3 Stocks Ripe for Upside Reversals

07/21/2011 9:00 am EST

Focus: STOCKS

Sentiment seems to be turning more favorable toward these three stocks, and given new insider buying, shares may be ready to move back higher after losing ground in recent months.

Short selling is a helpful indicator for the market’s sentiment surrounding a stock. When shorting increases, investors are generally more bearish about the stock, and when it decreases, investors are generally more bullish.

We ran a screen on stocks trading near their 52-week lows, searching for those that have seen significant decreases in the number of shares shorted month-over-month. We also screened for those that have seen significant net insider buying over the last six months.

Based on those two factors, these three stocks could be on the cusp of turning back higher.

MannKind Corp. (MNKD) is in the biotechnology industry and has a market cap of $478.33 million. The stock is trading 5.67% above its 52-week low.

Shares shorted have decreased from 22.98 million to 20.96 million month-over-month, a change representing 2.55% of the company's 79.18 million share float.

Net insider purchases over the last six months are at 3.48 million, which is 4.39% of the company's total float. It has been a rough couple of days for the stock, having lost 5.18% over the last week.

chart
Click to Enlarge

Auxilium Pharmaceuticals Inc. (AUXL) is in the drug-related products industry and has a market cap of $974.50 million. The stock is trading 8.84% above its 52-week low.

Shares shorted have decreased from 9.53 million to 9.32 million month-over-month, a change representing 0.48% of the company's 43.80 million share float.

Net insider purchases over the last six months are 973,070, which is 2.22% of the company's total float. The stock has lost 8.33% over the last year.

chart
Click to Enlarge

NEXT: One More Stock with Better Fortunes Ahead

|pagebreak|

Power-One Inc. (PWER) is in the diversified electronics industry and has a market cap of $778.26 million. The stock is trading 0.67% above its 52-week low.

Shares shorted have decreased from 29.21 million to 24.23 million month-over-month, a change representing 5.10% of the company's 97.70 million-share float.

Net insider purchases over the last six months are 15,000, which is 0.02% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.17). It has been a rough couple of days for the stock, having lost 5.06% over the last week.

chart
Click to Enlarge

By the Staff at Kapitall.com

Related Articles on STOCKS