Stock Quotes in this Article: GEL, TPX, TSLA, TXI, UTI

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.

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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 five stocks that b6insiders have been doing some big buying in per SEC filings.

Genesis Energy

One stocks that insiders are loading up on here is Genesis Energy (GEL), a limited partnership focused on the midstream segment of the oil and gas industry in the Gulf Coast region of the U.S. Insiders are buying this stock into some decent strength here, since shares are up around 20% so far in 2012.

Genesis Energy has a market cap of $2.67 billion and an enterprise value of $3.45 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 38.12 and a forward price-to-earnings of 24.75. Its estimated growth rate for this year is 27%, and for next year it’s pegged at 20.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $15.04 million and its total debt is $795.95 million.

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A director just bought 733,019 shares, or about $21.99 million worth of stock, at $30 per share.

From a technical perspective, GEL is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past four months, with shares soaring from a low of $26.30 to its recent high of $35.18 a share. During that uptrend, shares of GEL have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed GEL within range of triggering a near-term breakout trade.

If you’re bullish on GEL, then I would look for long-biased trades as long as it’s trending above its 50-day at $32.46, and then once it breaks out above some near-term overhead resistance levels at $34.07 to $35.18 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 221,635 shares. If that breakout triggers soon, then GEL will have a great chance of trending north of $40 a share.

Tesla Motors

Another stock that insiders are snapping up shares in here is Tesla Motors (TSLA), which designs, develops, manufactures and sells electric vehicles and advanced electric vehicle powertrain components. Insiders are buying this stock into some modest weakness here, since shares are down by 12% in the last six months.

Tesla Motors has a market cap of $2.98 billion and an enterprise value of $3.22 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 74.34. Its estimated growth rate for this year is -35.5%, and for next year it’s pegged at 112.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $210.55 million and its total debt is $438.97 million.

The CEO and beneficial owner just bought 35,398 shares, or about $999,000 worth of stock, at $28.25 per share.

From a technical perspective, TSLA is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending range bound for the last two months, with shares moving between $27.30 on the downside and $32.78 on the upside. A move outside of that range in the near future will likely setup the next major trend for TSLA.

If you’re in the bull camp on TSLA, then I would look for long-biased trades as long as it’s trending above its 200-day at $30.97, and then once it manages to break out above some near-term overhead resistance at $32.78 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 1,420,580 shares. If that breakout triggers soon, then look for TSLA to re-test or take out its next significant overhead resistance level at $36 a share.

Tempur-Pedic International

Another stock insiders are very active in here is Tempur-Pedic International (TPX), a manufacturer, marketer and distributor of premium mattresses and pillows. Insiders are buying this stock into some extreme weakness here, since shares are down by 38% so far in 2012.

Tempur-Pedic International has a market cap of $1.92 billion and an enterprise value of $2.5 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 10.53 and a forward price-to-earnings of 10.40. Its estimated growth rate for this year is -12.3%, and for next year it’s pegged at 11.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $134.20 million and its total debt is $683.71 million.

A beneficial owner just bought 528,410 shares, or about $16.27 million worth of stock, at $30.44 to $31.50 per share.

From a technical perspective, TPX is currently trading below its 200-day moving average and above its 50-day moving average, which is neutral trendwise. This stock has been uptrending very strong for the last three months, with shares moving from a low of $20.70 to its recent high of $36.11 a share. During that uptrend, shares of TPX have mostly made higher lows and higher highs, which is bullish technical price action. That move has now pushed TPX within range of triggering a near-term breakout trade.

If you‘re bullish on TPX, then I would look for long-biased trades as long as its trending above $30 a share, and then once it manages to break out above some near-term overhead resistance levels at $34.29 to $36.11 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 1,909,600 shares. If that breakout triggers soon, then TPX could easily re-fill some of its gap down zone from back in June that started near $45 a share.

Universal Technical Institute

Another stock that insiders are finding attractive here is educational services player Universal Technical Institute (UTI), which provides postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. Insiders are buying this stock into some decent strength here, since shares are up around 12% in the last six months.

Universal Technical Institute has a market cap of $336.75 million and an enterprise value of $237.25 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 25.16 and a forward price-to-earnings of 33.20. Its estimated growth rate for this year is -66.1%, and for next year it’s pegged at 0%. This is a cash-rich company, since the total cash position on its balance sheet is $92.09 million and its total debt is zero.

A beneficial owner just bought 43,359 shares, or about $581,000 worth of stock, at $13.35 per share.

From a technical perspective, UTI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the past two months, with shares soaring from a low of $10.83 to its recent high of $13.97 a share. During that uptrend, shares of UTI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed UTI within range of triggering a major breakout trade.

If you’re in the bull camp on UTI, then I would only look for long-biased trades if it can manage to break out above some key overhead resistance levels at $13.97 to $14.91 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 72,206 shares. If we get that breakout soon, then UTI will setup to re-test or take out its next major overhead resistance levels at $17 to $19 a share.

Texas Industries

One more stock to consider is heavy construction materials supplier Texas Industries (TXI). Insiders are buying this stock into some decent strength here, since shares are up around 32% so far in 2012.

Texas Industries has a market cap of $1.14 billion and an enterprise value of $1.73 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 93.09. Its estimated growth rate for this year is 55.9%, 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 $60.87 million and its total debt is $659.26 million.

A director just bought 10,000 shares, or around $414,000 worth of stock, at $40.90 to $41.74 share.

From a technical perspective, TXI is currently trading above its 200-day moving average and right below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways for the last month and change, between $39.80 on the downside and $45.09 on the upside. A move outside of that trading range in the near future will likely setup the next major trend for shares of TXI.

If you’re bullish on TXI, then I would look for long-biased trades as long as its trending above its 50-day at $41.49, and then once it manages to break out above some near-term overhead resistance levels at $45.09 to $45.68 a share with high volume. Look for a sustained move or close above those levels with volume that hits close to or above its three-month average action 333,261 shares. If that breakout triggers soon, then look for TXI to re-test or possibly take out its next major overhead resistance level at $47.15 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 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.