Penny stocks come with many risks, but with those risks come the potential for great rewards. While there is no guarantee which penny stocks will deliver those rewards, following the insiders is 1 way to find them. The insiders have the best knowledge of a company, its business, and its ability to continue as a going concern so when they buy stock it's something to pay attention to. Today we’re looking at 3 penny stocks the insiders are buying, which come with more reasons to be bullish than one. In all cases, the analysts are institutions are supporting the price action and have these stocks set up for big moves given the appropriate catalysts.
Vapotherm At Long-Term Low
Vapotherm (NYSE: VAPO) is a developer of treatments for respiratory distress. The company’s primary product line is a high-flow system to deliver humidified and oxygenated air to sufferers. The company has been struggling with revenue in the wake of the pandemic, but the inside and sell-side activity suggests this company is not down for the count.
8 insiders are buying the stock including most members of the executive tea and several directors. This activity has their total holdings up to over 10% and growing, compounded by robust institutional activity. The institutions have netted $32 billion over the last year to increase their holdings to 59% of the company. Remarkably, the buying is worth more than the company’s current market cap, but that isn’t a problem for the analyst.
There are 5 analyst rating this stock and although the sentiment rating is down to a Hold from Moderate Buy last year the price target has held firm. The price target is noteworthy because it forecasts 450% upside at the consensus midpoint and more than 100% at the low end of the range. Although a tiny operator focused on devices, Vapotherm could become the target of takeover plans given the upcoming patent cliff facing most major med-tech companies today.
DIRRT Environmental Solutions
DIRRT Environmental Solutions (NASDAQ: DRTT) uses 3-D imaging technology to design and build custom prefabricated inserts for business, industry, and private use. The company has seen an excellent rebound in business following the pandemic, but fears of slowing have impacted the price action. This pullback is used by 10 insiders, including major shareholders, board members, and company execs to add to their holdings.
The insiders own about 6.7% of the company, while the institutions own about 79%. The institutional activity has been flattish over the past year as have the analysts' ratings. The analyst's rating recently jumped to a Moderate Buy from a strong Hold due to an old rating falling out of the data set. The price target was also impacted but moved lower, yet still forecasts more than 100% of the upside for the market.
Precigen Gets Lifted By The Analysts
Precigen, Inc (NASDAQ: PGEN) is engaged in discovering and applying gene and cellular technologies. The company has been struggling with revenue and earnings for years but recently announced a surge in licensing revenues. This led to some optimistic analysts' activity with the stock pegged at a Buy rating with a price target more than 600% above the current price action. This news is in addition to the 5 insiders that started buying the stock in January 2023.