Penny stocks are irresistible for many investors. That's because, for a relatively minimal investment, you have the potential to get an outsized return. Unfortunately, penny stocks also have a high failure rate. And even those that succeed often require time to allow the company's business to achieve profitability.
This presents investors with a simple but challenging proposition. How do you find the best penny stocks among the hundreds of penny stocks that you can invest in? This special presentation looks at seven penny stocks that are worth your consideration.
Each of these stocks does business in a sector of the market that has plenty of upside. Many of these sectors are at the beginning of a super cycle – such as electric vehicles and pet care - that may last a decade or longer.
That's the kind of opportunity that investors should be looking for with penny stocks. And here are 7 penny stocks that may let investors hit the jackpot in the years to come.
Quick Links
- The Oncology Institute
- Clover Health Investments
- Senseonics
- Sandstorm Gold (SAND)
- American Lithium (AMLI)
- Microvast
- WAG! Group
#1 - The Oncology Institute (NASDAQ:TOI)
As its name implies, The Oncology Institute, Inc. (NASDAQ: TOI) is involved with many facets of cancer treatment. The company focuses on “value-based oncology care” and has three business units: dispensary, patient services, clinical trials and others. It goes without saying that the company has a large addressable market, as almost anybody reading this knows of one or more people that have been touched by cancer.
The company was founded in 2007 but has only been trading publicly since 2020. It was one of many companies that went public via a special purpose acquisition company (SPAC). These stocks lost favor with investors in late 2021, and that sent TOI stock tumbling. However, it wasn’t until March 2023 before it became a true penny stock.
TOI is partnering with the artificial intelligence firm, Massive Bio to help the company evaluate patient eligibility for its active clinical trial portfolio in addition to other services. Because the stock is a penny stock, it’s not widely covered by analysts. MarketBeat analyst ratings for the stock show two analysts that give the stock a price target of $6.50, which is a gain of over 950%.
However, a better barometer may be that 70% of institutional investors own 70% of the company’s stock. That's uncommon for a penny stock, and that should add stability and the opportunity for growth.
About Oncology Institute
The Oncology Institute, Inc, an oncology company, provides various medical oncology services in the United States. The company operates through three segments: Dispensary, Patient Services, and Clinical Trials & Other. It offers physician services, in-house infusion and dispensary, clinical trial, radiation, outpatient blood product transfusion, and patient support services, as well as educational seminars, support groups, and counseling services.
Read More - Current Price
- $0.13
- Consensus Rating
- Buy
- Ratings Breakdown
- 1 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $2.50 (1,791.1% Upside)
#2 - Clover Health Investments (NASDAQ:CLOV)
Clover Health Investments (NASDAQ: CLOV) is one of many companies trying to crack the code of making Medicare and Medicaid profitable. Clover focuses on Medicare Advantage, which is different from traditional Medicare in that it allows subscribers to get health and prescription drug coverage through plans offered by private insurers.
Not surprisingly, AI is at the center of the bullish proposition for CLOV stock. Through its Clover Assistant, the company is using AI as a tool for “empowering physicians with data-driven, personalized insights at the point of care.”
A recent study conducted by USC Schaeffer highlights the fact that demand for Medicare Advantage plans is increasing. This growth is in line with the Aging of America. And for its part, Clover says it pays physicians a premium over the traditional Medicare rate for office visits when the provider uses the Clover Assistant.
If these trends continue, it could propel Clover Health to profitability, something that has remained elusive. And also a fact that is weighing on the company’s stock.
About Clover Health Investments
Clover Health Investments, Corp. provides medicare advantage plans in the United States. It operates through two segments: Insurance and Non-Insurance. It also offers Clover Assistant, a cloud-based software platform, that enables physicians to detect, identify, and manage chronic diseases earlier; and access to data-driven and personalized insights for the patients they treat.
Read More - Current Price
- $3.35
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $4.00 (19.4% Upside)
#3 - Senseonics (NYSE:SENS)
Senseonics Holdings, Inc. (NYSEAMERICAN: SENS) makes this list because of the way the company is disrupting the diabetes industry with its Eversense implantable continuous glucose management device (CMD) that can be connected to a user’s smartphone via a mobile app.
One of the obstacles to the mass adoption of the Eversense system is, of course, cost. The system was not covered by many insurers. On that front, however, Senseonics got a lift when UnitedHealth Group Incorporated (NYSE: UNH) recently announced that it will provide coverage for the Eversense system. Starting July 1, 2023, the company will cover patients with type-1 and insulin-requiring type 2 diabetes. According to Senseonics president and chief executive officer (CEO), Tim Goodnow, this will allow nearly all insured adults in the United States to have access to the system.
SENS stock was part of the meme stock movement and has taken investors on a wild ride in the last two years. The stock has closed with a price of $4.63 in February 2021. But the stock is trading at just 75 cents per share as of this writing.
About Senseonics
Senseonics Holdings, Inc, a medical technology company, focuses on development and manufacturing of continuous glucose monitoring (CGM) systems for people with diabetes in the United States and internationally. The company's products include Eversense, Eversense XL, and Eversense E3 that are implantable CGM systems to measure glucose levels in people with diabetes through an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management.
Read More - Current Price
- $0.32
- Consensus Rating
- Buy
- Ratings Breakdown
- 1 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $2.00 (519.8% Upside)
#4 - Sandstorm Gold (SAND) (NYSE:SAND)
Trading at $5.18 as of this writing, Sandstorm Gold Ltd. (NYSE: SAND) may not be considered a true penny stock. But it’s been in-and-out of penny stock range for much of the last 12 months as SAND stock has underperformed other mining stocks.
Still, gold mining stocks seem like a good investment based on supply and demand. Gold outperformed equity indexes in 2022 and many industry insiders believe that gold will finish 2023 above the $2,000 mark and likely higher.
As a diversified metals royalty company, Sandstrom receives a percentage of the gold production or revenue from a mining company. This gives Sandstorm a revenue stream that is fairly predictable, but it has caused the company to take on significant debt in the past year.
In the company’s first quarter 2023 earnings report in May, Sandstorm reported earnings per share of 6 cents which was higher than analysts’ expectations of 4.3 cents per share. That puts the company on track to come in above 2022 earnings.
The Sandstorm Gold analyst ratings on MarketBeat give SAND stock a buy rating with an $8.94 price target which would be a gain of over 72% from the stock’s current level.
About Sandstorm Gold
Sandstorm Gold Ltd. operates as a gold royalty company. The company focuses on acquiring royalties and gold and other metals purchase agreements from companies that have advanced stage operating mines. It offers upfront payments for companies to acquire a stream and receives the right to purchase a percentage of a mine's production for the life of the mine.
Read More - Current Price
- $5.68
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $8.35 (47.0% Upside)
#5 - American Lithium (AMLI) (NASDAQ:AMLI)
American Lithium Corp. (NASDAQ: AMLI) is evidence of the risk of investing in stocks that rely on the price of underlying commodities. In this case, AMLI stock soared in early 2023 based on the expected demand for lithium, particularly as it relates to the electric vehicle (EV) industry.
The EV revolution may not be happening as quickly as many investors would have hoped. But all you have to see is the massive amount of investment that automakers are making to electrify their fleets to know that this is the beginning of a lithium supercycle. The United States still expects to need one million tons of lithium carbonate production by 2030.
The company recently received a $13 million grant to increase its manufacturing capability in the United States. And the company also recently received its first permit to drill at its project in Peru. And the company is expecting to receive two additional permits to drill in the region.
That being said, American Lithium is not only unprofitable, but it is also a pre-revenue company. That means AMLI stock is only for the most risk-tolerant investors.
About American Lithium
American Lithium Corp., an exploration and development stage company, engages in the acquisition, exploration, and development of resource properties in the United States. It principally focuses on the TLC Lithium Project located in the town of Tonopah, Nevada; and the Falchani Lithium project and the Macusani Uranium project located in Puno, Peru.
Read More - Current Price
- $0.70
- Consensus Rating
- Strong Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $3.25 (363.0% Upside)
#6 - Microvast (NASDAQ:MVST)
Speaking of electric vehicles, another way to invest in this technology via a penny stock is though Microvast Holdings, Inc. (NASDAQ: MVST). The company designs high-speed charging solutions for commercial vehicles. This is a niche market, but one that could give the company a competitive advantage.
Like many EV-adjacent stocks, MVST stock soared in early 2021 as enthusiasm about the growth of the EV sector caused a bubble to form. The stock has drifted back near the $1 mark, and investors have to decide what kind of opportunity exists.
In the short term, they will have to weigh the recent denial of a loan from the U.S. Department of Energy (DOE). There are concerns that the company has links to the Chinese government. The company, which is headquartered in Texas denies the charges, but it will continue to weigh on the 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)
#7 - WAG! Group (NASDAQ:PET)
The pet industry is one of the fastest growing segment in the market. Pet ownership grew significantly in 2020 and 2021, and now those owners are adjusting to a new normal that, in some cases, includes working in an office.
That increases the demand for pet caregivers and that’s why Wag! Group, Inc. (NASDAQ: PET) makes this list. The company provides an online platform that matches pet caregivers with pet owners. WAG! Group is going beyond dog walking to include a range of services, some of which are unique to the company.
WAG! Group is increasing revenue and is getting closer to be profitable. And this may be an ideal time for investors to jump into PET stock. Institutional investors have been piling into the stock. According to MarketBeat, institutional ownership for the stock is now at 88% which should give the stock a solid floor.
About Wag! Group
Wag! Group Co develops and supports a proprietary marketplace technology platform available as a website and mobile app that enables independent pet caregivers to connect with pet parents. Its platform allows pet parents, who require specific pet care services, such as dog walking, pet sitting and boarding, advice from licensed pet experts, home visits, training, and pet insurance comparison tools.
Read More - Current Price
- $0.21
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $4.40 (1,994.2% Upside)
With the proper risk tolerance and an ability to manage your position, it's possible to find success with penny stocks. That's because, as with other stocks, fundamentals matter. The right penny stocks can help long-term investors build wealth gradually, then suddenly.
The same attributes that investors look for in blue-chip stocks are the same with penny stocks. But there's a difference in mindset. With blue-chip stocks the reward is consistency in any market. In the case of penny stocks, however, there can be an incredible amount of stock price volatility.
Perhaps more than with other stock classes, investors need to perform their due diligence before investing in penny stocks. MarketBeat provides many resources including a list of the Most Active Penny Stocks that can give investors ideas for their portfolio or watchlist.
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