Insiders are buying PHX Minerals Inc. (NYSE: PHX), Herbalife Ltd. (NYSE: HLF) and Quantum-Si Incorporated (NASDAQ: QSI) because they are cheap and should provide value over time. Cheap is relative; in this case, we have stocks trading from $1.80 to $10 and near long-term lows. This allows investors to buy them when they are cheap relative to historical norms and load up on enough shares to leverage options. In all cases, insiders are buying, institutional support is present, analysts see an upside, and there are catalysts in the outlook — meaning there are more reasons than their cheapness to buy them.
PHX Minerals is a High-Yielding Small-Cap Energy Play
A solid small-cap dividend payer, PHX Minerals is an oil and gas company based in Texas that has operated for about 100 years. Like its larger competitors, the company cut distributions during the pandemic but has since resumed its distribution hiking cycle. The payout is worth about 3.5%, with shares trading near long-term lows, and it is cheap at 8.75% of earnings. The payout is reliable at current levels and only 30% of the 2024 earnings forecast. Earnings are expected to grow significantly in 2025, so another substantial distribution increase is expected.
PHX has three insiders purchasing shares, including the CFO, a director and a major shareholder, bringing the total holdings to about 4.7%. The Q1 purchases are notable because they are the first insider purchases in nearly two years, except for a single sale by a major shareholder last quarter. That shareholder is Edenbrook Capital, LLC, which is still the primary shareholder. Institutions also buy on balance and own about 38% of the company.
Analysts rate this stock at Buy and view it as undervalued. The lowest target tracked by Insidertrades.com is more than 25% above the current price action, and the consensus implies another 2500 basis points of upside. PHX is a low-volume stock, so investors should expect amplified volatility.
Renewed Life at Herbalife?
Herbalife is still in the weeds, but the company has had sufficient time for its business to normalize and the market to follow suit. Today, the company is producing profits, and growth and margin expansion are expected to persist into 2025. The latest guidance was solid but insufficient to support the market.
However, the post-release action shows the market trading at a possible bottom, and the analysts see a floor to the price action. The lowest target is just below the current action, and there is potential for a 25% upside at the consensus.
Four insiders bought this stock in Q1, the first insider activity since Q3 2023. Insiders include two directors, the CEO, and an EVP; total insider holdings are about 1%. As interesting as the insider activity is, the institutional holding is more telling. Institutions have been selling, but activity slacked off noticeably at the start of the year, and holdings remain large, accounting for about 75% of the stock. Recent purchases include Goldman Sachs Group, which increased its position by more than 150% to 1.3% of the company.
Quantum-Si Enters Revenue Phase
Quantum-Si Incorporated is a penny-stock life sciences company developing a single-molecule detection platform to advance next-generation protein sequencing. The company's product is a small-scale protein sequencer that can be used on a desktop at a fraction of the cost of larger models. It has been launched on a limited basis and is expected to see wider availability this year. The whisper is that revenue should skyrocket.
Insidertrades.com tracked no insider activity for nearly a year until Q1 2024 when buying spiked. Insiders now own about 30% of the company and may buy more, given the stock's low price and the outlook for sales. Institutions also buy this stock and hold about 40% of the shares. Analysts view it as a Buy and undervalued, trading 12% below the low end of their range and 50% below the consensus. The next earnings report is in early May, and it should be a good one, with growth accelerating compared to the previous quarter.
