Are Analysts Right About These Penny Stocks?
When you think of penny stocks, what comes to mind first? Is it companies with well-established track records and 10% annual dividends? Most traders and investors alike usually think about these as early-stage companies involving higher risk in the market. Whether you’re looking for penny stocks on Robinhood, the best penny stocks to invest in, or just some of the best microcap stocks to watch, there’s a big factor to consider. That factor is risk. Simply put, penny stocks are shares of companies trading under $5. All other things aside, the price can pose a huge risk when you’re talking about public companies.
Let’s say you’re deciding between two companies right now. The first is a stock trading around $100 per share with an active market. The second is one of the stocks under 10 cents but also has an active market. Obviously, a move of just a few pennies won’t mean much to the $100 stock but it would mean a move of at least 20% in the case of stocks under 10 cents.
I don’t want to just state the obvious but it’s something that should be mentioned especially considering that there are millions of new traders this year. The COVID pandemic has opened the doors for people to learn how to make money in the stock market. It’s even created one of the largest surges in new brokerage accounts being opened in recent history. Those who are new to trading, keep this in mind.
Not all penny stocks will produce massive gains. Some may even quickly break out and then break down in a matter of minutes. So it’s important to have a strategy. Also, as you’ll see in this list of penny stocks, companies are constantly raising money. This can pose an additional dilution risk later on.
Are Penny Stocks Worth It?
This leads to my next point. How much are you willing to risk? Whether we’re talking about hot penny stocks or just a few stocks under $5 with nice trends, there’s still risk involved. I’m not just talking about price or dilution anymore. You’ve also got to factor in things like headline risk and general market risk. As we saw earlier in the year, certain sectors fell apart because of the impact that coronavirus left.
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However, on the other side of this were stay-at-home stocks, which far outperformed during the past few months. When you ask yourself, “are penny stocks worth it,” keep all of the risks in mind. I don’t discuss this to scare anyone but you can’t expect to treat penny stocks like a lottery ticket or a slot machine. There are ways to become consistently profitable and none involve “YOLO-ing” your whole account.
Herein lies another topic of discussion: analysts. What are we to think of these market commentators? Should you take what they say as the ultimate factor in deciding whether or not to buy penny stocks in a certain sector or industry? In my opinion, no but it’s not a bad thing to take account of. At the end of the day, not all penny stocks with buy ratings are good to actually buy “right now”. Furthermore, not all penny stocks with sell ratings are to be avoided right now. At the end of the day, the choice to buy or sell is up to the trader, alone. With this in mind, are any of these on your list of penny stocks to buy right now?
Penny Stocks To Buy [according to BTIG Research]: Organogenesis Holdings Inc. (NASDAQ:ORGO)
Organogenesis Holdings Inc. (ORGO Stock Report) recently had its rating reiterate by BTIG Research. The firm has a Buy rating on the penny stock as well as a $10 price target. Considering ORGO stock closed last week at $4.22, that would put the firm’s target around 137% higher than the current trading price. Credit Suisse also weighed in on Organogenesis in November giving it an Outperform rating and boosting its price target from $7 to $8.
So why the optimism from analysts right now? The wound care company has realized considerable growth this year. In its most recent quarterly results, Organogenesis beat on EPS and sales figures by wide margins. In fact, while Wall Street expected an EPS loss per share of 8 cents, the company came in with an EPS gain of 11 cents. Sales also outperformed estimates by 40% for the quarter.
“We delivered third quarter revenue growth of 57% year-over-year, which was well ahead of expectations and exceeded the high-end of our preliminary revenue range announced on October 14 th,” said Gary S. Gillheeney, Sr., President and Chief Executive Officer of Organogenesis. What’s more is that the company just announced a $56.9 million offering whereby it’ll use proceeds for facility expansion and manufacturing enhancements, salesforce expansion and to conduct clinical studies of, obtain regulatory approvals and additional commercial insurance coverage for its products. All-in-all, traders digest that latest update favorably with Friday’s trading session being the most active one of 2020 so far.
Penny Stocks To Buy [according to Maxim Group]: Boxlight Corporation (NASDAQ:BOXL)
Boxlight Corporation (BOXL Stock Report) is another one of the penny stocks that analysts appear to have bullish ratings on right now. It’s also one of the pandemic penny stocks to watch right now. The company focuses on eLearning technology. Year-to-date, BOXL stock is up nearly 50% with the last 4 sessions seeing a stronger, upward move in the market. Maxim Group most recently weighed in on the penny stock. It currently has a Buy rating but boosted its price target from $4 to $6 at the beginning of October. Considering the BOXL stock closed the week last week at $1.68, that price target is 257% higher than the current retail level. Alliance Global Partners also boosted its price target earlier this quarter from $2.75 to $4.
What’s caused analysts to become so optimistic about BOXL stock? Call it a speculative bet or changing with the times. Right now, the future of certain things like general day-to-day life is unclear. Most recently, we saw new coronavirus-related restrictions enforced by a number of cities and states. On Friday, the governors of New Mexico, Oregon, Vermont, Virginia and West Virginia announced additional coronavirus restrictions.
Bars and restaurants with a liquor license will have to close by 10 p.m. and indoor gatherings at private homes will be limited to no more than 10 people in New York. Under new statewide rules announced Nov. 11 by Gov. Andrew Cuomo, gyms will also have to close by 10 p.m. These are just a few of the changes being implemented across the country. Meanwhile, many schools are back in session with in-person classes. But with these sweeping changes and record COVID-19 case levels, what will that mean later this winter?
This week Boxlight delivers its Q3 earnings. Monday afternoon following the closing bell, the company will also host a conference call for investors. Keep in mind that earnings can become a time of increased volatility. Depending on the ultimate results, the market can dramatically shift in one direction or another despite what analysts might say.
Penny Stocks To Buy [according to SVB Leerink]: Abeona Therapeutics Inc. (NASDAQ:ABEO)
Abeona Therapeutics Inc. (ABEO Stock Report) is another penny stock analysts appear bullish on. The latest round of coverage came last week. SVB Leerink weighed in early with its Outperform rating and an adjustment in price target to $5 on ABEO stock. Though this was a lower target than its previous $8, it’s still 290% higher than Friday’s closing price of $1.28. Other analysts include Cantor Fitzgerald which holds an Overweight rating and $4 price target, as well as B.Riley which has a Buy rating and $3 target.
What’s happening with Abeona right now? The company is working on a number of drugs utilizing its AAV-based gene therapies. These drugs are used for treating rare diseases like Sanfilippo Syndrome and others. Recently, the company announced its third-quarter financial results for the third quarter. These included year-over-year EPS growth from a 35 cent loss per share to a Q3 2020 loss per share of just 8 cents.
Michael Amoroso, COO of Abeona stated that “Abeona remains committed to pursuing the development of our portfolio of advanced and early-stage programs toward providing our novel gene and cell therapies to patients who currently have no approved treatment options.”
Currently the company is currently enrolling patients in trials for its ABO-101 and ABO-102 treatments. These are for Sanfilippo syndrome type A and type B. Anticipated completion of enrollment in these current studies is through the first quarter of 2021.