Wish you could get an idea of what company insiders thought of the prospects of their own company? One way is to look at insider stock buying trends, which can indicate how optimistic a company's insiders are.
We ran a screen with this idea in mind, beginning with stocks priced under $5 a share for those with strong upward momentum, rallying above their 20-day, 50-day, and 200-day moving averages.
We then screened for those with strong optimism from their company insiders, with strong net insider purchases over the last six months representing at least 1% of share float. Because most companies only have a few insiders - such as members of the board and upper management - net purchases representing 5% or more of the share float are a big show of confidence.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Are you as optimistic on these names as their insiders are? Use this list as a starting point for your own analysis.
List sorted by net insider purchases over the last six months as a percent of share float.
1. EnteroMedics, Inc. (ETRM): Focuses on the design and development of devices that use neuroblocking technology to treat obesity and associated co-morbidities, and other gastrointestinal disorders. Market cap at $111.21M, most recent closing price at $2.93. The stock is currently rallying 19.17% above its 20-day moving average, 28.52% above its 50-day MA, and 38.86% above its 200-day MA. Over the last six months, insiders were net buyers of 2,933,271 shares, which represents about 21.33% of the company's 13.75M share float.
2. Cumulus Media Inc. (CMLS): Engages in the acquisition, operation, and development of commercial radio stations in the United States. Market cap at $541.95M, most recent closing price at $3.57. The stock is currently rallying 8.29% above its 20-day moving average, 5.65% above its 50-day MA, and 13.98% above its 200-day MA. Over the last six months, insiders were net buyers of 8,549,020 shares, which represents about 18.01% of the company's 47.48M share float.
3. First Bancorp (FBP): Operates as the holding company for FirstBank Puerto Rico that provides a range of financial services and products to retail, commercial, and institutional clients in Puerto Rico, the United States, and the British Virgin Islands. Market cap at $876.63M, most recent closing price at $4.24. The stock is currently rallying 2.90% above its 20-day moving average, 5.89% above its 50-day MA, and 16.54% above its 200-day MA. Over the last six months, insiders were net buyers of 1,181,944 shares, which represents about 6.52% of the company's 18.12M share float.
*Insider data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.