What Are The Best Penny Stocks To Buy Right Now?
The 2022 stock market crash has weighed heavily on retail traders. Whether trading penny stocks or stocks over $100, this year has been a tough one to navigate if you’re a “buy and hold” investor. But the outcomes are likely much different for those who’ve participated in day trading and swing trading.
On top of that, the current conditions, thanks to this year’s sell-off, have opened eyes for some looking to take advantage of these extremely low price levels for specific stocks. Believe it or not, even though there are bearish tones across markets, insiders, hedge funds, and large investors are still establishing significant positions in cheap stocks. One of the trends emerging from this activity is considered the “Follow The Money” trend.
It simply means searching for insider activity by looking for specific SEC filing types. At the end of this list of penny stocks, we will discuss the Follow The Money strategy and how to identify insider & institutional activity in stocks.
Penny Stocks To Buy According To Insiders
Muscle Maker Inc. (NASDAQ: GRIL)
Shares of Muscle Maker Inc. took a breather on Wednesday morning. It may have come as a welcome trend after the last few days of trading. Since hitting 52-week lows of $0.30 earlier this month, GRIL stock has managed to rally nearly 100%. The parent company of Muscle Maker Grill, Pokemoto Hawaiian Poke, and SuperFit Foods meal prep announced several critical milestones within the last two weeks that have helped turn bearish sentiment around a bit.
Muscle Maker launched a new project with Aggia, a UAE company, to have it operate the new Muscle Maker subsidiary, Sadot LLC. This new subsidiary will source, distribute, and produce agricultural goods, such as shipping grains via cargo ship. In addition, the Pokemoto brand inked a partnership with Newtek Business Services last week to secure funding for opening new locations in the US.
This strategy also confirmed what CEO Michael Roper expressed in Muscle Maker’s latest earnings update. “As of September 30, 2022, we had cash in excess of $11.6M, which allows us the ability to both execute against our growth strategy but also keeps open the option of potential strategic acquisitions or partnerships. We believe we have positioned our company for growth in all facets, and we look forward to a strong finish for 2022.”
While all of these new developments were happening, insiders were buying shares of GRIL stock. The company’s CEO, CIO, COO, and CFO purchased shares of the penny stock, according to filings, between 11/23 and 11/25.
Babcock & Wilcox Enterprises (NYSE: BW)
Another one of the penny stocks gaining the interest of insiders and funds is Babcock & Wilcox Enterprises. The company specializes in energy and environmental products and services for power and industrial markets.
The company caught a bad break in October after reporting its latest 2023 EBITDA guidance and revising the guidance for 2022. Babcock & Wilcox explained, “Despite near-term macroeconomic and geopolitical headwinds, demand remains elevated, supported by a strong backlog and a robust pipeline of more than $7.5 billion of identified global project opportunities. The Company anticipates that full year 2023 adjusted EBITDA will range from $100 million to $120 million.”
Fast-forward to this month, and BW stock has rebounded from 52-week lows of $3.89. This is thanks, in part, to announcing new project wins and contracts that add to the company’s backlog. They include a $24 million deal for package boilers and environmental equipment at a North American petroleum refinery. Babcock also inked a pact to explore the development of a biomass-to-hydrogen project in South Korea last week.
November has been an active month for insider activity. Whether it was management or directors snagging near $200,000 purchases, BW stock has clearly been popular. The latest purchase and most significant thus far was reported by B. Riley Financial this week. The firm picked up 500,000 shares of BW stock at prices ranging from $4.36 to $4.50 in trades totaling more than $2.2 million.
Vapotherm (NYSE: VAPO)
Medical technology company Vapotherm has steadily risen from the ashes after reaching 52-week lows of $0.46 earlier this month. Its Vapotherm high-velocity therapy is mask-free noninvasive ventilatory support and is a front-line tool for relieving respiratory distress.
One of the recent catalysts came from the company’s announcement of an amendment to a specific debt agreement with SLR Investment Corp.
“We appreciate SLR’s continued confidence in the strength of our business as we continue our drive towards profitability and growth,” said Joseph Army, President, and CEO. “This amendment will provide additional balance sheet flexibility, allow us to be patient as we consider the need for additional capital, and ease concerns about our ability to meet our loan covenants.”
Like Babcock & Wilcox, Vapotherm has experienced an active month of insider activity. The most recent string of reports from 11/29 show Directors James Liken & Anthony Arnerish, SVP & CFO John Landry, and President and CEO Joseph Army collectively buying more than 1 million shares of VAPO stock. The largest purchase came from Army, who bought 750,000 shares at an average price of $0.76.
Follow The Money Trading Strategy Explained
The easiest way to find big-money bets on penny stocks to watch (or stocks, in general) is to look at the SEC filings. Here are a few of the most frequently referenced when it comes to these types of transactions:
Form 4 Filing
According to the Securities And Exchange Commission, Form 4 is a “statement of changes in beneficial ownership.”
It must get filed with the commission whenever a material change happens in the holdings of a company’s insiders.
Schedule 13D, Schedule 13G, and Schedule 13F Filings
These Schedules involve parties reporting ownership of stock over 5% of a particular equity class in a company. The SEC defines Schedules 13D and 13G as beneficial ownership reports: “The term ‘beneficial owner’ is defined under SEC rules. It includes anyone who shares voting or investment power directly or indirectly (the power to sell the security).”
These filings would be highlighted by traders looking for “Whale” trades as they generally connect to significant funds or investment trusts.
- A Schedule 13D gets filed by an “active investor” who owns more than 20% of a company’s outstanding shares.
- A 13G pertains to “passive investors” owning less than 20% of a company’s outstanding shares. Once a “passive investor” reaches over 20% of the OS, they must start filing 13D statements. These are important because we’ll see which large funds or investors are taking a more significant position in a company. These typically lift sentiment for a given company.
- Schedule 13F filings are where things get fun. 13Fs are quarterly reports required to be filed by institutional investment managers with at least $100 million in assets under management.
Read more about filings here: Penny Stocks & Due Diligence: Understanding Important SEC Filings.