Wish you could get an inside peek at your favorite companies? One idea is to consider insider buying trends. With this idea in mind, we ran a screen.
We began by screening for stocks trading under $5 a share for those that are currently outperforming the market, with quarterly return above 10%.
We then screened these names for those with the confidence of their company insiders, such as members of the board and upper management, with significant net insider purchases over the last six months representing at least 2% of share float. Since most companies only have a handful of company insiders, net insider purchases representing 2% of share float is a big show of confidence in their employer's prospects.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall.
Do you think these stocks will continue to outperform? Use this list as a starting point for your own analysis.
List sorted by net insider purchases as a percent of share float.
1. Horizon Pharma, Inc. (NASDAQ:HZNP): Develops and commercializes medicines for the treatment of arthritis, pain, and inflammatory diseases. Market cap at $133.79M, most recent closing price at $3.97. Performance over the last quarter at 20.63%. Over the last six months, insiders were net buyers of 4,270,210 shares, which represents about 16.85% of the company's 25.35M share float.
2. 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 $121.8M, most recent closing price at $3.12. Performance over the last quarter at 51.15%. Over the last six months, insiders were net buyers of 2,164,479 shares, which represents about 14.83% of the company's 14.60M share float.
3. American DG Energy, Inc. (NYSEMKT:ADGE): Distributes, owns, and operates on-site energy systems that produce electricity, hot water, heat, and cooling. Market cap at $109.98M, most recent closing price at $2.36. Performance over the last quarter at 44.37%. Over the last six months, insiders were net buyers of 466,000 shares, which represents about 2.36% of the company's 19.77M 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.