Significant acquisitions of a company's stock by insiders can be viewed as a bullish indicator. Due to their privileged access to internal company information, executives, directors, and major shareholders are generally considered to have a distinct advantage in appraising a company's value. That's why when they buy stock with their own money, it's often viewed as a vote of confidence in the shares.
However, insider buying in penny stocks is worth particularly close analysis. If the buying is based on fundamentals, prospective investors in these stocks may have identified a potential multibagger. On the other hand, if insiders are buying stock in the wake of negative news to help prop up investor morale - and stock prices - it's a significantly less encouraging sign.
With this in mind, here's a look at three stocks priced under $5 per share that have been targeted by notable insider buying lately.
#1. BigBear.ai
First up is BigBear.ai (BBAI), a company that leverages artificial intelligence (AI) to deliver "decision intelligence" solutions. Founded in 1988, their AI-powered software helps organizations make complex choices across various sectors. Its market cap currently stands at $334 million.
BBAI stock is down 34.5% on a YTD basis, significantly underperforming the broader market.
On June 3, Director Pamela Joyce Braden purchased 140,939 BBAI shares at an average price of $1.49 each, for a total investment of about $210,000. The Director's stake in the company now stands at 0.1814%.
Notably, the last significant insider buying on BigBear.ai shares was by Braden, too. In December 2023, she poured in almost $100,000 to acquire about 50,000 shares at $1.92 each.
BigBear's earnings results for the latest quarter were nothing to write home about. The company's Q1 revenues declined by 21.4% on a yearly basis to $33.1 million, while losses more than tripled to $0.67 per share from $0.19 per share in the year-ago period. The loss per share came in much wider than the consensus estimate for a loss of $0.06 per share.
BigBear.ai exited the quarter with a cash balance of $81.4 million, towering over its short-term debt levels of $826,000.
During the quarter, BigBear.ai closed the all-stock acquisition of Pangiam, a company that specializes in facial recognition. Pangiam's offerings, like Dartmouth, a unique imaging technology that distinguishes threats from everyday objects in airport baggage screening, significantly enhance BigBear.ai's capabilities. These full-scanning systems extend beyond security applications, potentially optimizing supply chain and distribution operations as well.
Furthermore, Pangiam broadens BigBear.ai's customer reach. Now, alongside its existing clientele of U.S. government defense agencies and commercial enterprises, BigBear.ai can target major airlines, airports, and other identity verification-focused organizations.
Overall, with the AI-powered computer vision market forecast to reach $274.8 billion by 2033, up from a mere $17.4 billion in 2023, the acquisition seems to be a timely one for BBAI to benefit from this megatrend.
Analysts have deemed BBAI stock a “Moderate Buy” overall, with a mean target price of $3.62. This denotes an upside potential of about 158.5% from current levels. Out of 5 analysts covering the stock, 3 have a “Strong Buy” and 2 have a “Hold” rating.
#2. Neuronetics
Founded in 2003, Neuronetics (STIM) develops non-invasive treatments for treatment-resistant psychiatric disorders using transcranial magnetic stimulation (TMS) technology. Neuronetics primarily targets psychiatrists, psychologists, and other qualified healthcare providers who treat patients with depression and potentially other mental health conditions in the future. Its market cap is currently at $60.5 million.
STIM stock is down by 30.7% on a YTD basis.
On June 6, Chairman Robert Anthony Cascella bought 50,000 shares of STIM at an average price of $2.0510 per share for a total value of $102,550, upping his stake in the company to 0.8137%. Chairman Cascella was also the last one to make a notable buy of the company's stock, with an August 2023 pickup of 28,500 shares around $1.81 each.
The latest results for Q1 show that Neuronetics has increased revenues and lowered losses when compared to the year-ago period. Revenues for the quarter came in at $17.4 million, up 12% from the previous year. Losses narrowed to $0.27 per share from $0.38 per share, while also surpassing the consensus estimate for a loss of $0.31 per share.
The company closed the quarter with a cash balance of $47.7 million, much higher than its short-term debt levels of just $851,000.
Neuronetics recently expanded its reach by achieving FDA clearance for treating major depressive disorder in adolescents (15-21 years old). This opens a significant new patient pool. Beyond this expansion, the company remains focused on boosting utilization of its existing systems.
Several initiatives target both patient demand and customer support. These include the Better Me Guarantee Provider program (BMGP), NeuroStar University training programs, and cooperative marketing efforts.
The BMGP has proven particularly successful. Facilities participating in the program see a five times faster conversion rate, moving patients from initial interest to completing a crucial motor threshold test. This translates to significantly higher treatment volumes. Neuronetics reports that BMGP sites treat an average of 10.7 patients per quarter, compared to just 3 for non-participating sites.
The four analysts in coverage have a unanimous rating of “Strong Buy” for STIM stock, with a mean target price of $7, which indicates an upside potential of about 248.3% from current levels.
#3. Altus Power
Founded in 2009 and based out of Stamford, Connecticut, Altus Power (AMPS) develops and operates clean energy infrastructure, specializing in distributed solar generation, energy storage solutions, and electric vehicle (EV) charging stations. It aims to create a "clean electrification ecosystem" serving commercial, public sector, and community solar customers. Its market cap is currently $673 million.
AMPS stock is down 36.9% on a YTD basis.
CEO Gregg Felton has been on a shopping spree of his company's stock in 2024. The latest transaction was on June 4, when Felton purchased 33,285 shares of AMPS at an average price of $4 each, for a total buy-in of $133,140. This increased his stake in the company to 10.0737%.
Prior to this purchase, the CEO bought 82,576 shares at $3.90 on May 31, and 12,500 shares at $4.78 on March 28, investing over $381K across the two transactions.
Altus Power posted a decent set of numbers for the latest quarter. In Q1, the company's revenues rose by 38% from the previous year to $40.7 million. Further, it reported adjusted EPS of $0.05, up 66.7% from the year-ago period, while also outpacing the consensus estimate for a loss of $0.07 per share.
The company generated net cash from operating activities of $4.52 million, and ended Q1 with a cash balance of $173.26 million, higher than its short-term debt levels of $82.52 million.
Operationally, the company increased its portfolio size by 45% to 981 MW as compared to the first quarter of 2023, and remained the largest owner of commercial-scale solar assets in the U.S. Moreover, Altus Power increased the number of community solar customers by 20%, from 20,000 to 24,000.
Altus benefits from the support of two strong partners in the form of commercial real estate giant CBRE Group (CBRE) and the world's largest asset manager Blackstone (BX). While CBRE helps to “distribute” AMPS products to a large customer base by integrating AMPS into CBRE’s customer base and broader offering, Blackstone solidifies AMPS' balance sheet by providing funding for Altus' M&A activities.
On average, analysts have a rating of “Strong Buy” for AMPS stock with a mean target price of $6.5, which denotes an upside potential of about 50.8% from current levels. Out of 10 analysts covering the stock, 9 have a “Strong Buy” rating, and 1 has a “Hold” rating.
