This week’s screen looks for stocks that have fallen significantly this year but have strong earnings growth potential, large insider buying, and significant share ownership by insiders.
Corporate insiders (executives and board members) often know more about their respective companies than outsiders. The stocks in this screen have been beaten up significantly, yet their executives are buying. What might they know?
- Insider Net Change in Holdings – Last 12 Weeks >20%
- Shares Held by Insiders >15%
- Price Change YTD < -50%
- Forward EPS Estimate >20% Growth
The companies in this scan are all in the biotechnology field. Likely, the future price movement of the shares will be predicated on the FDA approval process for new drugs, diagnostics, and therapies. Given the recent tightening of financial conditions, liquidity risk is elevated for these companies. The stocks in this list have low dollar prices and are down a lot more than 50% in the last year or two. These companies offer investors significant risks, but as we led, their executives see something that other investors might be missing.
Company Summaries (Corporate Summaries Courtesy of Zacks)
Applied Therapeutics (APLT)
Applied Therapeutics Inc. is a clinical-stage biopharmaceutical company. It engages in developing drug candidates for unmet medical need. The company s product candidate consists of AT-001, for the treatment of Diabetic Cardiomyopathy; AT-007, for the treatment of Galactosemia and AT-003, for the treatment of diabetic retinopathy which are in clinical stage. Applied Therapeutics Inc. is based in New York, United States.
Biodesix Inc. is a data-driven diagnostic solutions company. It offers blood-based tests across the lung cancer continuum of care. The company also offers include diagnostic research, clinical research, development, and testing services to biopharmaceutical companies, as well as develops and commercializes companion diagnostics. Biodesix Inc. is based in Boulder, Colorado.
Better Therapeutics (BTTX)
Better Therapeutics Inc. is a prescription digital therapeutics company delivering cognitive behavioral therapy to address the root causes of cardiometabolic diseases. Better Therapeutics Inc., formerly known as Mountain Crest Acquisition Corp II, is based in SAN FRANCISCO.NTIC has fallen roughly 45% from its 2021 highs despite strong historical earnings growth and future expectations. Over the past five years, its sales growth has been the lowest on the list, which likely contributes to lower (but still respectable) EPS growth expectations.
Ensysce Biosciences (ENSC)
Ensysce Biosciences is a clinical-stage biotech company using its proprietary technology platforms to develop safer prescription drugs. The company is involved in developing tamper-proof opioids which prevent both drug abuse and overdoses. Ensysce Biosciences, formerly known as Leisure Acquisition Corp., is based in SAN DIEGO.
Palisade Bio (PALI)
Palisade Bio Inc. is a late-stage biopharma company advancing therapies which help patients with acute and chronic gastrointestinal complications stemming from post-operative digestive enzyme damage. Palisade Bio Inc., formerly known as Seneca Biopharma Inc., is based in CARLSBAD, Calif.
Michael Lebowitz, CFA is an Investment Analyst and Portfolio Manager for RIA Advisors. specializing in macroeconomic research, valuations, asset allocation, and risk management. RIA Contributing Editor and Research Director. CFA is an Investment Analyst and Portfolio Manager; Co-founder of 720 Global Research.