Penny stocks provide a captivating opportunity for those aiming to profit in the stock market. The intrinsic risk and potential rewards associated with these stocks often lead to intense speculation and a quest for remarkable profits. It’s not uncommon to witness several of these penny stocks suddenly surging, whether due to specific market news or sometimes seemingly without any logical reason, a phenomenon often attributed to “YOLO” by enthusiasts of meme stocks.
This piece explores several stocks valued under $5, where there has been noticeable insider activity. Insider trading, the lawful variant, refers to situations where company executives or major stakeholders buy shares in their own organizations or continue their investment strategies. These insiders usually have access to unique information, encompassing the internal dynamics of the company.
Such inside transactions are typically documented in specific forms like Form 4s or Schedule 13s. These reveal details about the acquisitions, including the number of shares bought, the average cost, and the method of purchase, be it on the open market or through a private deal.
The Connection Between Penny Stocks & Insider Purchases
What’s the correlation between penny stocks and insider buying? Several factors make monitoring insider activity a wise strategy when putting together a list of penny stocks to watch.
A Window into the Company’s Well-being?
Observing insider buying is akin to having an inside look into the organization’s vitality. When those who are closest to the company are investing in its stocks, it’s often an encouraging indication that the company is thriving. This insight can be valuable for investors on the prowl for promising penny stocks.
In summary, the world of penny stocks is one filled with both uncertainty and potential. By carefully observing insider buying patterns and understanding what they signify, investors may discover unique opportunities and gain an edge in this thrilling aspect of the stock market. Here is a list of penny stocks with recent insider action in August. Are they worth the risk as penny stocks to buy, or should you avoid them entirely? I’ll leave that up to you to decide.
Penny Stocks To Buy [According To Insiders]
- TFF Pharmaceuticals (NASDAQ: TFFP)
- Bioventus Inc. (NASDAQ: BVS)
- Gannett Co (NYSE: GCI)
- CommScope Holdings (NASDAQ: COMM)
TFF Pharmaceuticals (TFFP)
Shares of TFF Pharmaceuticals took flight on Tuesday after news surfaced on its second-quarter performance. The company develops drug products based on a patented Thin Film Freezing platform. It provided a corporate update this week that sparked interest in the company.
“During the quarter, we announced three separate collaborations, which included an approximately $3 million SBIR grant from the NIAID for the continued development of a shelf-stable, universal influenza mucosal vaccine using our TFF technology. We also continue to be mindful of our capital resources. Yesterday, we strengthened our balance sheet after pricing an approximate $5 million equity financing, with significant participation by our existing institutional investors, with no warrants issued to investors in this transaction.”
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This week’s insider trading in TFFP stock has everything to do with the latest raise. Management and Directors purchase thousands of dollars worth of TFFP stock at the $0.25 offering price. As of this article, shares are hovering around $0.40.
Bioventus Inc. (BVS)
Bioventus has been a driving force in the biotech industry among small cap stocks. Shares have surged from around $0.80 to highs of $5.03 within a matter of months. This move has been fueled by continuous milestones reached and the latest earning results highlight some of those catalysts for the active healing platform company.
In its August update, interim CEO Tony Bihl explained, “We are pleased with our team’s strong execution in the second quarter resulting in significant growth in adjusted EBITDA and cash flow…We remain committed to strengthening our financial position, enhancing liquidity and improving profitability as we accelerate revenue growth and maintain spending discipline over the long-term to create value for our stakeholders.”
Bioventus sees 2023 revenue coming in between $490 million and $505 million with adjusted EPS at a loss of $0.24-$0.20 per share.
Director and 10% holder, John Bartholdson nabbed 111,848 shares of BVS stock this month. He paid an average of $4.47 per share. This was from purchases between $4.23 and $4.57 on August 10th.
Gannett Co (GCI)
Like BVS stock, Gannett has experienced a stronger move over the last few months. Shares climbed from around $1.60 to highs of $3.60 between May and August. One of the recent catalysts for the media and marketing company is earnings. Gannett posted an EPS beat for the second quarter. Wall Street expected a loss per share of 5 cents when Gannett posted a loss of 4 cents per share. Even though it missed sales estimates by a slight margin, shares of GCI stock managed to explode thanks to adjusted EPS guidance and reiterated 2023 revenue guidance above estimates.
The parent company of brands like USA Today saw free cash flow jump 189% year-over-year. CEO Michael Reed also explained, “We believe that focus is evident in our results, enabling us to raise our full-year guidance again this quarter. We expect sustained improvement in same-store revenue trends throughout the second half of the year, alongside more substantial growth in our digital revenue trends. Our strong performance expected in the latter half of this year also extends to Adjusted EBITDA and free cash flow, reinforcing our confidence in achieving a first lien net leverage well below 2.0x by the end of 2023.”
Reed is also the latest insider to buy shares of GCI stock in August. He purchased 80,000 at an average price of $3.29. This was from purchases made between $3.26 and $3.31.
CommScope Holdings (COMM)
CommScope has been pushing back after plummeting to fresh 52-week lows at the beginning of the month. The network connectivity solutions provider missed earnings and sales estimates for the quarter by a very wide margin. Analysts expected EPS to come in around $0.39, while the real figure was only $0.19 per share. Sales of $1.92 billion also missed the $2.04 billion expected.
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“In the second quarter, CommScope net sales declined 17% from the prior year to $1.918 billion, and adjusted EBITDA declined 13% to $260 million. The adjusted EBITDA held up a bit better than our revenue as we continue to drive our CommScope NEXT initiative plan, including reducing our fixed costs…However, based on current visibility driven by a weaker demand outlook for 2023, we reduced our Core adjusted EBITDA guideposts to a range of $1.15 to $1.25 billion,” said Kyle Lorentzen, Chief Financial Officer. CEO Chuck Treadway is also expecting the current environment to negatively impact the 2023 performance.
Needless to say, it hasn’t stopped insiders from buying shares of COMM stock. CEO Treadway picked up roughly $100,000 worth of stock earlier this month at prices ranging from $3.635 to $3.65. The purchases brought his total holdings to more than 2.125 million shares.
