We recently published a list of 12 Penny Stocks with Insider Buying in 2025. In this article, we are going to take a look at where Custom Truck One Source, Inc. (NYSE:CTOS) stands against other penny stocks with insider buying in 2025.
Insider trading can be a reliable signal for gauging the degree of confidence that management has in the future of their company. This practice has been supported for decades by leading investors and analysts, who claim that there is only one reason for insiders to buy shares of their own companies – if they strongly believe the share prices are going to rise significantly. We discussed the theory behind insider buying in one of our recent articles named 10 Large-Cap Stocks with Insider Buying in 2025.
Insider buying can be an even more significant signal in the case of penny stocks, which are usually small- or micro-cap companies, because these stocks are often underfollowed or not followed at all, leading to significant price inefficiencies and overreactions from investors. This, in turn, may create pockets of opportunity that insiders exploit by leveraging their confidential information and visibility. Furthermore, given the smaller market cap, insiders can exert significant upward pressure on the stock price, which may help boost morale among shareholders.
READ ALSO: 10 Technology Stocks with Insider Buying in 2024
Empirical studies suggest that small caps tend to underperform relative to large caps during tough economic conditions, such as slowing GDP growth, inflation, high interest rates, and other exogenous pressures. Many believe that the US has already entered a new regime, called “Trump 2.0,” which will be dominated by higher inflation, lower economic support from government spending, and reduced availability of cheap labor, among several other possible challenges. Some surveys have hinted at a deteriorating business outlook among small- and mid-sized businesses, marked by lower CapEx budgets. Yardeni Research charts show that small-cap forward earnings have lagged significantly behind large caps since 2023. On top of that, the new economic regime in the US could further exacerbate these discrepancies and lead to greater relative underperformance of small caps, including penny stocks.
While the aforementioned developments could be bad for existing penny stock investors, they could also create investment opportunities for new investors. As the US broad market is still trading near its all-time highs, it has become increasingly difficult to find undervalued or even fairly valued large- and mid-cap companies. In such an environment, investors seeking higher returns may turn to smaller, lesser-known stocks with strong growth potential. The key takeaway for investors is that penny stocks could offer much more attractive, high-upside opportunities than large caps, and watching insider buying signals provides further reassurance regarding stock picking.
Our Methodology
We used Insider Monkey’s insider trading stock screener to find penny stocks trading under $5.00 share price with at least two insiders buying shares worth at least $100,000 in the last six months. We believe that multiple insiders buying significant amounts of stock represents a higher chance that insiders have high confidence in the company. For all the companies, we also include the number of hedge funds holding stakes in them, tracked by Insider Monkey as of Q4 2024. The stocks are ranked according to hedge fund positions.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An aerial view of a construction site, the lift Boom of the specialization equipment rental services truck in the center.
Custom Truck One Source, Inc. (NYSE:CTOS)
Number of Hedge Fund Holders: 7
Custom Truck One Source, Inc. (NYSE:CTOS) is a comprehensive provider of specialty equipment and services, catering to industries such as electric utility transmission and distribution, telecommunications, rail, forestry, and waste management. The company operates through three primary segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS). The ERS segment offers rental services for new and used specialty equipment, including truck-mounted aerial lifts, cranes, service trucks, dump trucks, trailers, and digger derricks. The TES segment provides new equipment sales tailored to specific customer requirements across various end-markets. The APS segment delivers maintenance and repair services, alongside the rental and sale of specialized tools and aftermarket parts. With over 40 locations and a workforce exceeding 2,600 employees, CTOS positions itself as a “one-stop-shop” for specialty equipment needs, supporting the full lifecycle from acquisition to disposal. It is among the best penny stocks with insider buying.
Custom Truck One Source, Inc. (NYSE:CTOS) owns a substantial rental fleet valued at $1.6 billion and a complementary sales business for new and used trucks. The company primarily serves four key markets: utility (60% of revenue), infrastructure (25%), rail and telecom (each approximately 5%), with a focus on serving major contractors like Quanta, MasTec, MYR Group, and Century. The company has demonstrated strong pricing power, having implemented price increases of 10% in 2022 and 6% in 2023, though maintaining stable pricing in 2024 due to market conditions. Recent performance shows positive momentum with OEC on rent increasing by $200 million in the quarter, with 70-80% of this growth coming from core business demand rather than storm-related work.
Looking forward, management anticipates double-digit EBITDA growth, driven by improved utilization rates returning to the mid-to-high 70s range, continued growth in both rental and sales segments, and potential benefits from lower floor plan interest expenses as inventory levels decrease. Custom Truck One Source, Inc. (NYSE:CTOS) maintains a strategic focus on debt reduction with a target leverage ratio of 3.0x, while currently operating at 4.4x leverage. The optimistic guidance is further reinforced by significant insider purchases in the last six months.
Overall, CTOS ranks 7th on our list of penny stocks with insider buying in 2025. While we acknowledge the potential of CTOS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CTOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
