Stock Quotes in this Article: APU, KOPN, QDEL, SD, ZZ

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.

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.

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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, 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.

SandRidge Energy

Insiders are doing some active buying in SandRidge Energy (SD), which, together with its subsidiaries, operates as an independent natural gas and oil company in the U.S. Insiders are buying into some slight weakness here since the stock is off by around 4% so far in 2012.

SandRidge Energy has a market cap of $3.12 billion and an enterprise value of $5.81 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 60.31 and a forward price-to-earnings of 19.60. Its estimated growth rate for this year is 2,300%, and for next year it’s pegged at 66.7%. This is far from a cash-rich company, since the total cash position on its balance sheet is $207.96 million and its total debt is a whopping $2.82 billion.

A director just bought 50,000 shares, or about $386,000 worth of stock, at $7.70 to $7.76 per share.

From a technical perspective, SD is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been trading range-bound for the past six months, between $6.20 on the downside and around $9 on the upside. The stock recently broke back below both its 50-day and 200-day moving averages with high volume, which is bearish price action.

If you’re bullish on SD, I would only look for long biased trades once this stock find some buying interest near its previous support levels at around $7.50 to $6.20 a share. Let SD move sideways for a bit near one of those support levels before just jumping in on the long side. The trend at the moment is down, so let buyers show their hand before picking up shares.

SandRidge, one of BP Capital's holdings, shows up on a list of Natural Gas Stock Trades.

Sealy

Another name that insiders are doing some big buying in is Sealy (ZZ), which, together with its subsidiaries, engages in the manufacture and marketing of bedding products. Insiders are buying into some decent strength here since the stock is up 16% so far in 2012.

Sealy has a market cap of $201 million and an enterprise value of $873 million. This stock trades at a premium valuation, with a forward price-to-earnings of 25. Its estimated growth rate for this year is 133%, and for next year it’s pegged at 300%. This not a cash-rich company, since the total cash position on its balance sheet is $107.97 million and its total debt is $791.88 million.

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A beneficial owner just bough 864,494 shares, or $1.5 million worth of stock, at $1.70 per share.

From a technical perspective, ZZ is currently trading above its 50-day and 200-day moving average, which is bullish. This stock flirted with a major breakout trade Wednesday when shares briefly traded above some major past overhead resistance at $2.02 to $2.15 a share on monster volume. Volume registered 2.57 million shares versus its three-month average volume of 403,365 shares. That said, the stock failed to close above those breakout levels, and it closed a bit off its daily high of $2.23 a share.

If you’re bullish on ZZ, then I would look for long-biased trades off a sustained high-volume move and close above $2.02 to $2.15 a share. Look for volume on any move above those levels that’s near or well above 403,365 shares. If we get that action soon, then look for ZZ to make a run at its next major overhead resistance levels at $2.78 to $3.11 a share.

Quidel

One medical equipment and supplies player whose insiders are doing some decent buying is Quidel (QDEL), which is engaged in the development, manufacturing and marketing of diagnostic testing solutions. Insiders are buying into some solid strength here since shares are up over 20% so far in 2012.

Quidel has a market cap of $605 million and an enterprise value of $591 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 80.66 and a forward price-to-earnings of 37.37. Its estimated growth rate for this year is 4.3%, and for next year it’s pegged at 104.2%. This is just barley a cash-rich company, since the total cash position on its balance sheet is $61.33 million and its total debt is $49.77 million.

A director just bought 65,815 shares, or about $1.1 million worth of stock, at $16.48 to $16.65 per share. The president and CEO also just bought 10,000 shares, or about $165,000 worth of stock, at $16.55 per share.

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From a technical perspective, QDEL is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock found some buying interest at around $14 in February, and since then it has ran up big to its current price of over $18 a share. This move has now pushed QDEL within range of a big breakout trade.

If you‘re a bullish on QDEL, I would look for long-biased trades if the stock can manage to break out above $18.48 to $19.09 with high volume. Look for volume on that move that’s near or well above its three-month average of 169,075 shares. Keep in mind that the current relative strength index (RSI) reading for QDEL is overbought at 81.55. If that breakout doesn’t trigger soon with high-volume, then this stock is vulnerable for a selloff. I would only look for to get long if QDEL is trending about those breakout levels in the near-term.

Kopin

One semiconductor player where insiders are snapping up some stock in is Kopin (KOPN), a developer and manufacturer of III-V products and miniature flat panel displays. This stock has not done much so far in 2012, with shares up just over 4%.

Kopin has a market cap of $271 million and an enterprise value of $161 million. This stock trades at a premium valuation, with a trailing price-to-earnings 67.50 and a forward price-to-earnings of 45. Its estimated growth rate for this year is 14.3%, and for next year it’s pegged at 12.5%. This is a cash-rich company, since the total cash position on its balance sheet is $105.42 million and its total debt is zero.

The CEO and president just bought 52,800 shares, or around $184,000 worth of stock, at $3.49 to $3.74 per share.

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From a technical perspective, KOPN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock just started to trend back above both of those key moving averages in the last few trading sessions on above average volume. That move has now pushed KOPN within range of triggering a major breakout trade.

If you’re bullish on KOPN, I would look for long-biased trades if this stock can manage to trigger that breakout on a move above $4.15 to 4.24 a share with high-volume. Look for volume on that move that’s near or well above its three-month average action of 180,249 shares. If we get that action soon, then look for this stock to make a solid move back towards its next significant overhead resistance levels at $4.80 to $5.22 a share.

AmeriGas Partners

One final stock in the oil and gas complex where insiders are buying up stock in is AmeriGas Partners (APU). This company is a retail propane distributor in the United States. Insiders are buying into some weakness here since the stock is down 11% so far in 2012.

AmeriGas Partners has a market cap of $3.5 billion and an enterprise value of $4.5 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 22.79 and a forward price-to-earnings of 18.72. Its estimated growth rate for next quarter is -300%, and for this year it’s pegged at -103%. This is not a cash-rich company, since the total cash position on its balance sheet is $58.76 million and its total debt is a whopping $1.16 billion.

A chairman of the board and director just bought 4,000 shares, or $161,000 worth of stock, at $40.29 per share.

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From a technical perspective, APU is currently below both its 50-day and 200-day moving averages, which is bearish. This stock recently dropped big from around $45 to a low of $39.60 a share on monster volume. Since that sizeable decline, APU has been able to hold above that $39.60 low, and it has trended higher and moved within near-term breakout range.

If you’re bullish on APU, I would look for long-biased trades once this stock triggers a near-term breakout above $41 a share with high volume. Look for volume on a move above that level that registers near or well above 287,474 shares. If we get that action soon, then look for APU to make a solid pop back towards its 200-day at $42.53 or its 50-day at $43.20 in the very near future. I would simply avoid any long biased trades on APU if this stock trends back below that recent low of $39.60 with high-volume.

To see more stocks with notable insider buying, including Cracker Barrel Old Country (CBRL), Spectrum Brands (SPB) and Basic Energy Services (BAS), 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.