2.03 per share.

From a technical perspective, NVAX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently surged higher back above both of those key moving averages with heavy upside volume. That move pushed shares of NVAX into breakout territory above $1.85 to $1.94 a share, and it’s now quickly moving the stock within range of triggering another near-term breakout trade.

If you’re bullish on NVAX, then look for long-biased as long as it’s trending above its 50-day at $1.90, and then once it breaks out above some near-term overhead resistance at $2.11 a share with high volume. Look for a sustained move or close above $2.11 a share with volume that registers near or above its three-month average action of 741,297 shares. If that breakout hits soon, then NVAX will set up to re-test or possibly take out its next major overhead resistance levels at $2.28 to $2.40 a share. Any high-volume move above $2.40 to $2.44 will then put $2.60 to $3 into range for shares of NVAX.

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 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.