If you know what penny stocks are, you understand how risk plays a role. But you can’t expect uncapped gain potential from safe investments. The beauty of buying penny stocks, is having the ability to leverage less capital in exchange for a much larger gain percentage. Defined as stocks trading under $5 per share, price plays a big role.
For instance, shares of a company like Tesla (NASDAQ: TSLA) need to move up over $60 to record a 10% gain. When it comes to penny stocks, even at the higher end of the price range ($5), shares only need to move up $0.50 to see the same 10% gain or more. The lower the price, the less a stock needs to move for large gains.
Keep in mind that just as easily as they can rise, penny stocks can fall. A 50 cent dip in Tesla stock doesn’t amount to much. But a 50 cent drop in any of the penny stocks under $1, and you’re talking about significant losses.
So, should you treat this like a lotto ticket? Invest in penny stocks like you’re playing roulette? Or is there actually a way to make money with these cheap stocks in the long term? According to some of Wall Street’s top analysts, penny stocks are more than just low-priced shares. In fact, some firms go as far as giving price targets for some of these companies.Penny Stocks To Buy Now According To Analysts
Analysts aren’t infallible, and there are plenty of outside factors that can come into play after ratings and targets are given. A company can have a bullish rating but then announce a huge, discounted financing round, and the stock falls apart.
There could also be market conditions outside of a company’s control. We saw something like that happen in March. Many growth stocks, most notably tech stocks, were sold as a potential hedge against inflation. Even the strongest companies fell victim to this sell-off.
Needless to say, analyst ratings can be used as part of your entire research process. Understanding Wall Street sentiment can help narrow down your list of penny stocks. Here’s a quick list of companies analysts have gotten bullish on recently.
- Marker Therapeutics Inc. (NASDAQ: MRKR)
- ContraFect Corporation (NASDAQ: CFRX)
- Kindred Biosciences Inc. (NASDAQ: KIN)
Shares of MRKR stock have actually been sliding after its latest analyst recommendation. This was likely related to the scenario I mentioned above. In this case, small-cap stocks were hit over the last few days and experienced some selling pressure that took individual stocks with it.
Last week, Piper Sandler initiated coverage on Marker with an Overweight rating, equivalent to the standard “Buy” that other firms give. Piper also announced a price target of $6, which, based on the closing price on March 31st, is 167% higher right now.
Cantor Fitzgerald analysts have also latched onto Market. Earlier in March, the firm initiated Marker at Overweight and announced a $6 target as well. Why are analysts so bullish on this company? Marker is a biotech company developing T-cell-based immunotherapies.
The most recent development that has been a point of focus is the start of dosing in its Phase 2 Trial of MT-401. This is the company’s treatment candidate for acute myeloid leukemia. In particular, the company dosed its first patient, which has a planned enrollment of 160 patients.Penny Stocks To Buy [According To WBB Securities]: ContraFect Corporation (NASDAQ: CFRX)
Clearly, by looking at the stock’s chart, ContraFect has been under pressure for weeks. The source of this breakdown was the company’s public offering that was announced at a discount at $5. Other than that, there weren’t any major fundamental changes to point to. I mention this because one day before the financing news, Chardan analysts adjusted their price target from $15 to $17.50 and maintained its Buy rating. This is an example of what was mentioned above in that everything can be “kosher,” but news of a discounted share offering might’ve not been factored in by analysts.
This week, however, ContraFect has two new catalysts that have helped give the market a boost. Strong growth in its earnings report with EPS dramatically increasing year-over-year, as well as a new analyst initiating coverage, has helped CFRX stock get a boost.
“With the BARDA contract and subsequent $57.5 million raised, ContraFect is well positioned to execute the DISRUPT study towards the anticipated interim futility analysis in the second half of 2021. In addition, we continue to advance, with alacrity, our promising preclinical assets, including CF-370 for the treatment of Pseudomonas aeruginosa infections, and our amurin peptides targeting other Gram-negative pathogens.”Roger J. Pomerantz, M.D., President, Chief Executive Officer, and Chairman of ContraFect
The Phase 3 DISRUPT study enrollment is ongoing in patients with Staph aureus bloodstream infections. Results from interim futility analysis are anticipated in H2 2021. In light of this and other developments, it looks like WBB Securities jumped on this week. The firm initiated coverage with a Speculative Buy rating and a $6.50 price target.Penny Stocks To Buy [According To Alliance Global Partners]: Kindred Biosciences Inc. (NASDAQ: KIN)
Kindred Biosciences also felt some pressure recently. The market sell-off took shares of KIN down to lows of $4.24 last week. Since then, however, the biotech stock has been making its way back up, with March 31st being the biggest day since those lows. There weren’t any headlines or filings to speak of on Wednesday. However, shares of KIN stock jumped nearly 10% during the session.
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Kindred focuses on pet therapeutics. Its tirnovetmab has been the main point of focus in treating canine atopic dermatitis. The National Cancer Institute has also granted the company a manufacturing contract that could position the company well in the year ahead. In its recent earnings update, KindredBio’s Chief Executive Officer, Richard Chin, M.D., said, “We look forward to a number of important developments across our late-stage pipeline in 2021, including potential approval of our monoclonal antibody for canine parvovirus, updates on the tirnovetmab pivotal efficacy study, and pilot study results for our IL-4R program for canine atopic dermatitis.”
With plenty of interesting milestones that still need to be reported on, KIN could be an interesting biotech penny stock to watch. What’s more, analysts at Alliance Global Partners have already given their opinion. Right now, the firm has a price target of $9.50 on the stock along with a Buy rating.