With stocks on the verge of a potential purge, we came into this week with a specific type of insider buy in mind. Our hope was to find a very low-priced stock that’s considerably off its 52-week high. A company that preferably trades for less than $1.00, and where the insider has a trading history.
Our strategy is to find a company that we can treat like an option contract that doesn’t expire and has a lot of upside to its 52-week high. That way a few hundred bucks might turn into something worthwhile, even if it takes a few years to get there. Meanwhile, downside is limited to a few hundred bucks per 1000 shares, and that’s if the company goes belly-up.
Creative Medical Technology Holdings, Inc. (CELZ) fits our speculative objective. As we type, CELZ trades for $0.5476. So, the most you can lose is $0.55 per share. Meanwhile, Creative Medical’s 52-week high is $9.50. (1)
Creative Medical Technology Holdings is a biotechnology company, focuses on immunology, urology, orthopedics, and neurology using adult stem cell treatments. The company offers CaverStem to treat erectile dysfunction; FemCelz for the treatment of loss of genital sensitivity and dryness; StemSpine to treat chronic lower back pain; ImmCelz for the treatment of stroke patients; and OvaStem for treatment of female infertility.
CELZ Chief Executive Officer (CEO) Timothy Washington recently bought 42,000 of the biotech company at $0.59 per share for a total investment of $24,817. (2) It’s a small investment by most measuring sticks, but size doesn’t matter here.
CEO Washington has been accumulating CELZ stock since late May and his most recent trade was the largest. He previously acquired Creative Medical Technology stock with multiple trades in 2016 at $0.10 per share. In 2017, the CEO started selling shares at $0.45. Overall, Washington sold nearly $1.4 million of CELZ stock while buying a little under $225,000.
We’d be more than pleased if Washington had the same success again.
The lone analyst covering Creative Medical Technology Holdings believes the company will experience significant growth in 2023. Sales are forecasted to reach $820,000, not a lot for sure, but it’s nearly twice 2022’s projection of $430,000. They aren’t supposed to earn a profit for the foreseeable future.
As it stands now, the company trades at a robust 35.15 times sales. (3) To trade at $1, CELZ would need to trade at 17.16 times next 2023’s sales projection, essentially cutting its price to sales (P/S) ratio in half. If the P/S remained the same and the baby biotech hits the analyst’s forecast for next year, then CELZ would hit $2.05.
OVERALL: Creative Medical Technology Holdings, Inc. (CELZ) is a volatile speculative play. With a beta of 4.69 (the S&P’s beta is 1), investors can expect CELZ’s price to swing wildly. As a result, the biotech company is only appropriate for investors with the highest risk tolerance who can afford to lose most of their investment in a short order and have a time horizon of at least two years.
1 – https://finance.yahoo.com/quote/CELZ?p=CELZ
2 – https://www.secform4.com/insider-trading/1187953.htm
3 – https://finance.yahoo.com/quote/CELZ/key-statistics?p=CELZ