In the world of investment, penny stocks hold a unique position. Often priced at $5 per share or less, these are typically shares of small-cap companies that trade at relatively low prices. This low cost of entry often appeals to many investors, enabling them to acquire a substantial number of shares with a limited initial investment. What truly adds to their allure is their potential to deliver impressive returns.
A relatively small uptick in share price can result in a substantial percentage increase, presenting the opportunity for outsized gains. However, it is vital to remember that with high potential return comes an equally high level of risk. The inherent volatility and speculative nature of penny stocks necessitate caution and informed decision-making.
It’s crucial to consider that solely focusing on one dimension, such as insider trading, can potentially lead to a tunnel-vision view of the company’s prospects. Multiple financial metrics and indicators provide a more comprehensive overview of a company’s health and future potential.
The decisions of insiders, while informative, should ideally be part of a broader due diligence process, not the sole determinant of investment decisions. In this article, we look at a handful of penny stocks to watch. Some are getting bought up by insiders. Others are captivating attention for other reasons. Once you see which catalysts are propelling momentum, you can decide if they’re worth adding to your watch list this week.
Penny Stocks To Watch
Akebia Therapeutics (AKBA)
Akebia Therapeutics has been on the radar for months thanks to its dramatic rise in April and May. The company received an interim response from the FDA after appealing its vadadustat treatment of anemia.
It met with the FDA to discuss the next steps regarding the interim response to its Formal Dispute Resolution Request. This was prompted by a Complete Response Letter last March. A favorable Committee for Medicinal Products for Human Use (CHMP) opinion in Europe for the drug candidate has also helped boost sentiment in the market. The company also presented posters at the National Kidney Foundation Spring Clinical Meetings on April 11-15.
Fast forward to the end of May and Akebia was granted marketing authorization for vadadustat “Vafseo” by the UK Medicines and Healthcare Products Regulatory Agency. However, some things have come into question regarding the future in the US. The FDA denied its formal dispute resolution but offered guidance for approval and resubmission of a new drug application (NDA).
Following a rise in interest from analysts, including HC Wainwright and Piper Sandler, both with price targets higher than current levels. HC set its target at $2 while Piper Sandler upgraded its rating to Overweight and increased its target to $4.
Atlus Power Inc. (AMPS)
Atlus Power has been under pressure for most of the year. However, the last few weeks have seen bullish momentum back in the market. The company announced expansion into Maine earlier this quarter as the solar company plans to enter its 25th market. In its latest earnings report, Atlus blew by EPS estimates and reported a $0.03 gain compared to the $0.04 loss that was anticipated. Meanwhile, a slight miss in sales dampened the mood slightly.
Atlus also reaffirmed 2023 adjusted EBITDA guidance. It’s expected in a range of $97-$103 million and would be 70% growth over 2022 at the midpoint. This year’s adjusted EBITDA margin is expected to be in the “mid-to-high” 50% range.
Now, insider trading has begun attracting investor interest. Co-CEO Gregg Felton recently reported the purchase of 75,000 shares. Based on the Form 4 filing, he purchased shares between $4.37 and $4.50. Another form filed right before the end of May showed Felton buying another 22,500 shares at an average price of $4.49. The trades were conducted through his Felton Asset Management company, bringing its holdings to more than 11.88 million.
Taboola Ltd. (TBLA)
The advertising company’s shares have been holding gains from earlier in the month. The move came after it reported a $40 million share buyback, better revenue guidance, an earnings beat, and a $50 million debt repayment. Taboola also recently inked an exclusive deal with TelevisaUnivision to power its recommendations across top Spanish digital properties.
“TelevisaUnivision has massive viewership across several platforms, including television, digital, streaming, and audio, proving that they’re the ultimate destination for Spanish-speaking consumers. We’re pleased to be chosen as their new recommendations partner,” said Adam Singolda, CEO and founder at Taboola.
Like Atlus, insiders are also getting busy in TBLA stock. Company CFO Stephen Walker reported the purchase of 75,000 shares of TBLA stock. The average prices paid range from $2.60 to $2.64 and brought his position to more than 1.12 million shares.
P3 Health Partners Inc. (PIII)
Shares of P3 Health stock have been on the radar since the first quarter of the year. This is when, coincidentally, insiders were buying shares of PIII stock. At the time, Michael Balkin, a 10% owner and manager of Foresight Sponsor Group, purchased 15,000 shares. According to footnotes in Form 4, “These 15,000 Shares (as defined below) were acquired in a single transaction through a self-directed individual retirement account of Mr. Balkin.”
The company’s latest financial results for the first quarter of 2023 showed further progress. P3 beat sales estimates in its previous quarterly report but missed on earnings per share estimates. The achieved the same in its first quarter of 2023. “We are off to a strong start in 2023. We achieved a medical margin of $39.2 million or 13.1% as a percentage of capitated revenue for the quarter, a key metric for validating the effectiveness of P3’s model. As a result of the first quarter strength, we are increasing our Adjusted EBITDA guidance today,” said Dr. Sherif Abdou, CEO of P3.
P3 provides primary care providers with the support of care coordination and administrative services. The main focus is improving patient outcomes at a lower cost. In partnering with local providers, P3’s team creates “an enhanced patient experience by navigating, coordinating, and integrating the patient’s care within the healthcare system.”
The 10% owner, Chicago Pacific Founders UGP, and the company CEO and CFO are the most recent to file insider transaction forms. In May alone, Chicago purchase hundreds of thousands of shares worth millions of dollars. Meanwhile, CEO Abdou and CFO Kavthekar nabbed more than $300,000 worth, combined.