When it comes to penny stocks, a diligent look at fundamentals and insider activity should be key to your research. After all, penny stocks with strong insider buying can potentially be strong opportunities. How so? If an insider, such as a C-suite executive or board member, is buying additional shares with their own capital, it’s a positive sign that they are bullish on the company’s future prospects. Fortunately for your average investor, insiders at publicly-traded companies are required to disclose their transactions in filings submitted to the US SEC.
Plenty of online stock research tools enable you to filter for stocks where there has been a high level of insider buying. In fact, using these tools, I found seven penny stocks with strong insider buying. Let’s dive into each one, and see whether it is wise to follow their lead.
| ACER | Acer Therapeutics | $1.98 |
| ADES | Advanced Emissions | $2.91 |
| APLD | Applied Digital | $2.68 |
| BLBX | BioCryst | $8.79 |
| GLG | TD Holdings | $1.24 |
| GLT | Glatfelter | $3.75 |
| PRCH | Porch Group | $2.21 |
Acer Therapeutics (ACER)
Based in Newton, Massachusetts, Acer Therapeutics (NASDAQ:ACER) is a clinical-stage biotech company focused on the development of treatments for rare and life-threatening diseases. As Louis Navellier discussed in Jan., one candidate for urea cycle disorder (UCD) treatment, Olpruva, received Food and Drug Administration approval last Dec. Prior to this, Chairman Steve Aselage and CEO Chris Schelling participated in a private placement, purchasing $1.5 million worth of ACER stock.
Investors who bought right after the purchase reaped fast gains, as the stock surged from around $1.25 per share to as much as $4.56 per share, due to the Olpruva approval announcement. Although the stock has pulled back since its recent big news, you may still want to take a closer look. Further progress commercializing this treatment, plus progress with other candidates, could spark a rebound for shares.
Advanced Emissions (ADES)
Advanced Emissions (NASDAQ:ADES) provides emissions control solutions to industrial end-users such as coal-fired power plants. Last month, the company completed a merger with Arq Limited, which converts mining waste into an advanced carbon additive.
Along with this merger, the company raised an additional $15.4 million from insiders in a private placement. One of these insiders, Arq founder Julian McIntyre (who is now an ADES board member), through entities he controls, purchased around 1.2 million of these 3.85 million additionally-issued shares of ADES stock.
Jeremy Blank, another director, purchased 631,886 shares, worth around $2.5 million, offered in this private placement. Given the size of both these transactions, this is clearly one of the penny stocks with strong insider buying. Both these insiders appear confident that growth synergies from this merger will pan out, resulting in big gains for shares.
Applied Digital (APLD)
Applied Digital (NASDAQ:APLD) has made some big changes since the onset of crypto winter. An operator of data centers offering high-performance computing (or HPC) infrastructure, the company continues to build new facilities. Yet as a crypto comeback remains a work in progress, Applied Digital is now working to expand its customer base beyond cryptocurrency miners.
Better, according to Finviz.com, Chairman and CEO Wes Cummins, directly, indirectly, and via funds managed by B. Riley’s (NASDAQ:RILY) asset management unit (of which he is President), has purchased an additional 1.075 million APLD shares since Oct. This insider confidence may make it worthwhile to dive deeper into the situation with Applied Digital.
Blackboxstocks (BLBX)
Shares in fintech firm Blackboxstocks (NASDAQ:BLBX) have nearly doubled in price recently. A big reason for this spike may have to do with BLBX’s status as one of the penny stocks with strong insider buying. Reportedly, CEO Gust Kepler has purchased 1 million additional shares of BLBX stock — which may be a big sign of confidence in the company. Even better, the company itself has been buying back stock, recently extending its share repurchase program.
This may further suggest that BLBX’s management believes that the company is undervalued. While you may want to wait for the recent mania to calm down, add it to your penny stock watchlist.
TD Holdings (GLG)
TD Holdings (NASDAQ:GLG), a China-based commodities trader, is another penny stock that has made headlines over the past few months, due to news of an extremely large insider purchase of shares.
As Seeking Alpha reported last Dec., CEO Renmai Ouyang purchased 10 million additional shares of GLG stock. Per Form 4 filed with the SEC, Ouyang purchased these shares via a private placement. Another large shareholder in the company, Zhang Shuxiang, has also made big purchases of TD Holdings through private placements in recent months, acquiring a total of 20 million additional shares.
These purchases are significant compared to GLG’s total share count (107.9 million). Still, whether this is a bullish signal is another question. Penny stocks are risky enough but throw in the risks inherent with China stocks, extensive due diligence is likely required before deciding whether GLG is a buy.
Glatfelter (GLT)
Glatfelter (NYSE:GLT) manufactures various engineered materials, including tea bags and single-serve coffee filters, hygiene products, wipes, decorative laminate, and face masks. Inflationary pressures have severely affected the company’s operating performance. As a result, GLT has suspended its dividend, and management is attempting to bring Glatfelter back to profitability. Given its operational challenges, made worse by a highly-leveraged balance sheet, investors have bailed, and in the past year, shares have fallen by nearly 72%.
However, while the market is doubtful of a comeback, one insider recently made a big purchase of GLT stock. Wolfgang Laures, a senior vice president at the company, purchased 277,000 shares, worth just over $1 million. A large purchase for someone on the inside but not in the C-suite, among penny stocks with insider buying, this purchase may signal high confidence in Glatfelter’s turnaround.
Porch Group (PRCH)
Porch Group (NASDAQ:PRCH) is a diversified provider of home-related software and services. These businesses include its eponymous home services marketplace, software for home inspectors and contractors, as well as its insurance and home warranty segments.
However, becoming a jack of all trades hasn’t turned into big profitability for Porch. Based on its financials, PRCH has yet to reach consistent profitability. As shares in high-growth yet unprofitable companies, and housing stocks in general, have plunged since late 2021, so too has PRCH stock.
However, after cratering to penny stock levels, things may be starting to improve for the company, boding well for the stock going forward. CEO Matt Ehrlichman seems confident in recovery. As InvestorPlace’s William White reported back in November, Ehrlichman at that time announced his intent to buy up to $5 million worth of PRCH shares, which he did through a series of transactions.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.