This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Insider buying is on the rise in these 4 rallying stocks

Stocks in this article: BGMD CVM GIGM IDRA

James Dennin, Kapitall: One way to evaluate small cap stocks is by looking for insider buying, when people on staff are buying shares.

Investors should consider positive trends in insider buying when evaluating small-cap stocks. While that sounds illegal, insider buying is permissible if you're trading on information that is open to the public. 

[Read more from Kapitall: There are only 3 hotel stocks that are more valuable than Airbnb]

For many reasons, company insiders have a better outlook on a stock's potential growth than analysts do. With knowledge of their field, insight into their company's future plans, and understanding of inventory and supply-lines, insiders have information at their fingertips that vastly outweighs the data available to analysts.

Nevertheless, it's crucial that you look at the context of the insider buying and selling – is it a single marketing executive raising money for his kid's college tuition? Or are a number of executives loading up on shares, signalling confidence in their business plan and exciting announcements on the horizon?

It's important to understand that this strategy really only applies to smaller companies. For a big conglomorate like  Coke (KO) or  General Electric (GE), the activities of a single department aren't usually enough to move the needle for the whole company. And executives in New York won't necessarily be privy to the details of what's going on at corporate offices in India. 

For smaller companies, however, it can be a great way to screen for stocks within an unfamiliar niche market. And with riskier plays, it's always a comfort to see management that's putting their money where their mouth is.

We decided to build a list of rallying stocks with spikes in insider buying. So we started with a universe of equities that are all trading at least 30% above their  50-day simple moving average (SMA 50). Taking this list of around 200 companies, we futher screened the list for companies who'd seen at least 1% of their float purchased by company insiders. 

That left us with 4 small cap stocks on our list. 

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs