Stock Quotes in this Article: GE, WES, TTS, XON, RTRX

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, it's 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 five stocks whose insiders have been doing some big buying per SEC filings.

General Electric

One industrial conglomerate that insiders are loading up on here is General Electric (GE), which operates as an infrastructure and financial services company worldwide. Insiders are buying this stock into modest weakness, since shares are off by 8% so far in 2014.

General Electric has a market cap of $258 billion and an enterprise value of $629 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 20.36 and a forward price-to-earnings of 14.22. Its estimated growth rate for this year is 3.7%, and for next year it's pegged at 6.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $13.68 billion and its total debt is $383.04 billion. This stock currently sports a dividend yield of 3.4%.

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The CEO just bought 104,900 shares, or about $2.64 million worth of stock, at $25.19 per share.

From a technical perspective, GE is currently trending below its 50-day moving average and above is 200-day moving average, which is neutral trendwise. This stock has been uptrending a bit for the last month and change, with shares moving higher from its low of $24.11 to its recent high of $26.35 a share. During that move, shares of GE have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on GE, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average at $24.66 and then once it breaks out above some near-term overhead resistance at $26.35 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 38.05 million shares. If that breakout triggers soon, then GE will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $28.09 a share.

Intrexon

Another biotechnology player that insiders are snapping up a large amount of stock in here is Intrexon (XON), which operates in the synthetic biology field. Insiders are buying this stock into big time strength, since shares up sharply by 44% over the last three months.

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Intrexon has a market cap of $2.7 billion and an enterprise value of $2.4 billion. This stock trades at a premium valuation, with a price-to-sales of 112.98 and a price-to-book of 7.05. Its estimated growth rate for next year is 82.9%. This is a cash-rich company, since the total cash position on its balance sheet is $197.89 million and its total debt is $2.57 million.

The vice president just bought 100,000 shares, or about $2.59 million worth of stock, at $24.59 to $26.04 per share.

From a technical perspective, XON is currently trending just below its 50-day moving average, which is bearish. This stock is spiking higher today right above some near-term support at $26 a share. That spike is quickly pushing shares of XON within range of triggering a major breakout trade above some key overhead resistance levels.

If you're in the bull camp on XON, then I would look for long-biased trades as long as this stock is trending above support at $26 or at $24.50 and then once it breaks out above its 50-day moving average of $28.44 a share to some more key overhead resistance at $29.51 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 535,835 shares. If that breakout materializes soon, then XON will set up to re-test or possibly take out its next major overhead resistance levels at $34 to its 52-week high at $38.50 a share.

Retrophin

One biopharmaceutical player that insiders are in love with here is Retrophin (RTRX), which engages in the discovery, development and commercialization of orphan drugs for the treatment of rare and life-threatening diseases. Insiders are buying this stock into major strength, since shares are up a whopping 169% so far in 2014.

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Retrophin has a market cap of $345 million and an enterprise value of $338 million. Its estimated growth rate for next year is 33.6%. This is a cash-rich company, since the total cash position on its balance sheet is $16.37 million and its total debt is just $10,000.

The CEO just bought 43,100 shares, or about $804,000 worth of stock, at $17.20 to $18.67 per share.

From a technical perspective, RTRX 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 month and change, with shares moving higher from its low of $9.09 to its recent high of $21 a share. During that uptrend, shares of RTRX have been making mostly higher lows and higher highs, which is bullish technical price action. That said, shares of RTRX are extended here and are due for a pullback to re-test some near-term support levels at $14 or at its 50-day moving average of $13.23 a share. This stock could make for a great buy if we can first pullback to those key support levels.

If you're bullish on RTRX, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $14 or at its 50-day moving average of $13.23 a share and then once it breaks out above its all-time high of $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 action of 305,562 shares. If that breakout gets underway soon, then RTRX will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $25 to $30 a share.

Western Gas Partners

One energy player that insiders are loading up on here is Western Gas Partners (WES), which owns, operates, acquires and develops midstream energy assets. Insiders are buying this stock into modest strength, since shares are up 5% so far in 2014.

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Western Gas has a market cap of $7.6 billion and an enterprise value of $8.8 billion. This stock trades at reasonable valuation, with a trailing price-to-earnings of 35.48 and a forward price-to-earnings of 24.02. Its estimated growth rate for this year is 21.9%, and for next year it's pegged at 21.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $100.73 million and its total debt is $ 1.42 billion. This stock currently sports a dividend yield of 3.7%.

A beneficial owner just bought 308,490 shares, or about $18.75 million worth of stock, at $60.78 per share.

From a technical perspective, WES is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last three months, with shares moving higher from its low of $57.12 to its recent high of $65.31 a share. During that uptrend, shares of WES have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of WES within range of triggering a near-term breakout trade.

If you're bullish on WES, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $61.21 and then once it breaks out above its 52-week high at $65.31 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 231,250 shares. If that breakout hits soon, then WES will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $75 a share.

Tile Shop

One final stock with some large insider buying is Tile Shop (TTS), which operates as a specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the U.S. Insiders are buying this stock into modest weakness, since shares are off by 4% so far in 2014.

Tile Shop has a market cap of $850 million and an enterprise value of $969 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 28.12. Its estimated growth rate for this year is 15.4%, and for next year it's pegged at 31.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.76 million and its total debt is $96.68 million.

A director just bought 96,600 shares, or about $1.48 million worth of stock, at $15.29 to $15.60 per share.
From a technical perspective, TTS is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong over the last few weeks, with shares moving higher from its low of $12.40 to its recent high of $17.26 a share. During that move, shares of TTS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of TTS within range of triggering a near-term breakout trade.

If you're bullish on TTS, then look for long-biased trades as long as this stock is trending above its 50-day at $15.67 a share or above more near-term support at $15.19 a share and then once it breaks out above some key overhead resistance levels at $17.26 to $18.67 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 805,595 shares. If that breakout triggers soon, then TTS will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $22.53 a share to $25.50 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.