Consider researching promising penny stocks to buy for potential high returns in the stock market.Typically, the most risky stocks on the market are those that trade for less than $5. Nonetheless, among the multitudes of poor penny stocks, there are a few undiscovered treasures.
These are the top penny stocks for 2024 with tremendous upside potential and bullish ratings from Wall Street analysts if you’re ready to take on the risk and weather the turbulence. We looked for stocks with market capitalizations over $250 million, excellent profit potential, and an analyst consensus of “buy” that had share prices under $5.
VAALCO Energy (EGY)
| VAALCO Energy (EGY) | Market cap- $459.54M | YTD performance- −2.24% | P/E – 6.07 |
What you should know
Independent oil and gas exploration and production firm VAALCO Energy, situated in Texas, focuses on holdings in Western Canada and West and North Africa.
The tight global energy markets were further unsettled by Russia’s invasion of Ukraine in 2022. The energy sector has seen unprecedented profits as a result of constraints in the world’s energy supply and inflation in commodities prices.
Despite decreased commodity prices, VAALCO claimed a 20% year-over-year rise in output in August of 2023.
Additionally, EGY has a current yield of about 5.46%. Since penny companies rarely pay dividends, VAALCO’s management is anticipating strong growth in 2024 based on the company’s decision to increase dividends.
Pros and cons
Pros
· Notable income growth from year to year.
· A about 5.46% dividend yield.
· A favourable climate for the energy market.
Cons
· Subject to drops in the price of natural gas and oil.
· Risks related to regulations related to international climate change initiatives.
· Investor opinion regarding legacy energy stocks is negative.
Ardelyx (ARDX)
| Ardelyx (ARDX) | Market cap- $2.10B | YTD performance- −47.23% | P/E – -41.09 |
What you should know
A biopharmaceutical company is called Ardelyx. In order to treat constipation associated with irritable bowel syndrome, the business introduced Ibsrela (tenapanor) to the American market in March 2022. According to third-quarter revenue reports, net sales of Isbrela exceeded $22 million, representing a 22% increase from the previous quarter.
The Food and Drug Administration approved Ardelyx’s resubmission of their application in May 2023 for Xphozah (tenapanor), a medication used to regulate serum phosphorus levels in dialysis patients with chronic renal disease. The FDA approved Xphozah, a medication for renal illness, in October 2023.
Additionally, in July, China’s Centre for Drug Evaluation accepted the company’s drug application for tenapanor; an approval for the treatment medication is anticipated in 2024.
Pros and cons
Pros
· In September 2023, Kyowa Kirin, an Ardelyx partner, was granted regulatory permission in Japan for the use of tenapanor in dialysis patients suffering from chronic renal disease.
· Over the previous year, the stock had increased by triple digits.
· Positive results or more medical applications for tenapanor may serve as bullish catalysts.
Cons
· As of June 2023, the return on asset is negative.
· In 2022, the company’s net loss was $67.2 million.
· Inadequate clinical trial data on drug candidates in the pipeline are linked to headline hazards.
Savara (SVRA)
| Savara (SVRA) | Market cap- $672 M | YTD performance- −6.65% | P/E – -13.08 |
What you should know
A biopharmaceutical startup called Savara is in the clinical stage of creating medications for uncommon respiratory conditions. Molgramostim, an immunostimulator, is the company’s principal product candidate. It is now undergoing phase 3 clinical studies to treat autoimmune pulmonary alveolar proteinosis (aPAP).
The FDA and the European Medicines Agency have designated molgramostim as an orphan medication for the treatment of aPAP. Additionally, the FDA has designated it as a “breakthrough therapy and fast track designation.”
Although Savara stated in May that it has enough cash on hand to sustain operations through 2025, the firm anticipates receiving top-line data from its pivotal phase 3 trial of molgramostim by mid-2024.
Pros and cons
Pros
· Fast-track designations and breakthrough therapy imply that the FDA expedites the approval procedure for molgramostim.
· Sufficient funds to support ongoing operations until 2025.
· In the last year, the share price has increased.
Cons
• Significant risk if the results of the molgramostim trial are unsatisfactory.
• Molgramostim’s commercialization and profitability could be more than a year away.
• Because aPAP is a very uncommon condition, the market for molgramostim is small.
Iovance Biotherapeutics (IOVA)
| Iovance Biotherapeutics (IOVA) | Market cap- $2.34 B | YTD performance- −14.66% | P/E – 6.73 |
What you should know
A biopharmaceutical business called Iovance Biotherapeutics is developing therapies for solid tumour cancer. Lifileucel, a product of Iovance, is intended to treat advanced melanoma and cervical cancer. But Iovance has a long list of goods in the works. This is only one of them. Additionally, the organisation is creating a number of therapies and treatments for different illnesses.
Iovance has made very little money thus far and is not profitable. However, the majority of analysts advise purchasing the stock at this time. Analysts predict that in the upcoming year, the share price will quadruple or even higher. Even if the company is now losing money and the stock may be expensive, its earnings are trending upward.
Pros and cons
Pros
• Lifileucel is the only treatment of its sort for advanced melanoma, assuming it is authorised.
• Creating a plethora of additional treatments, such as those for head and neck squamous cell carcinoma, cervical cancer, and nonsmall cell lung cancer.
• The momentum of earnings is increasing.
Cons
• Iovance declared in September 2023 that more time is required by the FDA to finish reviewing lifileucel.
• The earnings still have a large red area.
• In the second quarter of 2023, cash on hand decreased by $253 million.
iQIYI Inc. (IQ)
| iQIYI Inc. (IQ) | Market cap- $3.43 B | YTD performance- −24.58% | P/E – 9.21 |
What you should know
Baidu is the owner of the Chinese subscription streaming service iQIYI. The programme lets users stream media from a number of Asian nations. Without a membership, viewers can stream video in up to 720P quality. Subscriptions, however, come with further advantages including ad bypasses and better streaming quality.
Over the same period in 2023, the company’s revenue increased by 17%. Compared to 2% during the same time in 2022, it reported operational income of $84.2 million and an operating income margin of 8%. Additionally, the business has seen increases in free cash flow for four straight quarters.
Pros and cons
Pros
• iQIYI’s operating income has increased by over four times in the past year.
• The business is making investments in cutting-edge technology like artificial intelligence that is generative.
• Increased average daily subscriptions from 98.3 million in 2022 to 111 million in the second quarter.
Cons
• Recent quarters have seen a decline in cash on hand.
• A narrow profit margin.
• A double-digit decline in share price during the previous five years.
Also read this: Best Start-up Business Loans 2024
Why some stocks were excluded
Because penny stocks are riskier than other investment options, we excluded companies with market values smaller than $250 million. Additionally, we excluded stocks with a share price greater than $5.
Nevertheless, investors shouldn’t base their decisions only on stock price. The managing partner and creator of Cornerstone Financial Services, Daniel Milan, contends that rather than stock prices, investors have to concentrate on company fundamentals and value.
The stocks on this list not only have cheap share prices but also successful and/or expanding underlying businesses with valuations that suggest a large potential upside in share price from current levels.
Are penny stocks a good investment?
The majority of penny stocks aren’t thought to be wise long-term investments. Even though penny stocks occasionally contain hidden treasures, most stocks that trade for less than $5, especially those that trade for less than $1, are inexpensive for a reason. Furthermore, there is sometimes little trading liquidity for penny stocks. Because of their tremendous volatility, investors can easily lose a sizable sum of money quickly.
The majority of profitable penny stock traders are more concerned with timing short- or medium-term entry and exit points in order to make money than they are with viewing the stocks as long-term investments.
Over 10,000 over-the-counter (OTC) securities—the majority of which are penny stocks—were the subject of a lengthy investigation that revealed an average yearly return of -27% for these equities.
Things to Consider Before Investing in Best Penny Stocks
• Consider the following crucial elements before to purchasing the best US penny stocks:
• Determine your level of risk tolerance and prepare for potential losses because penny stocks frequently fluctuate in value.
• Carry out in-depth analysis of the market, the company’s financial status, and the sector’s forecast.
• Verify if you can buy and sell shares efficiently by examining the amount of activity in the stock.
• Keep an eye out for potential scams and pump-and-dump operations in the penny stock market.
• Diversify your investments among a number of asset classes to prevent putting all of your money into penny stocks.
• Clearly outline your exit plan and choose the right time to sell to protect profits or cut losses.
• It is advisable to consult a licenced financial advisor in order to make informed investing decisions.
How to buy penny stocks
The majority of internet brokers permit trading penny stocks that are listed on major exchanges; however, some ban or limit trading of stocks over-the-counter or impose exorbitant fees.
Instead of placing all your eggs in one penny stock basket, think about adopting a diversified penny stock strategy after you’ve found a broker that offers fair commissions and permits trading in tiny stocks. A well-diversified portfolio reduces the probability of a single poor stock selection resulting in a significant loss.
Before purchasing, it’s usually a good idea to look at the trading volume and liquidity of any penny stock to make sure you can quickly sell it when you want to.
And lastly, remember the SEC’s caution and never invest more in penny stocks than you would be ready to lose in the worst-case situation, even if you think you’ve found the best of the best among penny stocks.
FAQ’s
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Are penny stocks profitable?
Like any company, penny stocks have the potential to give investors a profit if the companies behind them have a strong business plan, make wise management choices, and have a competitive advantage. As with other stocks, there is never a guarantee of success when investing in penny stocks. As a result, it’s advisable to include additional equities in your portfolio, such as exchange-traded funds and blue-chip stocks.
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How do I find the best penny stock?
Strong underlying company fundamentals, alluring values, and long-term growth potential are characteristics of the top penny stocks.
Compared to stocks that trade on a major exchange, penny stocks that are traded over-the-counter or on the electronic OTC Bulletin Board system are frequently lower-quality investments that are subject to less regulatory scrutiny. -
Can I make a profit with penny stocks?
Absolutely, if they time their entry and exit points precisely and take advantage of the extraordinary volatility of short-term price increases in tiny stocks, traders in these stocks can make enormous profits. Even for seasoned day traders with years of expertise, it can be quite challenging to recognise these erratic price movements and to time them accurately.
Conclusion
Finally, due to their inherent volatility and speculative nature, investing in the best penny stocks necessitates a cautious and informed approach. While penny stocks can have excellent growth prospects, they also carry higher risks, including potential financial loss. The likelihood of making informed investing decisions can be increased by seeking the assistance of financial specialists who can offer insightful information. A careful and balanced strategy is necessary to profit from the distinctive prospects provided by penny stocks while minimizing their inherent uncertainties.
