3 Stocks Under $5 with Insider Buying

07/25/2012 9:45 am EST


The staff at Kapitall.com take a look at three low-priced performers that got a boost from inside the company.

Here is the easiest way to get an inside peek at your favorite companies—follow insider buying.

The idea, of course, is that if someone inside the company is buying shares, they must believe those shares are going to rise. It doesn’t always work that way, but following insider buying trends is certainly one way to get a feel for how company executives feel the company is performing.

With that in mind, Kapitall.com staffers ran a screen for stocks trading under $5 a share that have strong upward momentum, trading above their 20-day, 50-day, and 200-day moving averages.

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. Since most companies only have a handful of company insiders, net insider purchases representing 1.5% of share float is a big show of confidence in their employer's prospects.

Here are the results.

1. EnteroMedics (ETRM) focuses on the design and development of devices that use neuroblocking technology to treat obesity and associated co-morbidities, and other gastrointestinal disorders. Over the last six months, insiders were net buyers of nearly 2.2 million shares, which represents about 14.75% of the company's 14.67 million share float.

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2. GTX (GTXI) engages in the discovery, development, and commercialization of small molecules to treat cancer, osteoporosis, bone loss, muscle loss, and other serious medical conditions. Over the last six months, insiders were net buyers of 795,478 shares, which represents about 3.2% of the company's 24.88 million share float.

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3. Support.com (SPRT) provides online care services for the digital home and small business, primarily in North America. Over the last six months, insiders were net buyers of 608,386 shares, which represents about 1.58% of the company's 38.58 million share float.

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