Stock Quotes in this Article: ACHN, GMCR, JCP, MUSA, HZNP

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

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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.

But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

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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 five stocks whose insiders have been doing some big buying per SEC filings.

Green Mountain Coffee Roasters

One coffee and tea player that insides are jumping into here is Green Mountain Coffee Roasters (GMCR), which is engaged in the coffee and coffeemaker businesses in the U.S. and Canada. Insiders are buying this stock into big time strength, since shares are up 62% so far in 2013.

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Green Mountain Coffee Roasters has a market cap of $10 billion and an enterprise value of $10.25 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 21.41 and a forward price-to-earnings of 15.44. Its estimated growth rate for this year is 10.9%, and for next year it's pegged at 16%. This is barely a cash-rich company, since the total cash position on its balance sheet is $260.09 million and its total debt is $256.98 million. This stock currently sports a dividend yield of 1.5%.
PA director just bought 10,000 shares, or $695,000 worth of stock, at $69.51 per share. Another director also just bought 10,000 shares, or $682,000 worth of stock, at $68.25 per share.

From a technical perspective, GMCR is currently trending well just below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending strong for the last few weeks, with shares moving higher from its low of $56.87 to its recent high of $73.57 a share. During that move, shares of GMCR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GMCR within range of triggering a near-term breakout trade.

If you're bullish on GMCR, then I would look for long-biased trades as long as this stock is trending above some near-term support at $63.50 and then once breaks out above its 200-day at $68.27 a share to more resistance at $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 4.42 million shares. If that breakout hits soon, then GMCR will set up to re-test or possibly take out its next major overhead resistance levels at $73.57 to $77.04 a share. Any high-volume move above $77.04 will then give GMCR a chance to tag $80 to $85 a share.

Murphy USA

Another energy player that insiders are active in here is Murphy USA (MUSA), which is engaged in operating retail stores. It mainly offers fuels which include Ethanol and Diesel. Insiders are buying this stock into notable strength, since shares are up 18% so far in 2013.

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Murphy USA has a market cap of $2.15 billion and an enterprise value of $2.54 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 13.36. This is not a cash-rich company, since the total cash position on its balance sheet is $262.50 million and its total debt is $642.50 million. This stock currently sports a dividend yield of 2.8%.

A director just bought 25,000 shares, or about $1.12 million worth of stock, at $44.94 per share.

From a technical perspective, MUSA is currently trending above its 50-day moving average, which is bullish. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $36.12 to its recent high of $46.91 a share. During that uptrend, shares of MUSA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of MUSA within range of triggering a big breakout trade.

If you're in the bull camp on MUSA, then I would look for long-biased trades as long as this stock is trending above some key near-term support at $44.38 or at $43, and then once it breaks out above its all-time high at $46.91 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 846,475 shares. If that breakout hits soon, then MUSA will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $58 a share.

J.C. Penney

One department store player that insiders are in love with here is J.C. Penney (JCP), which sells merchandise and services to consumers through its department stores and Direct channels. Insiders are buying this stock into big time weakness, since shares are off by 48% so far in 2013.

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J.C. Penney has a market cap of $3 billion and an enterprise value of $7 billion. This stock trades at a reasonable valuation, with a price-to-sales of 0.24 and a price-to-book of 1.08. Its estimated growth rate for this year is -72.3%, and for next year it's pegged at 55.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.23 billion and its total debt is $5.61 billion.

The CEO just bought 112,000 shares, or about $1 million worth of stock, at $8.95 per share.

From a technical perspective, JCP is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last month, with shares soaring higher from its low of $6.24 to its intraday high of $10.21 a share. During that uptrend, shares of JCP have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on JCP, then I would look for long-biased trades as long as this stock is trending above its 50-day at $8.56, and then once it takes out Wednesday's high of $10.21 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 41.57 million shares. If we get that move soon, then JCP will set up to re-test or possibly take out its next major overhead resistance levels at $12 to $13 a share, or even $14.50 a share.

Horizon Pharma

One specialty pharmaceutical stock that insiders are loading up on here is Horizon Pharma (HZNP), which, through its subsidiaries, develops and commercializes medicines for the treatment of arthritis, pain, and inflammatory diseases. Insiders are buying this stock into major strength, since shares are up huge so far in 2013 by 193%.

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Horizon Pharma has a market cap of $449 million and an enterprise value of $414 million. This stock trades at a premium valuation, with a forward price-to-earnings of 114.17. Its estimated growth rate for this year is 62.4%, and for next year it's pegged at 107.1%. This is barely a cash-rich company, since the total cash position on its balance sheet is $58.65 million and its total debt is $45.58 million.

A director just bought 151,089 shares, or about $942,000 worth of stock, at $6.24 per share.

From a technical perspective, HZNP 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 three months, with shares soaring higher from its low of $2.11 to its recent high of $7.08 a share. During that uptrend, shares of HZNP have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HZNP within range of triggering a near-term breakout trade.

If you're bullish on HZNP, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $6 or at $5.50 and then once it breaks out above its 52-weeek high at $7.08 share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 1.14 million shares. If that breakout hits soon, then HZNP will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $8.72 to $9 a share.

Achillion Pharmaceuticals

One final name with some big insider buying is Achillion Pharmaceuticals (ACHN), which focuses on the discovery, development and commercialization of innovative treatments for infectious diseases. Insiders are buying this stock into large weakness, since shares are off by 60% so far in 2013.

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Achillion Pharmaceuticals has a market cap of $307 million and an enterprise value of $157 million. This stock trades at a premium valuation, with a price-to-sales of 2,588 and a price-to-book of 1.86. Its estimated growth rate for this year is -6.3, and for next year it's pegged at -17.6%. This is a cash-rich company, since the total cash position on its balance sheet is $139.77 million and its total debt is just $436,000.

A beneficial owner just bought 1,110,000 shares, or about $2.82 million worth of stock, at $2.53 per share.

From a technical perspective, ACHN is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways and consolidating for the last two months, with shares moving between $2.26 on the downside and $3.62 on the upside. This sideways action is coming after shares of ACHN gapped down sharply from $7.50 to $2.62 a share in October. This stock is now starting to trend within range of triggering a major breakout trade above the upper-end of its recent sideways trading chart pattern.

If you're bullish on ACHN, then look for long-biased trades as long as this stock is trending above $3 or above more near-term support at $2.52 and then once it breaks out above its 50-day moving average of $3.35 a share to its gap down day high of $3.62 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 3.05 million shares. If that breakout triggers soon, then ACHN will set up to re-fill some of its previous gap down zone that started near $7.50 a share. Some possible upside targets if ACHN gets into that gap with volume are $4.50 to $5.50 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 Delafield, Wis.


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

Roberto Pedone, based out of Delafield, Wis., 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.