Investing 101: Momentum Stocks With Insider Buying

Interested in stocks with upward momentum and bullish investor sentiment? If so, the following list will likely be of interest to you.

For this list, we created a universe of stocks that meet the following requirements:

  1. Rallying above their 20, 50, and 200-day moving averages (MA)
  2. Experiencing significant levels of insider buying over the past six months
  3. Market cap above $300 million.

Interested in exploring the implications of these criteria? Let's review:

Momentum investing aims to capitalize on the continuance of existing trends and the strength behind it.

Rallying: When a stock is rallying, that means it is performing above its moving average for a given time period. It is presented as a % of performance relative to the average. When a stock is performing above its 20-day moving average (MA) as well as its 50 and 200 day moving averages, it signals bullish momentum. All the stocks in this list are rallying above their 20, 50, and 200-day MA.

Insider buying: Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else. Their investment activity is closely monitored and can tell us a lot about where they feel the business is heading.

Insider buying is represented as a percentage of the share float. Companies experiencing insider buying over the past six months provide an indicator that insiders think the stock is undervalued at current levels. Inversely, insider selling serves as a negative indicator.

Market capitalization (market cap): Market capitalization, commonly referred to as market cap, is the total market value of a company's outstanding shares. It can be thought of as a measure of company's size. It can be calculated by multiplying the number of shares by the current price of the shares. Companies with higher market cap are considered to have more trustworthy information because they have greater histories of profitability and data.

Investors seem to think these names have more value to price in -- do you agree? Use this list as a starting off point for your own analysis.

List sorted by distance from SMA200. (Click here to access free, interactive tools to analyze these ideas.)

1. Midway Gold (NYSE: MDW  ) : Engages in the acquisition, exploration, and development of mineral properties in North America. The stock is currently trading 10.12% above its SMA20, 15.87% above its SMA50 and 60.25% above its SMA200. Over the last six months, insiders were net buyers of 100,000 shares, which represents about 0.13% of the company's 76.07M share float.

2. MAKO Surgical (Nasdaq: MAKO  ) : MAKO Surgical Corp., a medical device company, markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures in the United States and internationally. The stock is currently trading 10.52% above its SMA20, 21.22% above its SMA50 and 56.49% above its SMA200. Over the last six months, insiders were net buyers of 485,142 shares, which represents about 1.53% of the company's 31.71M share float.

3. Akorn (Nasdaq: AKRX  ) : Engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. The stock is currently trading 12.37% above its SMA20, 18.25% above its SMA50 and 41.49% above its SMA200. Over the last six months, insiders were net buyers of 33,500 shares, which represents about 0.05% of the company's 67.56M share float.

4. Ladenburg Thalmann Financial Services (NYSE: LTS  ) : Provides a range of financial services primarily to corporate and institutional clients, and high net-worth individuals in the United States. The stock is currently trading 9.97% above its SMA20, 20.75% above its SMA50 and 39.93% above its SMA200. Over the last six months, insiders were net buyers of 957,500 shares, which represents about 1.17% of the company's 81.85M share float.

5. Diamond Foods (Nasdaq: DMND  ) : Engages in processing, marketing, and distributing snack products, as well as culinary, in-shell, and ingredient nuts. The stock is currently trading 13.63% above its SMA20, 17.80% above its SMA50 and 39.15% above its SMA200. Over the last six months, insiders were net buyers of 8,225 shares, which represents about 0.04% of the company's 19.82M share float.

6. Merge Healthcare (Nasdaq: MRGE  ) : Provides health information technology interoperability solutions. The stock is currently trading 14.43% above its SMA20, 21.03% above its SMA50 and 38.78% above its SMA200. Over the last six months, insiders were net buyers of 281,000 shares, which represents about 1.34% of the company's 21.00M share float.

7. Regeneron Pharmaceuticals (Nasdaq: REGN  ) : Develops, and commercializes pharmaceutical products for the treatment of serious medical conditions in the United States. The stock is currently trading 4.06% above its SMA20, 12.31% above its SMA50 and 36.91% above its SMA200. Over the last six months, insiders were net buyers of 675,375 shares, which represents about 0.95% of the company's 71.15M share float.

8. APAC Customer Services (Nasdaq: APAC  ) : Provides customer care outsourcing solutions and business process outsourcing (BPO) services worldwide. The stock is currently trading 0.21% above its SMA20, 0.56% above its SMA50 and 30.96% above its SMA200. Over the last six months, insiders were net buyers of 45,000 shares, which represents about 0.16% of the company's 28.99M share float.

9. Vista Gold (NYSE: VGZ  ) : Engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in Australia, North America, and Indonesia. The stock is currently trading 4.99% above its SMA20, 14.31% above its SMA50 and 24.24% above its SMA200. Over the last six months, insiders were net buyers of 29,500 shares, which represents about 0.05% of the company's 62.44M share float.

10. PharMerica (NYSE: PMC  ) : Operates as an institutional pharmacy services company in the United States. The stock is currently trading 4.46% above its SMA20, 11.05% above its SMA50 and 18.38% above its SMA200. Over the last six months, insiders were net buyers of 17,318 shares, which represents about 0.06% of the company's 27.16M share float.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Becca Lipman and Eben Esterhuizen do not own any of the shares mentioned above.

Motley Fool newsletter services have recommended buying shares of MAKO Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On September 20, 2011, at 2:34 PM, Gonzhouse wrote:

    As has been said before, Technical Analysis exists to make Astrology look respectible. Rather than go thru all the math, just buy a ouija board.

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