Investing 101: Oversold Small Cap Stocks with Insider Buying

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(List compiled by Becca Lipman. Insider data sourced from Fidelity, RSI(14) values sourced from Finviz.)

The following is a list of oversold stocks, as determined by the Relative Strength Index, or RSI(14). All of the stocks mentioned below have RSI(14) values below 40, which usually signals oversold conditions.

All of these stocks have seen more insider buying than insider selling over the last six months (excluding exercised options). For each company we'll list the average number of shares purchased by insiders on the open market over the last six months.

Want some more information on the terms we use above and why they’re valuable? No problem:

Relative Strength Index,  or RSI, measures the speed and change of price movements. It is often used as a momentum indicator, with a reading that ranges from 0 to 100.

In general: RSI(14) above 70 signal the stocks are overbought (i.e. prices might soon decline), and RSI(14) below 30 signal the stocks are oversold (i.e. prices might soon rebound). In this article we look at oversold stocks with RSI(14) below 40.

Insider Buying:  Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else. Their investment activity is closely montored and can tell us a lot about where they feel the business is heading.

Insider buying is represented as a percentage of the share float. Companies experiencing insider buying over the past six months provide an indicator that insiders think the stock is undervalued at current levels. Inversely, insider selling serves as a negative indicator.

Float short:  This is the percentage of share float that is currently being shorted, where share float is the number of shares available for trading.

Insiders seem to be enthusiastic about the prospects of their employers. Do they know something we don't? Full details below.

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1. Complete Genomics, Inc. (GNOM): Biotechnology Industry. Market cap of $363.49M. Current price at $11.25. RSI (14) at 27. Net insider purchases over the last 6 months at 1650000 shares, which is equivalent to 17.57% of the company's 9.39M share float. The stock has performed poorly over the last month, losing 25.89%.

2. Theravance Inc. (THRX): Biotechnology Industry. Market cap of $1.64B. Current price at $19.55. RSI (14) at 32.73. Net insider purchases over the last 6 months at 5189200 shares, which is equivalent to 12.43% of the company's 41.75M share float. The stock is a short squeeze candidate, with a short float at 9.58% (equivalent to 16.01 days of average volume). The stock is currently stuck in a downtrend, trading -16.19% below its SMA20, -15.51% below its SMA50, and -18.06% below its SMA200. It's been a rough couple of days for the stock, losing 10.2% over the last week.

3. Star Scientific, Inc. (CIGX): Cigarettes Industry. Market cap of $476.87M. Current price at $3.55. RSI (14) at 31.26. Net insider purchases over the last 6 months at 4041750 shares, which is equivalent to 3.98% of the company's 101.45M share float. The stock is a short squeeze candidate, with a short float at 15.04% (equivalent to 6.34 days of average volume). The stock has performed poorly over the last month, losing 20.58%.

4. The Hain Celestial Group, Inc. (HAIN): Processed & Packaged Goods Industry. Market cap of $1.37B. Current price at $31.6. RSI (14) at 37.68. Net insider purchases over the last 6 months at 1233531 shares, which is equivalent to 3.77% of the company's 32.70M share float. The stock is a short squeeze candidate, with a short float at 5.75% (equivalent to 6.3 days of average volume). The stock has gained 46.16% over the last year.

5. Accuride Corp. (ACW): Trucks & Other Vehicles Industry. Market cap of $505.57M. Current price at $10.7. RSI (14) at 28.81. Net insider purchases over the last 6 months at 1005420 shares, which is equivalent to 3.47% of the company's 29.01M share float. The stock is currently stuck in a downtrend, trading -13.57% below its SMA20, -15.18% below its SMA50, and -20.74% below its SMA200. It's been a rough couple of days for the stock, losing 5.73% over the last week.

6. Vantage Drilling Company (VTG): Oil & Gas Drilling & Exploration Industry. Market cap of $447.62M. Current price at $1.54. RSI (14) at 31.62. Net insider purchases over the last 6 months at 5350210 shares, which is equivalent to 3.19% of the company's 167.92M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.06). It's been a rough couple of days for the stock, losing 6.1% over the last week.

7. PHI Inc. (PHII): Air Services Industry. Market cap of $306.81M. Current price at $20.04. RSI (14) at 32.78. Net insider purchases over the last 6 months at 200000 shares, which is equivalent to 2.2% of the company's 9.11M share float. It's been a rough couple of days for the stock, losing 8.99% over the last week.

8. Saul Centers Inc. (BFS): REIT Industry. Market cap of $714.33M. Current price at $38.22. RSI (14) at 37.24. Net insider purchases over the last 6 months at 196636 shares, which is equivalent to 1.7% of the company's 11.55M share float. The stock has lost 10.43% over the last year.

9. Texas Industries Inc. (TXI): Cement Industry. Market cap of $1.06B. Current price at $37.84. RSI (14) at 39.03. Net insider purchases over the last 6 months at 344598 shares, which is equivalent to 1.58% of the company's 21.76M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.18). The stock is a short squeeze candidate, with a short float at 24.1% (equivalent to 21.76 days of average volume). The stock has gained 12.12% over the last year.

10. MAKO Surgical Corp. (MAKO): Medical Appliances & Equipment Industry. Market cap of $1.12B. Current price at $27.27. RSI (14) at 36.23. Net insider purchases over the last 6 months at 485142 shares, which is equivalent to 1.55% of the company's 31.22M share float. The stock is a short squeeze candidate, with a short float at 15.39% (equivalent to 6.3 days of average volume). After a solid performance over the last year, MAKO has pulled back during recent sessions. The stock has performed poorly over the last month, losing 14.16%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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