Penny stocks can be some of the most fickle investment types to choose. Driven primarily by speculation and “potential,” these cheap shares are well known for their innate ability to fly high. But what are penny stocks really and are they worth it?What Are Penny Stocks?
Penny stocks are shares of companies trading for less than $5. That’s the definition according to the Securities & Exchange Commission. Some traders have their own definitions of what they deem to be a penny stock. But at the end of the day, we can all agree that they’re cheap stocks to hopefully make money with.
This is where the question comes into play: are penny stocks worth it? Sure, you can buy hundreds or even millions of shares of these cheap stocks for far less than you could buy the same amount of shares in Apple or Tesla. But it comes at its own price. That “price” is in the form of risk. Since these stocks are inexpensive, they don’t need to move much to record a gain.
The stock trading at $1 only needs a 10 cent move to return 10% to the holder. While that’s advantageous when stocks go up, what about when they go down? Just as quickly as the gains can compound, so can the losses. That same $1 stock can drop 10 cents. Now the holder is looking at a decent-sized loss. It’s up to you to decide how much risk is enough or too much at the end of the day.Hot Penny Stocks To Buy [According To Analysts]
When it comes to finding penny stocks to buy, research is key. While you can hope to catch lightning in a bottle with some of the 1-day, high-flying stocks, some traders (especially those with full-time jobs) may not be able to stay at a trading desk all day. In this case, research entails much more than searching for momentum in the market.
It also involves due diligence (DD) and includes news, filings, and even analyst ratings. As far as analysts are concerned, they aren’t the ultimate determining factor by any means (nor should they be, in my opinion). But analyst ratings and reports can help identify strengths, weaknesses, opportunities, and threats to certain companies. With this in mind, here’s what 4 analysts think about these penny stocks
- Opko Health (NASDAQ: OPK)
- Onconova Therapeutics (NASDAQ: ONTX)
- Aqua Metals (NASDAQ: AQMS)
- Aeterna Zentaris (NASDAQ: AEZS)
- Selecta Biosciences (NASDAQ: SELB)
Barrington Research updated its stance on Opko Health earlier this quarter. The firm carries an Outperform rating on the company and previously held a $7 price target. The recent update came in the form of a boost to that $7 target. Barrington increased to $8, a price point OPK stock hasn’t traded at in years. Needless to say, this bullishness comes at a time where insiders have been buying up shares of the biotech company.
Last month, CEO and Chairman Dr. Phillip Frost bought 500,000 shares of OPK stock at an average price of $4.77. A few weeks ago, at the beginning of March, he came back in for another 300,000 shares at an average price of $3.91, bringing his current holdings to more than 192 million.
Among its entire business of subsidiaries, one of the more recent points of interest has actually been with Pfizer. Late last month, Opko and Pfizer Pfizer Inc. said the European Medicines Agency validated for review their marketing authorization application for somatrogon. This is the once-weekly human-growth hormone treatment for pediatric patients with growth hormone deficiency.
Pfizer and OPKO signed a worldwide agreement in 2014 to develop and commercialize somatrogon for growth-hormone deficiency. In January, the FDA accepted the companies’ application for review of the treatment. At the same time, a New Drug Application was submitted to PMDA in Japan for somatrogon.Penny Stocks To Buy [According To Noble Financial]: Onconova Therapeutics (ONTX)
Noble Financial is the most recent analyst firm to weigh in on Onconova. It carries an Outperform rating on the stock. The firm also issued a price target of $0.46. Obviously, since this was issued, ONTX stock has far surpassed that price and has made a splash in 2021.
Onconova’s proprietary multi-kinase inhibitor, ON 123300, has been the primary focus. It received clearance from the FDA to begin Phase 1 studies and was given Institutional Review Board approval at one U.S. clinical site. The Phase 1 study will focus on the impact of this treatment on tumors. There’s already an ongoing solid tumor study happening in China with continual enrollment.
Onconova’s other product candidate, oral rigosertib, is currently in a dose-escalation and expansion Phase 1 investigator-initiated study targeting patients with KRAS+ lung adenocarcinoma in combination with nivolumab. If nivolumab seems unfamiliar, it’s sold under the brand name Opdivo, a Bristol-Myers Squibb (NYSE: BMY) treatment.
Commenting on studies with oral rigosertib in its most recent financial results, Steven M. Fruchtman, M.D., President and Chief Executive Officer of Onconova, said, “We are currently supporting investigator-initiated studies that are exploring the use of oral rigosertib for cancers driven by mutation of the RAS gene including a Phase 1 study in combination with a PD-1 inhibitor for patients with progressive K-RAS mutated non-small cell lung cancer…Results are expected in 2021.”Penny Stocks To Buy [According To H.C. Wainwright]: Aqua Metals (AQMS)
H.C. Wainwright has become a popular analyst among the grouping of penny stocks. The firm covers many different companies, and right now, it appears bullish on AQMS. The firm started covering Aqua Metals this month. H.C. gave a Buy rating on the stock as well as an $8 price target. This came shortly after the company reported its 2020 annual results. Earnings per share came in at a $0.42 loss. This was much better than its prior year’s loss per share of $0.86. However, sales were down significantly at $108 thousand compared to over $4.8 million.
The company was not in commercial production during 2020 and, as a result, generated minimal revenue. However, progress has been made as Aqua Metals ramps up for a hopeful production boost thanks to added excitement from the renewable energy space. One of the latest steps it took was submitting a provisional patent to protect the process enabling ultra-pure AquaRefined material. This will be utilized directly in the production of oxide for new batteries. Aqua Metals also secured investment in LINICO Corporation, a cleantech lithium-ion battery recycling company.
“Through the V1.25L program, we have dramatically improved AquaRefining with a 100% increase in production over previously achieved volumes, in addition to other enhancements including the Pure Metrics™ integrated, real-time software portal.”Steve Cotton, President and Chief Executive Officer
Due to growing interest in green energy and cleantech, AQMS could be one of the penny stocks to watch right now.Aeterna Zentaris (AEZS)
As it relates to H.C. Wainwright, it was the last firm to weigh in on Aeterna. However, the rating it gave was back in 2019. So for all intents and purposes, that likely won’t hold much weight to the current state of Aeterna. The main reason why has everything to do with COVID-19, and I’ll explain why.
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At the time H.C. had given its Buy, there weren’t any headlines discussing coronavirus. Aeterna was working on growth hormone-related treatments. Fast-forward to this week, and the main point of focus for Aeterna is on preventing coronavirus diseases, including COVID-19.
The company announced that it entered into an exclusive worldwide sub-licensable patent and know-how license agreement for a potential COVID-19 vaccine currently in preclinical development that was invented at the Julius-Maximilians-University Wuerzburg. Aeterna also entered into a research agreement with the University to conduct supplementary research activities and preclinical development studies on the potential vaccine. Based on this, will H.C. Wainwright take another look at AEZS stock in 2021?Penny Stocks to Buy [According To Cannacord Genuity]: Selecta Biosciences (SELB)
Selecta has the highest price target from any of the analysts mentioned in this article. That’s thanks to Cannacord Genuity. Earlier this year, the firm reiterated its Buy rating on the company. It also carries a $13 price target. Mizuho and, more recently, William Blair analysts also fell in line, boosting ratings to Buy and Outperform, respectively.
Selecta recently gave a business update and reported its 2020 financial results. Some things of note were the company’s current studies that are underway. One of them, its gene therapy program, methylmalonic acidemia, in collaboration with AskBio. This is expected to enter the clinic next quarter. Selecta also has its first-in-human dose-escalation study, with initial data expected in the fourth quarter of 2021. It’s being conducted to evaluate its ImmTOR™ treatment to mitigate the immunogenicity of AAV capsid.
“A key objective of 2021 will be to generate human data in our gene therapy programs and to continue to build our extensive pipeline in gene therapies, enzyme therapies—with an expected IND filing by the end of the year in IgA nephropathy—and autoimmune diseases, as we work to deliver on our mission to leverage our pioneering ImmTOR platform to improve the lives of patients and their families.”Carsten Brunn, Ph.D., president and chief executive officer of Selecta