Stock Quotes in this Article: DGIT, GDP, LIVE, NAV, ARCP

MADISON, Wis. (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 several stocks whose insiders have been doing some big buying per SEC filings.

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Navistar

One stock that insiders are jumping into here is Navistar (NAV), which produces International brand commercial and military trucks, MaxxForce brand diesel engines, IC Bus brand school and commercial buses, Monaco RV brands of recreational vehicles and Workhorse brand chassis. Insiders are buying this stock into notable strength, since shares are up 41% so far in 2013.

Navistar has a market cap of $2.4 billion and an enterprise value of $5.9 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 13.87. Its estimated growth rate for this year is 75.3%, and for next year it’s pegged at 181.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.19 billion and its total debt is $4.46 billion.

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A director just bought 6,370 shares, or about $199,000 worth of stock, at $31.28 per share.

From a technical perspective, NAV is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has recently bounced right off its 50-day moving average and hit a near-term high at $34.20 a share. Following that bounce, shares of NAV have now pulled right back to its 50-day.

If you’re bullish on NAV, then I would look for long-biased trades as long as this stock is trending above its 50-day at $30.44 and then once it breaks out above some near-term overhead resistance at $34.20 a share with high volume. Look for a sustained move or close above $34.20 with volume that hits near or above its three-month average action of 2.13 million shares. If that breakout triggers, then NAV will set up to re-test or possibly take out its 52-week high at $37.65 a share.

Digital Generation

Another stock that insiders are buying up is Digital Generation (DGIT), a provider of digital technology services that enable the electronic delivery of advertisements, syndicated programs and video news releases to traditional broadcasters, online publishers and other media outlets. Insiders are buying this stock into extreme weakness, since shares are off by 38% so far in 2013.

Digital Generation has a market cap of $185 million and an enterprise value of $562 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 12.22. Its estimated growth rate for this year is 104.6%, and for next year it’s pegged at 37.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $84.83 million and its total debt is $453.92 million.

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A beneficial owner just bought 1,543,228 shares, or about $10.09 million worth of stock, at $6.44 per share.

From a technical perspective, DGIT is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently hit a new 52-week low at $5.78 a share and then started to rebound higher to its recent high at $7.28 a share. That move has failed to push DGIT back above its 50-day moving average at $7.49 a share, and the stock now looks poised to push lower if it breaks some near-term support at $6.50 a share.

If you’re in the bull camp on DGIT, then look for long-biased as long as this stock is trending above its 52-week low at $5.78, and then once it breaks out above its 50-day at $7.49 a share with high volume. Look for a sustained move or close above its 50-day with volume that hits near or above its three-month average action of 791,056 shares. If that breakout triggers soon, then DGIT will set up to re-test or possibly take out its next major overhead resistance levels at $8.24 to $9.50 a share.

Goodrich Petroleum

An oil and gas stock that insiders are very active in here is Goodrich Petroleum (GDP), which explores, exploits, develops and produces oil and natural gas properties in East Texas and Northwest Louisiana. Insiders are buying this stock into modest strength, since shares are up 8.6% so far in 2013.

Goodrich Petroleum has a market cap of $473 million and an enterprise value of $1.1 billion. This stock trades at a reasonable valuation, with a price-to-sales of 2.95 and a price-to-book of 9.18. Its estimated growth rate for this year is -91.1%, and for next year it’s pegged at 52.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.19 million and its total debt is $568.67 million.

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A director just bought 60,000 shares, or about $1.5 million worth of stock, at $25 per share. The chairman of the board also just bought 40,000 shares, or about $1 million worth of stock, at $25 per share.

From a technical perspective, GDP is currently trending just above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has sliced below its 50-day today at $14.04 a share, after the stock recently formed a double top at $16.18 to $16 a share. Shares of GDP are quickly moving within range of testing its 200-day at $12.11 a share.

If you’re bullish on GDP, then look for long-biased trades as long as this stock is trending above its 200-day at $12.11 with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 1.26 million shares. I would avoid this stock if it takes out its 200-day in the near future.

American Realty Capital Properties

A real estate stock that insiders are loading up on here is American Realty Capital Properties (ARCP), which owns and acquires single tenant freestanding commercial real estate that is net leased on a medium-term basis primarily to investment-grade-credit-rated and other credit-worthy tenants. Insiders are buying this stock into strength, since shares are up 22% so far in 2013.

American Realty Capital Properties has a market cap of $177 million and an enterprise value $339 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 14.10. Its estimated growth rate for this year is -13%, and for next year it’s pegged at 22.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $2.75 million and its total debt is $160.36 million.

The vice president just bought 30,001 shares, or about $470,000 worth of stock, at $15.69 per share. A director also just bought 30,000 shares, or about $470,000 worth of stock, at $15.69 per share. And the CEO also just bought 30,000 shares, or about $470,000 worth of stock, at $15.69 per share.

From a technical perspective, ARCP 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 two months, with shares soaring higher from its low of $12.45 to its recent high of $16.65 a share. During that move, shares of ARCP have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of ARCP now look poised to trend back towards its 50-day, so that could present a solid buying opportunity if it holds.

Traders should now look for long-biased trades in ARCP as long as it’s trending above its 50-day at $14.39 and then once it triggers a break out above its 52-week high and all-time high at $16.65 a share with high volume. Look for a sustained move or close above $16.65 with volume that hits near or above its three-month average action of 3.08 million shares. If that breakout triggers soon, then ARCP will set up to trend well north of $20 a share.

LiveDeal

One more stock to consider with some big insider buying is LiveDeal (LIVE), which provides marketing solutions that boost customer awareness and merchant visibility on the internet. Insiders are buying this stock into weakness, since shares are off by 21% so far in 2013.

LiveDeal has a market cap of $8.26 million and an enterprise value of $7.65 million. This stock trades at a reasonable valuation, with a price-to-sales of 2.96 and a price-to-book of 2.96. This is a cash-rich company, since the total cash position on its balance sheet is $1.17 million and its total debt is zero.

A beneficial owner just bought 722,534 shares, or about $1 million worth of stock, at $1.38 to $1.40 per share.

From a technical perspective, LIVE is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently skyrocketed from $1.97 to $4.24 a share in just a few trading sessions. Following that monster move, shares of LIVE have now pulled back to its current price of around $3 a share, which sits just below its 50-day at $3.07 a share.

If you’re bullish on LIVE, then look for long-biased trades as long as this stock is trending above some key near-term support at $2.88 a share, and then once it breaks out above some near-term overhead resistance levels at $3.07 to $3.24 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 44,000 shares. If that breakout triggers soon, then LIVE could run back towards its next significant overhead resistance levels at $3.75 to $4.20 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 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.