Stock Quotes in this Article: DY, GNRC, OPK, REGN, BCRH

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

>>5 Stocks Hedge Funds Love This Summer

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.

>>5 Stocks Set to Soar on Bullish Earnings

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, it's 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.

>>5 Rocket Stocks to Buy for Earnings Season

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 five stocks whose insiders have been doing some big buying per SEC filings.

Generac

One industrial goods player that insiders are active in here is Generac (GNRC), which designs, manufactures and markets power generation equipment and other engine-powered products for the residential, light commercial, industrial and construction markets in the U.S., Canada, and internationally. Insiders are buying this stock into notable weakness, since shares are down by 19% so far in 2014.

>>4 Stocks Rising on Unusual Volume

Generac has a market cap of $3 billion and an enterprise value of $4 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 19.9 and a forward price-to-earnings of 11. Its estimated growth rate for this year is -14.5%, and for next year it's pegged at 8.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $173.74 million and its total debt is $1.19 billion.

A beneficial owner just bought 27,168 shares, or about $1.27 million worth of stock, at $47.04 per share.

From a technical perspective, GNRC 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 four months, with shares moving lower from its high of $62.50 to its intraday low of $45.19 a share. During that move, shares of GNRC have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on GNRC, then I would look for long-biased trades as long as this stock is trending above some key past support at $45.02 and then once breaks out above some near-term overhead resistance levels at $46.50 to $48.02 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 1.15 million shares. If that breakout triggers soon, then GNRC will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $49.81 to its 200-day moving average of $51.58 a share.

Dycom Industries

Another industrial goods player that insiders are making moves in here is Dycom Industries (DY), which provides specialty contracting services in the U.S. and Canada. Insiders are buying this stock into decent strength, since shares are higher by 10% so far in 2014.

>>4 Stocks Under $10 Making Big Moves

Dycom Industries has a market cap of $1 billion and an enterprise value of $1.4 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 27 and a forward price-to-earnings of 18. Its estimated growth rate for next year is -1.7%, and for next year it's pegged at 44%. This is not a cash-rich company, since the total cash position on its balance sheet is $18.72 million and its total debt is $413.24 million.

A director just bought 15,000 shares, or about $465,762 worth of stock, at $30.50 per share.

From a technical perspective, DY is currently trending below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $29.80 to $30.28 a share. That bottom has formed right above DY's 200-day moving average of $29.51 a share. Shares of DY are now starting to trend within range of triggering a major breakout trade above some key near-term overhead resistance levels.

If you're in the bull camp on DY, then I would look for long-biased trades as long as this stock is trending above its 200-day at $29.51 or above $29 and then once it breaks out above some near-term overhead resistance levels at $32.39 to $33.06 a share and then above its 52-week high at $34 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 239,762 shares. If that breakout hits soon, then DY will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45 a share.

Opko Health

One biopharmaceutical and diagnostics player that insiders are in love with here is Opko Health (OPK), which is engaged in the discovery, development and commercialization of novel and proprietary technologies. Insiders are buying this stock into notable weakness, since shares are off by 9.9% over the last three months.

>>5 Blue-Chip Stocks to Trade for Summer Gains

Opko Health has a market cap of $3.6 billion and an enterprise value of $3.6 billion. This stock trades at a premium valuation, with a price-to-sales of 40.51 and a price-to-book of 4.23. Its estimated growth rate for this year is -15.6%, and for next year it's pegged at 13.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $156.40 million and its total debt is $238.93 million.

The CEO just bought 43,482 shares, or about $387,000 worth of stock, at $8.80 to $8.98 per share. The same CEO also just bought 27,000 shares, or about $237,000 worth of stock, at $8.69 to $8.85 per share.

From a technical perspective, OPK is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has formed a major bottoming chart pattern over the last month, with shares finding buying interest each time its pulled back towards $8.45 a share. Shares of OPK are now starting to uptick higher off those support levels and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on OPK, then I would look for long-biased trades as long as this stock is trending above support at $8.45 or above $8 and then once it breaks out above some near-term overhead resistance levels at $9 to its 200-day at $9.18 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 2.50 million shares. If that breakout gets started soon, then OPK will set up to re-test or possibly take out its next major overhead resistance levels at $9.50 to $9.83 a share, or even $10.15 to $10.25 a share.

Regeneron Pharmaceuticals

One biopharmaceutical player that insiders are snapping up a huge amount of stock in here is Regeneron Pharmaceuticals (REGN), which discovers, invents, develops, manufactures and commercializes medicines for the treatment of serious medical conditions in the U.S. and internationally. Insiders are buying this stock into notable strength, since shares are up 11.6% so far in 2014.

>>Book Double the Gains With These 5 Shareholder Yield Champs

Regeneron Pharmaceuticals has a market cap of $30.3 billion and an enterprise value of $30.5 billion. This stock trades at reasonable valuation, with a trailing price-to-earnings of 88 and a forward price-to-earnings of 25. Its estimated growth rate for this year is 159.8%, and for next year it's pegged at 21.2%. This is just barely a cash-rich company, since the total cash position on its balance sheet is $648.13 million and its total debt is $531.11 million.

A beneficial owner just bought 424,800 shares, or about $129 million worth of stock, at $285.89 to $311.92 per share. That same beneficial owner also just bought 356,700 shares, or about $111 million worth of stock, at $309.46 to $315.59 per share.

From a technical perspective, REGN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last few weeks, with shares moving higher from its low of $269.50 to its recent high of $315.94 a share. During that move, shares of REGN have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of REGN within range of triggering a near-term breakout trade.

If you're bullish on REGN, then I would look for long-biased trades as long as this stock is trending above its 200-day at $297.67 and then once it breaks out above some near-term overhead resistance levels at $315.94 to $320 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 volume of 876,789 shares. If that breakout materializes soon, then REGN will set up to re-test or possibly take out its next major overhead resistance levels at $335 to $340, or even its 52-week high at $352.49 a share.

Blue Capital Reinsurance

One final stock with some decent insider buying is Blue Capital Reinsurance (BCRH), which offers collateralized reinsurance in the property catastrophe market. Insiders are buying this stock into decent strength, since shares are up 11% over the last six months.

Blue Capital Reinsurance has a market cap of $173 million and an enterprise value of $44 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 8.7. Its estimated growth rate for this year is 816.2%, and for next year it's pegged at 2.7%. This is a cash-rich company, since the total cash position on its balance sheet is $129.40 million and its total debt is zero. This stock currently sports a dividend yield of 6.4%.

A beneficial owner just bought 33,000 shares, or about $652,000 worth of stock, at $19.67 to $19.86 per share.

From a technical perspective, BCRH 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 $16.19 to its recent high of $20 a share. During that uptrend, shares of BCRH have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BCRH within range of triggering a near-term breakout trade.

If you're bullish on BCRH, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $19 or at its 50-day of $18.32 and then once it breaks out above its all-time high at $21.02 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 50,684 shares. If that breakout gets underway soon, then BCRH will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30 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 Delafield, Wis.


RELATED LINKS:







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 Delafield, 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.