Sign In with Google
Sign In with Facebook
Penny Stocks and Their Unique Risks
Penny stocks, known for trading at mere pennies per share, carry an elevated risk due to their profit-generation potential and liquidity dynamics. They often trade at steep discounts compared to their competitors since they might not yet have produced profits for stakeholders. Profits are a key player in affecting a publicly traded stock and its share prices because they influence liquidity - a vital gauge for serious investors. Low-liquidity markets cannot execute orders rapidly or effectively, causing small orders to significantly influence prices. To mitigate risk, one strategy is to track insider activities as they have in-depth knowledge of a company's performance. They would unlikely buy a stock unless they expect the business to thrive or show improvement. We turn our attention to two penny stocks with growth potential that insiders have been buying - OPKO Health and Southland Holdings.
Insiders at OPKO Health Increasing their Holdings
OPKO Health Inc (NASDAQ:OPK) grabbed the spotlight on Insidertrades.com in January as a popular insider purchase. During that time, seven insiders executed nine transactions, putting it on the frontrunner list. Insiders carried forward the trend into February, with two additional transactions. The company's chairman and CEO, Dr. Phillip Frost, made these transactions, which now gives him close to 30% of the company's total stock. Combined insider ownership is over 40%, with a visible growth trend. For the past three years, insiders have exclusively bought stock, and there is robust sentiment on the sell side.
Institutional ownership of the health company is a lean 22%, but there has been a net purchase trend over the preceding year. Analysts demonstrate a stronger bullish stance, placing a firm Buy rating with a price target substantially above the current price. The average price target of $3.85 implies a near 300% boost from the current price level, and the floor target of $2 indicates a deep-value chance with 100% upside potential. Factors driving the company's potential include the FDA approval secured last year and industry normalization. Despite its diagnostic business, heavily reliant on COVID-19, dragging on profitability, it is expected to stabilize by 2024 through cost reductions and capacity downsizing. The FDA approval is meant for Ngenla, a treatment for children with growth hormone deficiency. The company also has an exciting pipeline, with additional approvals for Ngenla and several antibody-type treatments targeting solid tumors, leukemia, and hematologic malignancies in tow.
Insiders at Southland Holdings Transition, Begin Purchasing Stock
Specializing in infrastructure projects, Southland Holdings Inc (NYSE:SLND) operates two segments that encompass all aspects of infrastructure-related construction such as pipelines, waterways, roads, bridges, and facilities.
The stock underwent significant pressure in 2023, due to unexpected losses and insider selling, but the bottom appears imminent. Rather than selling, insiders pivoted in December and started buying up the stock. This group of buyers includes the CEO, COO and a director; collectively, insiders and significant shareholders own approximately 90% of the stock.
Analysts are optimistic about Southland Holdings. Insidertrades.com tracks two analysts with ongoing ratings who advise a firm Moderate Buy. The price target communicates a deep-value potential with a 60% increase at the consensus midpoint and 50% at the range's lower border. Several catalysts, including a series of new contracts valued at almost $500 million, expected to boost business in the next two years, underpin the stock's potential.
