Stock Quotes in this Article: BAC, BLK, FCEL, JPM, WAG

 MADISON, Wis. (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 some stocks where insiders have been doing some big buying in per SEC filings.

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JPMorgan Chase

One stock that insiders are buying up a huge amount of stock in here is global baking firm JPMorgan Chase (JPM). Insiders are buying this stock into strength, since shares are up 10% so far in 2013.

JPMorgan Chase has a market cap of $184 billion and an enterprise value of $47 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 8.68 and a forward price-to-earnings of 8.20. Its estimated growth rate for this year is 8.5%, and for next year it’s pegged at 5.1%. This is a cash-rich company, since the total cash position on its balance sheet is $952.49 billion and its total debt is $722.93 billion. After you back out the debt, JPMorgan Chase has a total cash position of $229.56 billion on its balance sheet. This stock currently sports a dividend yield of 3.2%.

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A director just bought 436,859 shares, or about $20.52 million worth of stock, at $46.98 to $46.99 per share.

From a technical perspective, JPM is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock is just starting to flirt with its 50-day moving average at $48.52 a share. If JPM can take that level out soon with conviction, then this stock will set up to trigger a near-term breakout trade.

If you’re bullish on JPM, then I would look for long-biased trades as long as this stock is trending above its 50-day at $48.52 and then once it breaks out above some near-term overhead resistance levels at $49.60 to $50.68 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 23.89 million shares. If that breakout triggers, then JPM will set up to re-test or possibly take out its 52-week high at $51 a share. A sustained high-volume move above $51 would then give JPM a chance to hit $55 in the near future.

Bank of America

Another large banking player that insiders are active in here is Bank of America (BAC). Insiders are buying this stock into notable strength, since shares are up sharply by 31% during the last six months.

Bank of America has a market cap of $132 billion and an enterprise value of $143 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 29.10 and a forward price-to-earnings of 9.45. Its estimated growth rate for this year is 292%, and for next year it’s pegged at 32.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $609.62 billion and its total debt is $617.76 billion. After you back out the cash, Bank of America has $8.14 billion of debt on its balance sheet.

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A director just bought 20,000 shares, or about $230,000 worth of stock, at $11.51 per share.

From a technical perspective, BAC is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently crossed back above its 50-day at $12 a share and it’s now quickly moving within range of triggering a near-term breakout trade.

If you’re in the bull camp on BAC, then look for long-biased as long as this stock is trending above its 50-day at $12 and then once it breaks out above some near-term overhead resistance levels at $12.40 to $12.94 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 152.76 million shares. If that breakout triggers soon, then BAC will set up to re-test or possibly take out its next major overhead resistance levels at $14 to $15 a share.

BlackRock

Another stock that insiders are loading up on here is BlackRock (BLK), which provides investment management services to institutional clients and to individual investors through various investment vehicles. Insiders are buying this stock into strength, since shares are up by 25% so far in 2013.

BlackRock has a market cap of $44.4 billion and an enterprise value of $42.8 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 18.16 and a forward price-to-earnings of 14.62. Its estimated growth rate for this year is 16.7%, and for next year it’s pegged at 13.1%. This stock currently sports a dividend yield of 2.7%.

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A director just bought 5,000 shares, or about $1.24 million worth of stock, at $248.64 per share.

From a technical perspective, BLK 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 six months, with shares soaring higher from its low of $182.51 to its recent high of $265.57 a share. During that uptrend, shares of BLK have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BLK within range of triggering a near-term breakout trade.

If you’re bullish on BLK, then look for long-biased trades as long as this stock is trending above its 50-day at $249.29 and then once it breaks out above its 52-week high at $265.47 a share with high volume. Look for a sustained move or close above its 52-week high with volume that hits near or above its three-month average action of 799,000 shares. If we get that breakout, then BLK will set up to trend towards $300 a share.

Walgreen

A drug store operator that insiders are jumping into here is Walgreen (WAG), which is engaged in the retail sale of prescription and non-prescription drugs and general merchandise. Insiders are buying this stock into big time strength, since shares are up 32% so far in 2013.

Walgreen has a market cap of $46.6 billion and an enterprise value $50.6 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 21.89 and a forward price-to-earnings of 13.34. Its estimated growth rate for this year is 21%, and for next year it’s pegged at 12.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $2.44 billion and its total debt is $6.36 billion. This stock currently sports a dividend yield of 2.2%.

A director just bought 83,299 shares, or about $4.04 million worth of stock, at $48.62 per share.

From a technical perspective, WAG 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 six months, with shares soaring higher from its low of $31.67 to its recent high of $50.35 a share. During that uptrend, shares of WAG have been consistently making higher lows and higher highs, which is bullish technical price action. That said, this stock has gotten a bit extended above both of its key moving averages.

Traders should now look to buy WAG off weakness on a pullback back towards its 50-day moving average of $44.68 a share, or down near more key near-term support at $42 a share. This stock is clearly in a strong uptrend, but buying it off weakness might be a better bet versus chasing it since it’s extended at current levels. If we don’t see a pullback soon, then look to get long this stock off a high-volume move above $50.35 a share. Look for a sustained move or close above its 52-week high at $50.35 a share with volume that hits near or above its three-month average action of 6.47 million shares.

FuelCell Energy

One more stock with some decent insider buying is integrated fuel cell player FuelCell Energy (FCEL), which designs, manufactures, sells, installs, operates and services ultra-clean, highly efficient stationary fuel cell power plants for distributed baseload power generation. Insiders are buying this stock into modest strength, since shares are up 10% so far in 2013.

FuelCell Energy has a market cap of $191 million and an enterprise value of $127 million. This stock trades at a premium valuation, with a price-to-sales of 1.49 and a price-to-book of 30. Its estimated growth rate for this year is 19%, and for next year it’s pegged at 64.7%. This is a cash-rich company, since the total cash position on its balance sheet is $86.27 million and its total debt is $26.24 million.

The chairman of the board just bought 200,000 shares, or about $183,000 worth of stock, at 92 cents per share. A director also just bought 100,000 shares, or $90,000 worth of stock, at 90cents per share.

From a technical perspective, FCEL is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently spiked back above both of those key moving averages with high volume. That move is now quickly pushing shares of FCEL within range of triggering a near-term breakout trade.

If you’re bullish on FCEL, then look for long-biased trades as long as this stock is trending above its 50-day at 98 cents per share and then once it breaks out above some near-term overhead resistance levels at $1.06 to $1.10 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 913,000 shares. If that breakout triggers soon, then FCEL will set up to re-test or possibly take out its next major overhead resistance levels at $1.15 to $1.19 a share. Any high-volume move above those levels will then put $1.30 to $1.40 into range for shares of FCEL.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Madison, Wis.

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

Roberto Pedone, based out of Madison, 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.