Stock Quotes in this Article: AAPL, GHDX, JCP, SIRI, WFR

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

>>5 Dividend Stocks Itching to Pay You More

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.

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.

>>5 Breakout Stock Plays: Must-See Charts

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.

Apple

One technology leader that insiders are buying shares in here is Apple (AAPL). This company designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players and sells a variety of related software, services, peripherals, and networking solutions. Insiders are buying this stock into some notable weakness, since shares are off by around 14% in the last three months.

Apple has a market cap of $525 billion and an enterprise value of $498 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 12.66 and a forward price-to-earnings of 9.59. Its estimated growth rate for this year is 13.2%, and for next year it's pegged 16.6%. This is an extremely cash-rich company, since the total cash position on its balance sheet is $29.13 billion and its total debt is zero.

A director just bought 1,780 shares, or about $1 million worth of stock, at $562.13 to $565.08 per share.

From a technical perspective, AAPL is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares falling from a high of $701.86 to its recent low of $505.75 a share. During that downtrend, shares of AAPL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AAPL have recently bounced strongly off that low and are now approaching a near-term breakout trade.

If you're bullish on AAPL, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance at $571.95 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 19,732,700 shares. If that breakout triggers soon, then look for APPL to re-test or possibly take out its next major overhead resistance levels at its 200-day at $593.15 a share, or at its 50-day at $622.90 a share.

J.C. Penny

Another name in the department store complex that insiders are jumping into here is J.C. Penny (JCP). This is a holding company, whose business consists of selling merchandise and services to consumers through its department stores and direct channels. Insiders are buying this stock into some extreme weakness, since shares are off by over 50% so far in 2012.

J.C. Penny has a market cap of $3.75 billion and an enterprise value of $6.22 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 46.22. Its estimated growth rate for this year is -168%, and for next year it's pegged at 143%. This is far from a cash-rich company, since the total cash position on its balance sheet is $525 million and its total debt is $2.96 billion.

A director just bought 126,000 shares, or about $2.01 million worth of stock, at $15.93 per share.

From a technical perspective, JCP is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares dropping from a high of $32.55 to its recent low of $15.69 a share. During that downtrend, shares of JCP have been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has now moved into extremely oversold territory since its current relative strength index (RSI) reading is 24.47. Oversold can always get more oversold, but if JCP triggers a near-term breakout soon then the stock could see a powerful bounce higher.

If you're in the bull camp on JCP, then I would look for long-biased once this stock manages to break out above some near-term overhead resistance at $17.73 a share with high volume. Look for a sustained move or close above $17.73 a share with volume that hits near or above its three-month average action of 8,823,240 shares. If that breakout triggers soon, then JCP could easily bounce back towards its 50-day moving average of $24.01 a share.

Sirius XM Radio

One name that insiders are snapping up a huge amount of stock in here is Sirius XM Radio (SIRI). This company broadcasts its music, sports, news, talk, entertainment, traffic and weather channels in the United States for a subscription fee through its proprietary satellite radio systems: the SIRIUS system and the XM system. Insiders are buying this stock into strength, since shares are up by over 50% so far in 2012.

Sirius XM Radio has a market cap of $14.4 billion and an enterprise value of $16.3 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 5.46 and a forward price-to-earnings of 27.80. Its estimated growth rate for this year is 671.4%, and for next year it's pegged at -81.5%. This is far from a cash-rich company, since the total cash position on its balance sheet is $556.27 million and its total debt is $2.43 billion.

A beneficial owner just bought 30,961,300 shares, or about $82.43 million worth of stock, at $2.63 to $2.65 per share.

From a technical perspective, SIRI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strongly for the last six months, with shares soaring from a low of $1.80 to its recent high of $2.97 a share. During that uptrend, shares of SIRI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed SIRI within range of triggering a major breakout trade.

If you‘re bullish on SIRI, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $2.84 to $2.97 a share with high volume. Look for a sustained move or close above that level with volume that tracks near or above its three-month average action of 71,346,100 shares. If that breakout triggers soon, then some possible upside targets are $4 to $6 a share.

MEMC Electronic Materials

Another name in the semiconductor complex that insiders are heavily active in is MEMC Electronic Materials (WFR). This company is engaged in the manufacture and sale of wafers and related products to the semiconductor and solar industries. Insiders are buying this stock into some notable weakness, since shares are off by over 35% so far in 2012.

MEMC Electronic Materials has a market cap of $575 million and an enterprise value $2.27 billion. This stock trades at a reasonable valuation, with a forward price-to-earnings of 11.86. Its estimated growth rate for this year is -25%, and for next year it's pegged at 40%. This is not a cash-rich company, since the total cash position on its balance sheet is $609.80 million and its total debt is $2.32 billion.

A director just bought 3,238,000 shares, or about $7.35 million worth of stock, at $2.25 to $2.27 per share.

From a technical perspective, WFR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways for the last two months, with shares moving between $2.15 on the downside and $2.69 on the upside. A high-volume move outside of that sideways trading pattern will likely set up the next major trend for shares of WFR.

If you're in the bull camp on WFR, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $2.59 to $2.69 a share, and then once it takes out its 200-day at $2.85 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 4,373,750 shares. If that breakout triggers soon, then WFR will set up to re-test or possibly take out its next major overhead resistance levels at $3.35 to $3.77 a share.

Genomic Health

The last name to consider with some huge insider buying is biotechnology and drugs player Genomic Health (GHDX). This company is engaged in the 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 this stock into some recent weakness, since shares are down by over 20% in the last three months.

Genomic Health has a market cap of $842 million and an enterprise value of $720 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 94.81 and a forward price-to-earnings of 83.03. Its estimated growth rate for this year is -19.2%, and for next year it's pegged at 57.1%. This is a cash-rich company, since the total cash position on its balance sheet is $126.21 million and its total debt is zero.

A director and beneficial owner just bought 926,939 shares, or around $25.72 million worth of stock, at $25.83 to $27.99 per share.

From a technical perspective, GHDX is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares falling from a high of $36.83 to its recent low of $25.25 a share. During that downtrend, shares of GHDX have been consistently making lower highs and lower lows, which is bearish technical price action. Shares of GHDX also gapped lower during that timeframe from around $32 to $25.25 a share with huge selling volume. That said, the stock has started to stabilize and move within range of triggering a near-term breakout trade.

If you're bullish on GHDX, then I would look for long-biased once this stock manages to break out above some near-term overhead resistance a $28.43 to $29 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 230.551 shares. If that breakout triggers soon, then GHDX will set up to re-fill some of that previous gap down zone that started near $32 a share.

To see more stocks with notable insider buying like NovaBay Pharmaceuticals (NBY), Take-Two Interactive (TTWO) and Pilgrim's Pride (PPC), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

RELATED LINKS:

>>5 Big Stocks to Trade for Gains This Week

>>5 Stocks With Large Insider Buying

>>Profit From 5 Stocks Everyone Hates

Follow Stockpickr on Twitter and become a fan on Facebook.

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.