2 Small-Cap Stocks Drawing Interest From Insiders

The market ended the week on a high note as stocks had a broad-based rally Friday. The Nasdaq led the way with a rise of better than 2% while the S&P 500 rose more than 1.5% and the Dow Industrials gained 1.1%. Even with the big rally Friday, stocks ended the week in the red. The S&P 500 and Dow Industrials each were down just over 1% on the week as they suffered their worst three-day losses in nearly seven months to start the week. The Nasdaq lost 2.3% for the week and logged its fourth consecutive week of declines. This is the longest such weekly stretch since August 2019. However, given the litany of poor economic reports last week, the pullback was more than manageable. The April Consumer Price Index (CPI) and Producer Price Index (PPI) showed a huge uptick in inflation and April retail sales came in flat and under expectations after a big surge in March on the back of the latest stimulus checks. Consumer sentiment numbers were also much weaker than expected, mostly as a result of rising inflation expectations among the population. I continue to be cautious on the market and I'm watching the yield on the 10-year Treasury closely. I also continue to hold a shopping list of various names I will add to or establish a new position in via covered calls on the next dip in the overall market. Plenty of my new ideas first appear on my radar due to insider purchases. Insider buying has been sparse for most of the year so far, but there are couple new names I am researching as they seem intriguing and have seen some significant insider activity of late. Let's start with Gogo Inc. , which provides Internet capability on myriad airline flights. Obviously, this name should see some tailwinds as air travel demand continues to return globally with the pandemic ebbing. Last week, Robert Crandall, the ex-CEO of American Airlines and a director at Gogo, purchased nearly $600,000 of new GOGO shares. It was the first insider activity in the stock so far in 2021. Gogo has done a good job taking costs out its business during the pandemic. By restructuring its balance sheet, it removed $70 million in annual interest costs and saw EBITDA jump 25% to nearly $35 million in the first quarter versus the same period a year. Management guided that it expects to be cash flow positive in 2021 and to produce $100 million in annual cash flow by 2023. Gogo's stock has had a massive run since its pandemic low and trades at $12 a share. I am happy to nibble closer to $10 on the next pullback in the overall market. I am also teeing up Exterran Corp. for further research as a possible shopping list name. Exterran is a small equipment and services supplier to the energy industry, which has been helped recently by rising oil prices. Exterran raised forward guidance when it reported quarterly earnings results earlier this month. Exterran is also in the midst of a strategic transformation to a less-cyclical business model. Exterran has a large order backlog and it appears to have quite a bit of leverage on its balance sheet. Insiders seem to be buying into the story. The CFO and a director bought more than $200,000 in new shares in aggregate recently and a beneficial owner added nearly $4 million in new purchases starting 10 days ago. And those are two new names on my radar in which insiders seem be signaling a nice vote of confidence.

2 Small-Cap Stocks Drawing Interest From Insiders

Gogo Inc. and Exterran Corp. have seen a bit of buying from people in the know.

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