The realm of penny stocks, often characterized by their affordable price tag, has become a hotspot for investors eager to seize the stock market’s opportunities. These stocks, typically valued under $5, carry inherent risks and promise impressive rewards. Such potential for high returns makes them a popular choice for market participants who are averse to risk.
The magnetic pull of significant profits draws countless investors to these budget-friendly stocks. Specific market events or even unforeseen incidents can occasionally lead to sudden surges in particular penny stocks. These unexpected jumps are sometimes linked to the “live-for-the-moment” mindset common among meme stock traders.
A Deep Dive into Sub-$5 Stocks with Notable Insider Moves
In this analysis, we spotlight a selection of stocks priced below $5, showcasing significant insider movements. Legal insider trading, distinct from its unlawful counterpart, encompasses scenarios where pivotal players, such as company leaders, decide to back their firms or maintain their existing investment paths.
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Such insiders often possess an exclusive window into the company’s core operations, granting them perspectives not readily available to the average investor. Details of insider transactions can typically be found in documents like Form 4s or Schedule 13s. These documents shed light on the details of the trades. They show the number of shares acquired, the average cost, and the mode of purchase through public markets or private transactions.
Unraveling the Link Between Penny Stocks and Insider Buys
Why do penny stocks and insider purchases go hand in hand? Several reasons suggest that tracking insider activities can be strategic when curating a list of potential penny stocks to buy.
Monitoring insider acquisitions can be equated to receiving an exclusive insight into the company’s health. When those deeply familiar with the business invest in its stocks, it often signals a flourishing future for the company. This intel can be invaluable for those searching for promising penny stocks ripe for growth.
Charting the Vibrant Landscape of Affordable Stocks
At its core, the penny stock niche within the market is a blend of unpredictability and potential. Investors can unearth hidden gems by analyzing insider trading patterns and grasping their implications. Whether that secures a competitive advantage is to be seen. Just because insiders buy or sell doesn’t mean the market should follow suit.
This list of penny stocks spotlights companies with noteworthy insider activities in August. Do these stocks present investment opportunities? Or should they be approached with caution? Armed with the right insights, you’re better equipped to make informed choices.
Penny Stocks To Buy [According TO Insiders]
- The RealReal Inc. (NASDAQ:REAL)
- Sirius XM Holdings (NASDAQ:SIRI)
- Beyond Air, Inc. (NASDAQ:XAIR)
The RealReal Inc. (REAL)
What if you could buy things like Louis Vuitton, Coach, Chanel, Gucci, and other high-end brands on consignment? This is what The RealReal is. The company is an online (and, in some places, physical) marketplace for authenticated luxury goods.
Shares have been moving higher for the last few months, and it began when the company reported its first-quarter results. It beat estimates for earnings per share but missed sales expectations by a slight margin. In reviewing second-quarter results, The RealReal beat EPS estimates once again and missed sales expectations by a wider margin. Revenue Guidance came in between $540 million to $560 million, with the higher end of the range above expectations of $555.26 million. Now, notable funds (not insiders) may be starting to find opportunities.
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REAL Stock Insider Buying
Scion Asset Management, run by notable “Big Short” investor Michael Burry, appears bullish. In the latest round of 13F’s from institutional investors like Scion, Burry reported a stake of 1.5 million shares.
There has also been some buying by company management, including CEO John Koryl. In a buying spree at the end of August, Koryl purchased shares a prices ranging from $2.18 to $2.375. In total, his activity added up to more than 43,000 shares. It also brought his total direct holdings to more than 2.79 million shares.
Sirius XM Holdings (SIRI)
SIRI stock has been on the list of penny stocks experiencing above-average price action for the last few months. Shares experienced a steep uptrend in late June and early July. This is a stark difference from what happened at the beginning of this year.
Most recently, earnings have been a catalyst for the company. Revenue came in line with expectations. However, full-year free cash flow guidance was raised to $1.15 billion. Analysts reacted with increased price targets from Wells Fargo and Goldman Sachs.
Additionally, overall sentiment in the stock market appears to have gotten a boost, at least for now. In an interview with CNBC in April, CEO Jennifer Witz said that the quarter itself was expected and the rest of the year is expecting growth.
In the last month, traders found this to be a sticking point, and eventually, SIRI stock squeezed to highs of $7.95. Now that the proverbial air has been let out a bit, shares have begun steadily trading sideways over the past week. Meanwhile, attention remains fixed on the SIRI short interest for a repeat performance. According to data from TD Ameritrade, the current short float percentage sits just under 27%.
SIRI Stock Insider Buying
Siri CEO Jennifer Witz is doing the significant buying in SIRI stock this month. She picked up 250,000 shares from $4.080 to $4.140 this month. This brought her direct holdings to more than 2.8 million shares.
Beyond Air, Inc. (XAIR)
It looks like the bullish story for Beyon Air begins after earnings. Shares imploded earlier this month thanks to its latest financial results and plans to raise money after filing a shelf offering. Despite beating EPS estimates, the company failed to wow investors with its first quarter findings of the fiscal 2024 year. The commercial-stage medical device company aims to improve patients’ lives by utilizing nitric oxide in respiratory illnesses, solid tumors, and neurological disorders.
Despite the results, management appears optimistic about Beyond Air’s prospects:
“Our commercial team has implemented training programs and support at each of these hospitals, and report that LungFit PH has been well received. The initial success of the LungFit PH commercial rollout has allowed our team to hone their sales and support processes and move into the second phase of the commercial launch, which has resulted in annual contracted revenue in excess of $1 million at this time,” said Steve Lisi, Chairman and Chief Executive Officer of Beyond Air.
XAIR Stock Insider Buying
Director Robert Carey is the latest to buy up shares of XAIR stock in August. Via multiple trades posted in two Form 4s, Carey purchased more than 330,000 shares. The purchase prices range from $2.635 to $2.78 and brought his total direct holdings to more than 1.2 million shares.
