5 Stocks With Big Insider Buying

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

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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.

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

Vitran

One ground freight player that insiders are loading up on here is Vitran (VTNC), a provider of less-than-truckload services throughout Canada and in 34 states in the U.S. Insiders are buying this stock into decent strength, since shares are up 17% so far in 2013.

Vitran has a market cap of $93.51 million and an enterprise value of $133.77 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 3.78 and a forward price-to-earnings of 15. Its estimated growth rate for this year is -88%, and for next year it's pegged at 112.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $41.24 million and its total debt is $82.98 million.

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A beneficial owner just bought 489,461 shares, or about $2.57 million worth of stock, at $5.18 to $5.30 per share.

From a technical perspective, VTNC 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 few weeks, with shares soaring higher from its low of $3.89 to its recent high of $5.80 a share. During that uptrend, shares of VTNC have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on VTNC, then I would look for long-biased trades as long as this stock is trending above some near-term support at $5.25 or at $5 and then once breaks out above some near-term overhead resistance at $5.80 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 123,158 shares. If that breakout hits soon, then VTNC will set up to re-test or possibly take out its next major overhead resistance levels at $6.69 to its 52-week high at $7.73 a share.

Cosi

Another stock that insiders are jumping into here is Cosi (COSI), which owns, operates and franchises premium convenience restaurants that sell hot and cold sandwiches, freshly-tossed salads, breakfast wraps, hot melts, flatbread pizzas, desserts and a variety of coffees. Insiders are buying this stock into weakness, since shares are off by 27% so far in 2013.

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Cosi has a market cap of $40.53 million and an enterprise value of $28.75 million. This stock trades at a reasonable valuation, with a price-to-sales of 0.43 and a price-to-book of 4.31. Its estimated growth rate for this year is 17.9%, and for next year it's pegged at 73.9%. This is a cash-rich company, since the total cash position on its balance sheet is $11.96 million and its total debt is zero.

A beneficial owner just bought 246,511 shares, or about $537,000 worth of stock, at $2.17 to $2.20 per share.

From a technical perspective, COSI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways and consolidating for the last four months, with shares moving between $1.90 on the downside and $2.70 on the upside. Shares of COSI are now starting to uptick and move within range of breaking out above the upper-end of its sideways trading chart pattern.

If you're in the bull camp on COSI, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $2.13 to $2, and then once it breaks out above some near-term overhead resistance levels at $2.33 to $2.38 a share, and then above $2.70 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 70,846 shares. If we get that move soon, then COSI will set up to re-test or possibly take out its next major overhead resistance levels at $3.19 to its 52-week high at $3.92 a share.

Puma Biotechnology

One development-stage biopharmaceutical player that insiders are loading up on here is Puma Biotechnology (PBYI), which acquires and develops innovative products for the treatment of various forms of cancer. Insiders are buying this stock into major strength, since shares are up sharply by 134% in 2013.

Puma Biotechnology has a market cap of 1.26 billion and an enterprise value of $1.17 billion. This stock trades at a premium valuation, with a price-to-book of 11.42. Its estimated growth rate for this year is 47.1%, and for next year it's pegged at -23.8%. This is a cash-rich company, since the total cash position on its balance sheet is $107.52 million and its total debt is zero.

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A beneficial owner just bought 140,900 shares, or about $5.69 million worth of stock, at $39.97 to $40.08 per share.

From a technical perspective, PBYI is currently trending below its 50-day moving average and above its 200-day moving averages, which is neutral trendwise. This stock has recently been sold off sharply with volume from its high of $57.73 to its low of $38.94 a share. That low corresponded with PBYI's 200-day moving average, which for now has held as support. Shares of PBYI have started to rebound off that $38.94 low, and it's now moving within range of triggering a near-term breakout trade.

If you're bullish on PBYI, then look for long-biased trades as long as this stock is trending above its 200-day at $39, and then once it breaks out above some near-term overhead resistance at $44.98 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 volume of 156,625 shares. If that breakout triggers soon, then PBYI will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day of $52.53 to $57.73 a share.

Yum! Brands

Another stock that insiders are snapping up a large amount of stock in here is Yum! Brands (YUM), which develops, operates, franchises and licenses a worldwide system of restaurants which prepare, pack and sell a menu of food items. Insiders are buying this stock into notable weakness, since shares are down by 7.3% during the last three months.

Yum! Brands has a market cap of $29.5 billion and an enterprise value of $31.9 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 27.81 and a forward price-to-earnings of 18.39. Its estimated growth rate for this year is -10.2%, and for next year it's pegged at 23.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $753 million and its total debt is $2.93 billion. This stock currently sports a dividend yield of 2.2%.

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A director just bought 20,000 shares, or about $1.32 million worth of stock, at $66.09 per share.

From a technical perspective, YUM is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply from around $72 to $64.92 a share with heavy downside volume. Following that gap down, shares of YUM have stabilized a bit and trended range bound between $66 and $67 a share.

If you're bullish on YUM, then look for long-biased trades as long as this stock is trending above that recent low of $64.92, and then once it breaks out above some key near-term overhead resistance at $67.15 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 volume of 2.82 million shares. If that breakout hits soon, then YUM will set up to re-fill some of its previous gap down zone that started near $72. Shares of YUM could even tag $74 to $75 if that gap gets filled with strong upside volume flows.

ChemoCentryx

One more stock with some big insider buying activity is ChemoCentryx (CCXI), a biopharmaceutical company engaged in discovering, developing and commercializing orally-administered therapeutics to treat autoimmune diseases, inflammatory disorders and cancer. Insiders are buying this stock into major weakness, since shares are off by 52% so far in 2013.

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ChemoCentryx has a market cap of $221 million and an enterprise value of $93 million. This stock trades at a premium valuation, with a price-to-sales of 31.37 and a price-to-book of 1.38. Its estimated growth rate for this year is 8.8, and for next year it's pegged at -16.5%. This is a cash-rich company, since the total cash position on its balance sheet is $129.77 million and its total debt is just $618,000.

A beneficial owner just bought 1.3 million shares, or about $6.88 million worth of stock, at $5.26 per share.

From a technical perspective, CCXI 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 plunging lower from its high of $14.75 to its low of $5.04 a share. During that downtrend, shares of CCXI have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of CCXI have now moved into oversold territory, since its current relative strength index reading is 25.58. Oversold can always get more oversold, but it's also an area where a stock can experience a powerful bounce higher from.

If you're bullish on CCXI, then look for long-biased trades as long as this stock is trending its recent low of $5.04 and then once it breaks out above near-term overhead resistance levels $5.41 to $5.90 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 472,123 shares. If that breakout triggers soon, then CCXI will set up to re-test or possibly take out its next major overhead resistance levels at $6.45 to $7. Any high-volume move above $7 will then give CCXI a chance to re-fill some of its previous gap down zone from September that started near $8.50 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.

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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.