Stocks that are trading under five dollars a share are often referred to as penny stocks. This is generally considered to be a speculative category of stocks highlighted by large percentage moves that reflect their volatility. Investing in these stocks carries a significant level of risk that makes many investors uncomfortable.
However, for many investors, these stocks provide the opportunity for strong growth. There have been many examples of penny stocks that have grown 10x or more. Two names that almost every investor knows are Amazon.com Inc. (NASDAQ: AMZN), which traded for under $2 a share in 1997, and Monster Beverage Corp. (NASDAQ: MNST), which was trading at 10 cents a share in 2003.
One way to analyze potential penny stock winners is to look at emerging industries. However, many investors couldn't imagine an online bookseller becoming the world's leading e-commerce company.
Are there any Amazon's or Monster Beverage's in the current crop of penny stocks? In this special presentation, we're looking at seven stocks in various sectors that may be ready to make strong, positive moves.
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- Agenus
- Desktop Metal
- 23andMe
- Clean Energy Fuels
- Applied Digital
- Redwire
- Microvast
#1 - Agenus (NASDAQ:AGEN)
Our first stock is in the biotechnology sector. Agenus Inc. (NASDAQ: AGEN) is a clinical-stage biotechnology company. The company's mission is to "harness the power of the immune system to bring curative therapies to cancer patients." This focus on immuno-oncology ties directly to the enhanced focus on cancer research.
Agenus has a robust pipeline, but nothing is commercially available at this time. However, the company is forecasting a Biologics License Application (BLA) for its lead candidate for Metastatic MSS Colorectal Cancer in mid-2024. This is an important step, but it's only the beginning of the process.
That means investors should be playing the long game with AGEN stock. But if they have the risk tolerance, analysts are lining up behind the stock. The Agenus analyst ratings on MarketBeat give the stock a consensus Buy rating with a price target of $7.10, which would make the stock more than a 10-bagger from its March 26, 2024, price of 55 cents.
About Agenus
Agenus Inc, a clinical-stage biotechnology company, discovers and develops immuno-oncology products in the United States and internationally. The company offers Retrocyte Display, an antibody expression platform for the identification of fully human and humanized monoclonal antibodies; and display technologies.
Read More - Current Price
- $2.67
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $10.00 (274.5% Upside)
#2 - Desktop Metal (NYSE:DM)
Desktop Metal Inc. (NYSE: DM) is a 3D printing company that is the leader in additive manufacturing (AM) for mass production in the 3D printing market. Mass production is the fastest-growing segment in the AM space.
The company is growing fast. However, in 2022 and 2023, that growth came at a cost with higher interest rates. However, if the company's fourth quarter earnings report is any indication, the company may be turning a corner. While year-over-year revenue was down, it was up 22% from the prior quarter. Desktop Metal also reported YOY improvements in key metrics such as net loss, adjusted EBITDA, gross margins, and operating cash flow.
The company believes this shows its cost control efforts are taking root. And with a Federal Reserve pivot expected at some point this year, DM stock could be ready to deliver outsized gains to investors buying with the stock trading at 81 cents a share.
About Desktop Metal
Desktop Metal, Inc manufactures and sells additive manufacturing technologies for engineers, designers, and manufacturers in the Americas, Europe, the Middle East, Africa, and the Asia- Pacific. The company offers Shop System, an entry-level metal 3D printing using binder jetting; X-series platform that provides binder jet 3D printing of specialty materials, including metals and ceramics, and tools; and P-Series offers high-speed metal 3D printing.
Read More - Current Price
- $4.34
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $5.50 (26.7% Upside)
#3 - 23andMe (NASDAQ:ME)
23andMe Holding Co. (NASDAQ: ME) is a consumer genetic testing company perhaps best known for tracing one's ancestry. However, the saliva test that consumers take also helps them understand if they are genetically predisposed to certain diseases.
The company leans into a few significant trends. First, as we understand more about the human genome, gene editing is becoming a reality. Second, many pharmaceutical companies are investing in genetic research as doctors realize the link between genetic testing and personalized medicine.
As the company's partnership with GSK PLC (NYSE: GSK) showed, the data 23andMe can also provide value to drug companies. That partnership ended in July 2023, but the stage is set for future partnerships.
That represents the risk and potential reward for investors in ME stock. The company is already feeling the effects of the end of its partnership with GSK. If another partner steps in, the downward trend should end. And for a company with a $280 million market cap, it does have a respectable 36% institutional ownership with buyers slightly outpacing sellers over the last 12 months.
About 23andMe
23andMe Holding Co operates as a consumer genetics testing company. The company operates in two segments, Consumer & Research Services and Therapeutics. The Consumer & Research Services segment provides a suite of genetic reports, including information on customers' genetic ancestral origins, personal genetic health risks, and chances of passing on certain rare carrier conditions to their children, as well as reports on how genetics can impact responses to medications.
Read More - Current Price
- $3.15
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $9.40 (198.4% Upside)
#4 - Clean Energy Fuels (NASDAQ:CLNE)
Clean Energy Fuels Corp. (NASDAQ: CLNE) makes renewable natural gas from organic waste. This fuel can be used in heavy-duty trucks, buses and other large vehicles. The company claims the carbon emissions from its renewable fuel are an average of 300% lower than diesel. Clean Energy Fuels also sells compressed natural gas (CNG), renewable natural gas (RNG) and liquefied natural gas (LNG) through virtual natural gas pipelines and interconnects.
The company's revenue is growing, but that growth has been a little uneven. The larger issue is on the bottom line. Although the company has been in business for over 20 years, it's still not profitable. And analysts aren't forecasting that to change in the next two years.
That's of some concern as oil prices are expected to rise, and some renewable energy initiatives may go on the back burner. Nevertheless, analysts are bullish on CLNE stock and give it a consensus price target of $6.80, which is more than 189% above its price as of March 26, 2024.
About Clean Energy Fuels
Clean Energy Fuels Corp. provides natural gas as alternative fuels for vehicle fleets and related fueling solutions in the United States and Canada. It supplies renewable natural gas (RNG), compressed natural gas (CNG), and liquefied natural gas (LNG) for medium and heavy-duty vehicles; and offers operation and maintenance services for public and private vehicle fleet customer stations.
Read More - Current Price
- $2.62
- Consensus Rating
- Buy
- Ratings Breakdown
- 4 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $5.38 (105.2% Upside)
#5 - Applied Digital (OTCMKTS:APLD)
Applied Digital Corp. (OTCMKTS: APLD) is a picks-and-shovel play on the digital economy. To begin with, the company designs, develops and operates data centers to accommodate the needs of high-performance computers. The company also provides cryptocurrency data centers for miners such as Marathon Digital Holdings Inc. (NASDAQ: MARA), which recently contracted to buy one of Applied Digital's data centers.
The company also has an artificial intelligence (AI) tie. Applied Digital rents GPU servers that are needed for AI and machine learning (ML) applications. The company will be among the first cloud providers to use the new Blackwell platform-based GPUs from Nvidia Corporation (NASDAQ: NVDA).
Revenue is growing fast, and the company expects to be profitable sometime in 2024. The Applied Digital analyst ratings on MarketBeat show a bullish price target of $14.70, resulting in a 233% gain from the stock's price of $4.41 on March 26, 2024.
About Applied Digital
Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services.
Read More - Current Price
- $8.76
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - Redwire (NYSE:RDW)
If you're intrigued by the prospects of the space economy, Redwire Corp. (NYSE: RDW) may be worth the speculative risk. The company provides critical infrastructure and space solutions for the global space industry. This includes government and defense contractors as well as civilian space agencies.
Redwire also does business with commercial companies such as Eli Lilly & Co. (NYSE: LLY). In March 2024, the company announced it was partnering with Lilly on a second spaceflight mission that will allow the biopharma giant to conduct an experiment in an effort to speed up the discovery of novel medicines against chronic diseases.
Redwire has an expansive portfolio, but it isn't directly involved with launching rockets, which could be a benefit as that can be a tricky and capital-intensive business.
The company is growing revenue at an impressive pace, but it's still not profitable. However, a solid backlog of projects combined with increased free cash flow (FCF) should mean it's just a matter of time before the company begins to report positive earnings.
About Redwire
Redwire Corporation provides critical space solutions and space infrastructure for government and commercial customers in the United States, Europe, and internationally. The company provides avionics and sensors including star trackers, sun sensors, critical for navigation, and control of spacecraft; camera systems; solar array solutions for spacecraft spanning the spectrum of size, power needs, and orbital location; and strain composite booms, coilable booms, truss structures, telescope baffles, and deployable booms to position sensors or solar arrays away from the spacecraft.
Read More - Current Price
- $11.02
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $8.55 (22.4% Downside)
#7 - Microvast (NASDAQ:MVST)
Electric vehicle stocks are taking it on the chin for many reasons. But the story has been different for a lithium-ion battery maker such as Microvast Holdings Inc. (NASDAQ: MVST). One obstacle to EV adoption is the lack of infrastructure, such as an ample supply of lithium-ion batteries. That's one reason why a major initiative of the Biden administration is to increase domestic manufacturing of EV batteries.
Microvast leads the way in that department with over 600 patents and applications. The vertically integrated company takes care of everything from the raw materials to the battery assembly.
This is another company showing bullish YOY revenue growth and has a $678.70 million backlog of projects on the books. The company has noticed project delays as customers navigate a high interest rate environment. But with an expected rate cut in June and perhaps more to follow, now is a good time to consider getting in on MVST stock.
About Microvast
Microvast Holdings, Inc provides battery technologies for electric vehicles and energy storage solutions. The company offers a range of cell chemistries, such as lithium titanate oxide, lithium iron phosphate, and nickel manganese cobalt version 1 and 2. It also designs, develops, and manufactures battery components, such as cathode, anode, electrolyte, and separator.
Read More - Current Price
- $0.58
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $4.50 (675.9% Upside)
Investing in stocks under $5 contains significant risk. Many of these stocks are unprofitable. Some have a significant bankruptcy risk. For example, in 2023, a record 18 biotechnology companies filed for bankruptcy protection. That beat the old record of eight, which occurred in 2022.
Because of their low price, penny stocks also tend to be more volatile than higher-priced stocks. But if you're looking for the opportunity for outsized gains, these are stocks that you need to consider.
MarketBeat has many resources to help you find penny stock ideas. You can, for instance, use the free Stock Screener tool and sort more precisely for different sectors of interest. You can also look under the Market Data tab for Stocks Under $5. You can also find an entire section devoted to penny stocks, including Most Active Penny Stocks, Most Popular Penny Stocks, and Top Penny Stocks today.
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