In this article, we will take a look at the 10 best fast growing penny stocks to buy now. To see more such companies, go directly to 5 Best Fast Growing Penny Stocks to Buy Now.
The second half of 2023 started with a strong optimism on the back of hopes that the long-anticipated recession which everyone was talking about might never realize, thanks to cooling inflation, strong labor market conditions and economic growth. Market bulls had long been talking about a soft landing, or mild recession at best. For example, in its 2023 outlook report entitled “Turning the Corner,” Edward Jones had said that the second half of 2023 would bring positive news for the economy. The report had said that recession in 2023 would not be as strong as ones seen in 2008, 1981 or 1974 since unemployment rate is very low and the labor market is extremely strong.
The report also said that it expects economic expansion to “take shape in the second half of 2023” due to a decline in inflation and the “end of the Fed’s tightening campaign.” This should, according to the report, usher in positive phases for consumer spending and corporate earnings. Time proved that this is exactly what happened (minus the end of Fed’s hawkish policy prediction). Inflation is falling, earnings are strong and new positive phases have started to show their effects. Importantly, the Edward Jones report said that the market had already priced in a recession in 2022. The report said that there were very thin chances that the market would see the October 2022 lows again. It also said that financial markets are very forward looking in nature and when recessions come, they bring along buying opportunities. For example, the report added that between 1970 and 2020, every recession saw a new bull market starting on average “five months before the recession ended, with an average return of 49% in the first 12 months.” Based on this data point, the report said that 2023 should be seen as a chance for “opportunistic investing”
The Edward Jones report also had some important predictions about inflation trends in the US. The report said that inflation will start to decline “meaningfully” in 2023. The report said that while the battle against inflation would be tough in the start, results would begin to come in the second half of the year and inflation would fall below 4% in the second half of the year and approach 3% by year-end. It seems the report’s projections were conservative at best, since inflation rate in the US already reached 3% in June, still above the Fed’s target of 2% but the lowest since 2021. Here’s an interesting part of the report:
“Historically, once inflation peaks, it tends to decelerate at a steady pace. That was the case even in the 1970s and ’80s, with the rise and fall of the inflation rate proving to be symmetric. This round of inflation was fueled by a sharp rise in prices for goods, which then broadened to include higher prices for services. Easing supply shortages, lower consumer demand and excess retailer inventories should all contribute to a sharp slowdown in goods inflation. Price increases for services tend to be more persistent and slow-moving, but will also likely shift in the right direction as the year progresses. Housing inflation, the biggest services component, is poised to slow as home prices cool under the weight of higher borrowing costs. And a gradual easing in labor market conditions should keep downward pressure on wage growth, which tends to drive inflation for other services.”
Luis Louro / shutterstock.com
Reluctantly Bearish?
But not all analysts are painting a rosy picture. Some still advise caution. T. Rowe Price in its mid-year outlook report said that time has proven the wisdom of the “reluctantly bearish” approach. Being bearish is necessary since risks are “substantial” while reluctance is needed to make sure one does not lose buying opportunities, the report said. Market bears also say the financial markets are yet to see the true effects of the Fed’s rate hikes.
The report quoted Sébastien Page, Head of Global Multi-Asset and Chief Investment Officer at T. Rowe, who said:
“Every time the Fed has slammed on the brakes in the past, someone’s head has gone through the windshield. And we’ve already found out that some banks weren’t wearing their seat belts this time.”
Only time would prove whether bears or bulls were right. But one thing both groups agree on: now is the time to spot buying opportunities for the long term. This is why in this article we will discuss some low-priced stocks that are showing strong momentum and increasing interest from hedge fund managers.
Our Methodology
For this article, we first used a stock screener to identify companies trading under $5 with at least 30% stock gains year to date through July 30, over 5% sales QoQ sales growth and over 5% sales growth recorded over the past five years. These conditions gave us a long list of companies with positive sales momentum and strong share price gains. Out of these stocks, we picked 10 stocks with the highest number of hedge fund investors. We gauged hedge fund sentiment using Insider Monkey’s database of 943 hedge funds.
Best Fast Growing Penny Stocks to Buy Now
10. LifeMD, Inc. (NASDAQ:LFMD)
Number of Hedge Fund Holders: 6
Shares of telehealth platform company LifeMD, Inc. (NASDAQ:LFMD) have been on an absolute tear in 2023, gaining a whopping 141% in the year through July 30. LifeMD, Inc. (NASDAQ:LFMD)’s turnaround plan is working and LifeMD management is aiming to reach cash flow breakeven by mid-2023.
Insider Monkey’s database of 943 hedge funds shows that 6 hedge funds reported owning stakes in LifeMD, Inc. (NASDAQ:LFMD) as of the end of the first quarter. The most notable hedge fund stakeholder of LifeMD, Inc. (NASDAQ:LFMD) was Chuck Royce’s Royce & Associates with a $1.82 million stake in the company.
9. Heritage Insurance Holdings, Inc. (NYSE:HRTG)
Number of Hedge Fund Holders: 7
Heritage Insurance Holdings, Inc. (NYSE:HRTG) ranks 9th in our list of the best fast growing penny stocks to buy now. Heritage Insurance Holdings, Inc. (NYSE:HRTG) has gained about 157% in value year to date through July 30. In May Heritage Insurance Holdings, Inc. (NYSE:HRTG) posted first quarter results. GAAP EPS in the period totaled $0.55 surpassing estimates by $0.45. Revenue in the quarter jumped 11.5% year over year to $176.9 million, beating estimates by $11.09 million.
A total of 7 hedge funds tracked by Insider Monkey had stakes in Heritage Insurance Holdings, Inc. (NYSE:HRTG). The biggest stakeholder of Heritage Insurance Holdings, Inc. (NYSE:HRTG) was John Overdeck and David Siegel’s Two Sigma Advisors with a $607,992 stake in the company.
8. Xeris Biopharma Holdings, Inc. (NASDAQ:XERS)
Number of Hedge Fund Holders: 8
Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) is a fast growing penny stock and the company is eyeing to hit profitability soon. Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) shares have gained 125% year to date through July 30. A total of 8 hedge funds tracked by Insider Monkey had stakes in Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) as of the end of the first quarter.
In May Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) posted Q1 results. Revenue for the quarter came in at $33.2 million, beating estimates by $2.43 million.
For 2023 Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) expects its revenue in the range of $135 million – $165 million vs. consensus of $146.9 million.
7. SCYNEXIS, Inc. (NASDAQ:SCYX)
Number of Hedge Fund Holders: 8
SCYNEXIS, Inc. (NASDAQ:SCYX) Inc. is a biotech company that makes treatment for fungal infections. SCYNEXIS, Inc. (NASDAQ:SCYX) shares have gained about 103% year to date through July 30. In May SCYNEXIS, Inc. (NASDAQ:SCYX) posted Q4 results.
GAAP EPS in the period came in at -$0.30 beating estimates by $0.10. Revenue in the period jumped 133.3% year over year to $1.41 million, surpassing estimates by $0.13 million.
A total of 8 hedge funds tracked by Insider Monkey had stakes in SCYNEXIS, Inc. (NASDAQ:SCYX) as of the end of the first quarter. The biggest stakeholder of SCYNEXIS, Inc. (NASDAQ:SCYX) was Kingdon Capital of Mark Kingdon which owns a stake worth about $4.5 million.
6. LexinFintech Holdings Ltd. (NASDAQ:LX)
Number of Hedge Fund Holders: 9
Chinese consumer finance company LexinFintech Holdings Ltd – ADR (NASDAQ:LX) shares have gained about 44% year to date through July 30. In May LexinFintech Holdings Ltd (NASDAQ:LX) posted its first quarter results according to which its total operating revenue in the period came in at RMB2,983 million, representing an increase of 74.2% from the first quarter of 2022.
A total of 9 hedge funds tracked by Insider Monkey were long LexinFintech Holdings Ltd (NASDAQ:LX) as of the end of the first quarter. The biggest stakeholder of LexinFintech Holdings Ltd (NASDAQ:LX) during this period was D E Shaw which had a stake worth about $3 million.
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Disclosure: None. 10 Best Fast Growing Penny Stocks to Buy Now is originally published on Insider Monkey.
