Stock Quotes in this Article: GHDX, KEYN, NBR, TLAB, VOCS

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.

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.

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.

Nabors Industries

An energy name that insiders are loading up on here is Nabors Industries (NBR), a land drilling contractor, as well as a land well-servicing and workover contractor in the U.S. and Canada. Insiders are sniffing out some value here since this stock is off by 12% so far in 2012.

Nabors Industries has a market cap of $4.44 billion and an enterprise value of $8.76 billion. This stock trades at an extremely cheap valuation, with a trailing price-to-earnings of 15.17 and a forward price-to-earnings of 5.97. Its estimated growth rate for this year is 57.6%, and for next year it’s pegged at 16.9%. This is far from a cash-rich company, since the total cash position on its balance sheet is $493.97 million and its total debt is a whopping $4.77 billion.

A director just bought 58,000 shares, or around $1 million worth of stock, at $17.34 per share.

From a technical perspective, NBR is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a nasty downtrend since it hit a February high of $22.73 a share. Since hitting that high, shares of NBR have plunged and consistently made lower highs and lower lows, which is bearish technical price action. The current downtrend in NBR has pushed the stock near some previous support zones at $15 to $14 a share.

If you’re in the bull camp on NBR, then you need to step away from this stock until it shows a complete trend change from bearish to bullish price action. Shares of NBR could find some buying interest soon near its previous support levels at $15 to $14 a share, but the prevailing trend right now is clearly down. Don’t try and catch the falling knife, wait until NBR stabilizes and starts to make higher lows and higher highs before you step in to take long positions.

Nabors was included on a list of the Best Growth Stocks for 2012.

Tellabs

Another name that insiders are scooping up here is Tellabs (TLAB), which is engaged in designing and marketing equipment and services to communications services providers. This stock is down a bit so far in 2012 with shares off by around 4.4%.

Tellabs has a market cap of $1.42 billion and an enterprise value of $450 million. This stock trades at a premium valuation, with a forward price-to-earnings of 48.31. Its estimated growth rate for the current quarter is 100%, and for this year it’s pegged at 100%. This is a cash-rich company, since the total cash position on its balance sheet is $1.16 billion and its total debt is $223.30 million. After you back out the debt, Tellabs has around $937 million of total cash on its balance sheet.

The CFO and vice president just bought 200,000 shares, or $745,000 worth of stock, at $3.72 to $3.73 per share.

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From a technical perspective, TLAB is currently trading right below its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been trending down since its January high of $4.38 to its recent low of $3.63 a share. Since hitting that low, TLAB has found some buying interest since the stock has spiked back up close to its 50-day moving average of $3.89 a share.

If you’re bullish on TLAB, then I would look for long-biased trades once it sustains a high-volume move or close back above its 50-day moving average of $3.89 a share. Look for volume on that move that’s near or well above its three-month average volume of 2,536,648 shares. If we get that action soon, then I would add to any long positions in TLAB once it takes out its 200-day moving average of $4.02 a share with high-volume.

I would simply avoid any long trades in TLAB if it fails to trigger that high-volume move back above its 50-day and 200-day moving averages, and then drops below some major support zones at $3.63 to $3.62 a share with heavy volume. A high-volume move below those support zones would not be a good technical sign for this stock since it’s held those levels since mid-2011.

Genomic Health

A biotechnology and drugs player that insiders are falling in love with here is Genomic Health (GHDX), a molecular diagnostics company focused on the global development and commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. Insiders are buying into strength here since this stock is up over 17% so far in 2012.

Genomic Health has a market cap of $894 million and an enterprise value of $770 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 105.32 and a forward price-to-earnings of 166.17. Its estimated growth rate for this year is -103.8%, and for next year it’s pegged at 1,900%. This is a cash-rich company, since the total cash position on its balance sheet is $101.85 million and its total debt zero.

A director and beneficial owner just bought 195,701 shares, or around $5.56 million worth of stock, at $27.99 to $28.50 per share.

From a technical perspective, GHDX is currently trading above both its 50-day and 200-day moving averages, which is bullish. In fact, this stock recaptured its 50-day moving average of $29.63 on Wednesday with decent volume. That move back above its 50-day has also pushed the stock within range of triggering a major near-term breakout trade.

If you‘re in the bull camp on GHDX, I would look for long-biased trades as long this stock is trending above its 50-day and if it triggers that breakout above $29.99 with strong upside volume. Look for up-day volume that’s near or well above its three-month average action of 145,390 shares. If that breakout triggers soon, then GHDX should easily continue its uptrend towards its March high of $32 a share. If that level gets hit, I would then add to any long positions if it gets taken out with high-volume.

I would avoid this stock or look for short-biased trades if GHDX fails to maintain its uptrend above its 50-day moving average of $29.62 a share, or if it fails to trigger that breakout above $29.99 a share. This stock could easily trend down towards some near-term support levels at $27.76 to $27.42 a share if heavy volume selling pushes this back below its 50-day soon.

Vocus

A software and programming player whose insiders are snapping up a large amount of stock is Vocus (VOCS). This company is a provider of cloud-based software for public relations management. Insiders are buying this stock into some big-time weakness since shares are off by 28% so far in 2012.

Vocus has a market cap of $301 million and an enterprise value of $282 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 23.64. Its estimated growth rate for this year is -51.9%, and for next year it’s pegged at 71.8%. This is a cash-rich company, since the total cash position on its balance sheet is $25.83 million and its total debt is just $1.79 million.

The CEO and chairman of the board just bought 60,000 shares, or $959,000 worth of stock, at $15.99 per share. The vice president and CFO also just bought 15,000 shares, or about $239,000 worth of stock, at $15.99 per share.

From a technical perspective, VOCS 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 February from around $22 to $13 a share on monster volume. Since that major gap-down, this stock has found some buying interest at around $12 a share and it’s recently spiked higher towards its current price of $15.84 a share.

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If you’re a bullish on VOCS, I would look for long-biased trades if this stock can manage to trigger a near-term breakout above some overhead resistance at $16.42 with high-volume. Look for volume on that move that’s near or well above its three-month average action of 512,148 shares. If we get that action soon, look for VOCS to fill some of that gap and trend back towards its 200-day moving average of $19.08 a share.

I would simply avoid VOCS or look for short-biased trades if it fails to trigger that breakout, and then drops below some near-term support at $15.59 with heavy volume. This stock could trend back towards $14 or even its 50-day moving average of $13.39 a share if it resumes its downtrend again.

Keynote Systems

One more stock whose insiders are doing some large buying is Keynote Systems (KEYN), a global provider of Internet and mobile cloud monitoring and testing solutions. Insiders are finding some value here since this stock is down by 23% so far in 2012.

Keynote Systems has a market cap of $275 million and an enterprise value of $223 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 6.02 and a forward price-to-earnings of 12.91. Its estimated growth rate for this year is -16.1%, and for next year it’s pegged at 23.20%. This is a cash-rich company, since the total cash position on its balance sheet is $43.63 million and its total debt is zero.

A beneficial owner just bought 595,600 shares, or about $9.09 million worth of stock, at $15.00 per share.

From a technical perspective, KEYN is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently sold off hard from near $19 to a low of $14.77 a share. Following that selloff, this stock has started to find some buying interest with the stock trading up 3.2% on Wednesday to $15.75 a share in weak overall market.

If you’re bullish on KEYN, I would only look for long-biased trades if this stock can manage to trigger a near-term breakout above $16 a share with high-volume. Look for volume on that move that’s near or well above its three-month average action of 131,089 shares. If we get that move soon, look for KEYN to make a run at its 50-day moving average of $18.53 a share or possibly into the low $20s.

Traders should avoid KEYN or look for short-biased trades if this stock fails to get back above $16, and then drops below some near-term support at $14.77 a share with high-volume. A high-volume move below $14.77 will mean KEYN is printing a new 52-week low and is most likely heading much lower to possibly $12 a share.

To see more stocks with notable insider buying like FuelCell Energy (FCEL), Shutterfly (SFLY) and General Electric (GE), 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.