Stock Quotes in this Article: CTSH, HK, QCOR, VGR, SRPT

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.

>>5 Stocks the Pros Love This Summe

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 Stocks Poised to Break Out

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.

>>5 Big Trades for a Ping-Pong Market

Vector Group

One tobacco and real estate player that insiders are loading up on here is Vector Group (VGR), which through its subsidiaries is engaged in the manufacture and sale of cigarettes in the U.S., as well as in the real estate business. Insiders are buying this stock into modest strength, since shares are up 7.8% so far in 2013.

Vector Group has a market cap of $1.44 billion and an enterprise value of $1.64 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 38.73. This is not a cash-rich company, since the total cash position on its balance sheet is $434.34 million and its total debt is $645.62 million. This stock currently sports a dividend yield of 10.1%.

>>5 Sin Stocks to Play Defense

A director just bought 300,000 shares, or about $4.78 million worth of stock, at $15.96 per share.

From a technical perspective, VGR 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 moving higher from its low of $13.98 to its recent high of $16.25 a share. During that uptrend, shares of VGR have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VGR within range of triggering a near-term breakout trade.

If you're bullish on VGR, then I would look for long-biased trades as long as this stock is trending above its 50-day at $15.72 or above its 200-day at $15.19, and then once it breaks out above some near-term overhead resistance at $16.25 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 353,941 shares. If we get that breakout, then VGR will have a great chance of trending toward $20 to $25 a share.

 

Cognizant Technology Solutions

Another technology player that insiders are jumping into here is Cognizant Technology Solutions (CTSH), a provider of custom information technology, consulting and business process outsourcing services. Insiders are buying this stock into weakness, since shares are off by 13% so far in 2013.

Cognizant Technology Solutions has a market cap of $19.3 billion and an enterprise value of $16.2 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 17.99 and a forward price-to-earnings of 13.86. Its estimated growth rate for this year is 16.6%, and for next year it's pegged at 16%. This is a cash-rich company, since the total cash position on its balance sheet is $2.74 billion and its total debt is zero.

>>5 Hated Earnings Stocks That Deserve Your Love

The chairman of the board just bought 7,500 shares, or about $470,000 worth of stock, at $62.78 per share.

From a technical perspective, CTSH 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 $61.29 a share on the downside and $68.73 a share on the upside. A high-volume move above its recent range could trigger a near-term breakout trade for shares of CTSH.

If you're in the bull camp on CTSH, then look for long-biased as long as this stock is trending above some key near-term support levels at $62.49 or $61.29 and then once it breaks out above some near-term overhead resistance levels at $66.66 to $68.73 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 4.07 million shares. If that breakout triggers soon, then CTSH will set up to re-test or possibly take out its 200-day moving average at $70.82 a share. Any high-volume move above that level will then give CTSH a chance to trend back towards its next major overhead resistance levels at $76 to $78 a share.

Sarepta Therapeutics

One biopharmaceuticals player that insiders are active in here is Sarepta Therapeutics (SRPT), which discovers and develops RNA-based therapeutics for the treatment of rare and infectious diseases. Insiders are buying this stock into big time strength, since shares are up 52% so far in 2013.

Sarepta Therapeutics has a market cap of $1.26 billion and an enterprise value of $1.06 billion. This stock trades at a premium valuation, with a price-to-sales of 39.79 and a price-to-book of 13.94. Its estimated growth rate for this year is 27.4%, and for next year it's pegged at 22%. This is a cash-rich company, since the total cash position on its balance sheet is $167.92 million and its total debt is just $1.74 million.

>>5 Cash-Rich Stocks to Triple Your Gains

A director just bought 10,000 shares, or about $385,000 worth of stock, at $38.50 per share.

From a technical perspective, SRPT 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 two months, with shares pushing higher from its low of $28.90 to its intraday high of $41.25 a share. During that uptrend, shares of SRPT have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SRPT within range of triggering a major breakout trade.

If you're bullish on SRPT, then look for long-biased trades as long as this stock is trending above its 50-day at $35.29 and then once it breaks out above some key overhead resistance levels at $42.20 to its all-time high at $45 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 1.75 million shares. If that breakout triggers soon, then SRPT will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $55 to $60 a share, or even north of $60 a share.

Halcon Resources

One energy player that insiders are snapping up a large amount of stock in here is Halcon Resources (HK), an oil and natural gas company that's engaged in the acquisition, development, exploitation, exploration and production of oil and natural gas properties. Insiders are buying this stock into notable weakness, since shares are off by 16.8% so far in 2013.

>>5 Rocket Stocks Worth Buying This Week

Halcon Resources has a market cap of $2.14 billion and an enterprise value of $4.55 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 8.92. Its estimated growth rate for the current quarter is 200%, and for next year it's pegged at 103.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $802,000 and its total debt is $2.51 billion.

A beneficial owner just bought 1.98 million shares, or about $10.78 million worth of stock, at $5.45 per share.

From a technical perspective, HK is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last three months, with shares dropping from its high of $8.12 to its recent low of $4.92 a share. During that downtrend, shares of HK have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of HK have started to bounce off that $4.92 low and it's now moving within range of triggering a near-term breakout trade.

If you're bullish on HK, then look for long-biased trades as long as this stock is trending above $4.92, and then once it breaks out above some near-term overhead resistance levels at $5.87 a share to its 50-day moving average at $6.08 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 5.59 million shares. If that breakout triggers soon, then HK will set up to re-test or possibly take out its next major overhead resistance levels at $6.75 to its 200-day moving average at $6.85 a share. Any high-volume move above those levels will then put its next major overhead resistance levels at $7.50 to $8 into range for shares of HK.

Questcor Pharmaceuticals

One final name with some decent insider buying is Questcor Pharmaceuticals (QCOR), a biopharmaceutical company that provides prescription drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms indications. Insiders are buying this stock into big time strength, since shares are up 75% so far in 2013.

>>3 Health Care Stocks Under $10 to Watch

Questcor Pharmaceuticals has a market cap of $2.71 billion and an enterprise value of $2.53 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 14.61 and a forward price-to-earnings of 9.91. Its estimated growth rate for this year is 20.4%, and for next year it's pegged at 18.7%. This is a cash-rich company, since the total cash position on its balance sheet is $153.42 million and its total debt is $17.74 million. This stock currently sports a dividend yield of 2.2%.

A director just bought 3,250 shares, or about $149,000 worth of stock, at $46.15 per share.

From a technical perspective, QCOR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently gapped up sharply from around $36 a share to its recent high at $50.20 a share with heavy upside volume. Shares of QCOR then pulled back off that gap high of $50.20 to its recent low of $44.17 a share, and now the stock is setting up again to break out and challenge that gap high.

If you're bullish on QCOR, then look for long-biased trades as long as this stock is trending above $44.17, and then once it breaks out above some near-term overhead resistance levels at $46.75 to $50.20 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 2.06 million shares. If that breakout triggers soon, then QCOR will set up to re-test or possibly take out its next major overhead resistance levels at $52.50 to $57.50 a share. Any high-volume move above those levels will then give QCOR a chance to trend north of $60 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 Madison, Wis.

RELATED LINKS:

>>5 Buy Signals From the Consumer Sector
>>3 Stocks With Ever-Increasing Dividends

>>5 Stocks Under $10 Set to Soar

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 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.