We recently published a list of 10 Small–Cap Stocks Insiders Are Buying Recently. In this article, we are going to take a look at where Community West Bancshares (NASDAQ:CWBC) stands against other small–cap stocks insiders are buying recently.
Why should we be interested in stocks with smaller market capitalizations? Small-cap stocks usually operate in other industries than large-cap companies, meaning they will help investors diversify their portfolios. Also, the share price of small-cap stocks is often lower, which makes them more affordable. Some small-cap investors focus on finding young companies with strong growth potential, which can lead to high returns once they transition to large-cap stocks. While small-cap stocks often carry higher risks and are more prone to market volatility, they also offer investors more room for growth.
How to pick good small-cap stocks to invest in currently? While there’s no single simple or complicated rule that investors can follow to achieve secure results, there are some strategies that can help. One strategy is to keep track of insider trading activity. Insiders or, in other words, people at high positions within companies, such as CEOs, CFOs, directors and other executives have unparalleled insights into the company’s strategic moves, plans, and initiatives. A CEO’s investment in a company’s stock can sometimes signal strong confidence in the company’s future.
Insider trading activity should be assessed within the broader context of the company’s fundamentals, industry trends and overall market conditions, because behind insider moves can be various other motives. Heavy insider trading activity doesn’t necessarily mean the company is poised for growth. That’s why due diligence is of utmost importance before making any investment. Investors should also take into account and meticulously analyze underlying reasons for insider transactions. However, insider trading activity in combination with other relevant factors can offer valuable insights into a company’s capabilities, helping investors make more informed investment decisions.
To come up with the 10 small-cap stocks insiders are buying recently, we only considered stocks with a market capitalization of between $250 million to $2 billion. We first used Insider Monkey’s insider trading screener and searched for stocks with at least two insiders buying shares in the last three months.
With each stock we note the number of recent insider purchases and the company’s current market capitalization. But why is it important to follow insider activity? Our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds, focusing on insider trading and stock picks from hedge fund investor newsletters and conferences. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A person depositing money into an ATM, reflecting the various banking services offered.
Community West Bancshares (NASDAQ:CWBC)
Number of Insiders Buying: 7
Market Capitalization: $369.815 million
Seven insiders, including the President, acquired a total of $19,780 worth of Community West Bancshares (NASDAQ:CWBC) shares at an average price of $19.67. The stock is currently trading at $19.44 per share, as it went up 0.36% since the beginning of the year. Over the last five years, shares of this financial institution which offers a range of banking services such as commercial and residential estate loans and consumer loans, lost merely 0.31%.
The average analyst rating for Community West Bancshares (NASDAQ:CWBC) stock from 2 stock analysts is “Buy”. This means that analysts believe this stock is likely to outperform the market over the next twelve months. Their average projected price target is $23 for an upside of 18.31%.
For the three months ended December 31, 2024, Community West Bank reported unaudited consolidated net income of $6.9 million and diluted earnings per share of $0.36, which compares to $5.89 million and $0.50 per diluted common share for the same period year ago. The company also declared a $0.12 per common share cash dividend.
Even though the stock’s price hasn’t changed much from when insiders acquired shares in November, their moves reveal the management’s conviction that the stock will perform well.
Overall, CWBC ranks 6th on our list of small–cap stocks insiders are buying recently. While we acknowledge the potential of CWBC, 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 CWBC 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.
