In this article, we discuss the 10 best NASDAQ penny stocks to invest in. We also discuss the current market conditions and their potential effects on penny stocks.
Penny stocks are companies that are trading under $5 per share. They represent a unique and controversial segment of the financial market. Penny stocks are known for their low market capitalization, limited liquidity, and high volatility. While penny stocks can offer significant returns for investors, they are full of risks that often make them unsuitable for the average investor. Moreover, penny stocks are more prone to scams such as pump-and-dump schemes, chop stocks, and reverse mergers. We discussed these scams in detail in our article on the best books on penny stocks.
Despite the risks, penny stocks also come with huge advantages. One of the biggest advantages of penny stocks is their potential for massive gains even with a small increase in price. For example, a $1 stock rising to $2, provides a 100% return on investments, which makes them perfect for investors with high risk tolerance.
Assessing the Favorability of Current Market Conditions for Small-Caps
On July 15, Tom Lee, Fundstrat Global Advisors co-founder and head of research discussed the recent rotation of funds from large-cap stocks into small-cap stocks and expressed optimism about their potential rise, in a CNBC interview. The Russel 2000 small cap index is up 11.55% higher between July 9 and 16. He believes the current rally, which began last week, could be more substantial than the October to December 2023 rally that saw a 27% gain in the small-cap index over eight weeks. Lee attributed this rally to larger institutional short positions and even more oversold conditions, in addition to lower valuations, with median P/E ratios now at 10 times 2025 earnings. He predicts a 40% rise over ten weeks, further fueled by the June CPI data indicating softer inflation, which could lead the Fed to cut rates by September.
Regarding the S&P 500, Lee expects July to be positive and expects the broader market index to possibly reach 5700-5800 (0.6% to 2.3% increase from July 16 levels). However, he expects a more pronounced rotation into small caps in August, potentially leading to flat or slightly declining performance for the broader market. He noted that during the previous small-cap rally, large caps underperformed, and he expects a similar dynamic this time, given the significant current short positions against small caps. If Lee’s prediction holds, penny stocks, which account for a significant number of penny stocks, could prove to be attractive investments.
However, if we look at the broader market apart from the penny stocks, AI has been driving the NASDAQ but market participants have raised concerns about a potential AI bubble. This sentiment is shared by Jefferies analysts, Jim Covello from Goldman Sachs, and David Cahn from Sequoia Capital, among others. These analysts are showing skepticism about AI’s economic impact and suggesting that AI may not deliver substantial returns to justify its high costs. Jefferies highlighted difficulties in AI monetization and noted that global investments in AI servers are expected to range from $400 billion to $500 billion between 2023 and 2025, with high power costs adding to the challenge. The firm emphasized that considerable AI revenue is required for a satisfactory return on investment. While current AI stocks are supported by solid cash flows, unlike during the dot-com bubble, the market may see a correction if monetization goals are not met by 2025 or 2026.
On a positive note, other analysts such as Joseph Briggs of Goldman Sachs are optimistic about AI’s potential. They project that generative AI could automate a substantial portion of tasks, leading to significant productivity and GDP growth over the next decade. Despite high current expenditures, some analysts believe the investment in AI is comparable to past technology cycles. They argue that companies linking AI investments to revenue growth are being rewarded, indicating that the investments may pay off in the long run. While there are short-term challenges like chip shortages, the broader adoption of AI could positively impact various sectors, including utilities, in the future. Finally, the potential for AI to transform industries and drive efficiency remains high, with the possibility of future advancements that could justify current spending.
10 Best NASDAQ Penny Stocks To Invest In
Our Methodology
For this article, we identified around 90 penny stocks listed on NASDAQ with Buy or better analyst ratings and market capitalizations of over $300 million. We narrowed down our list to 10 stocks based on multiple but different metrics such as future growth prospects, valuations, and analysts’ ratings and comments. We listed the stocks in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best NASDAQ Penny Stocks To Invest In
10. Cipher Mining Inc. (NASDAQ:CIFR)
Share Price as of July 12: $4.68
Number of Hedge Fund Holders: 37
Cipher Mining Inc. (NASDAQ:CIFR) specializes in the establishment and management of large-scale bitcoin mining facilities across the United States. The company develops and operates industrial-scale bitcoin mining data centers. It also deploys specialized computer servers for Bitcoin mining and security maintenance of the Bitcoin network. Cipher Mining plays a pivotal role in the cryptocurrency ecosystem.
It is one of the best NASDAQ penny stocks as the company’s energy cost efficiency serves as a competitive advantage in the bitcoin mining sector. The company’s strategic focus on securing fixed-price power agreements at exceptionally low rates, averaging around $0.027 per kilowatt hour, positions it as one of the lowest-cost producers in the industry. This cost-effective setup greatly improves Cipher’s (NASDAQ:CIFR) per-unit profitability, allowing it to maintain profitability even during periods of market volatility.
Cantor Fitzgerald is also bullish on Cipher Mining (NASDAQ:CIFR) due to similar reasons. The firm says that all publicly traded bitcoin miners are currently profitable at these levels but Cipher Mining (NASDAQ:CIFR) stands out due to its superior energy cost efficiency, which is significantly lower than its peers. Wall Street analysts have an average price target of $6 for the company stock, showing an upside of 28.2% from current levels.
Cipher Mining’s (NASDAQ:CIFR) valuation also looks quite attractive at current levels as it is trading at a forward price-to-earnings ratio of 11.8x, a 51% discount compared to its peers. While we acknowledge the fact that it’s a risky investment due to its main product being one of the most volatile asset classes, Cipher Mining (NASDAQ:CIFR) is expected to grow its EPS by 120% this year. Moreover, it could benefit significantly if the Federal Reserve decides to cut rates in the coming months which will lead to an increase in investors’ risk appetite.
Furthermore, cryptocurrency is seeing an increase in global interest, and Bitcoin remains at the front of it all. This growing adoption is driven by factors such as inflationary concerns in traditional currencies, institutional acceptance, and broader awareness among retail investors. It is estimated that around 300 million people own cryptocurrencies and this number is expected to reach 1 billion people by the end of the decade, according to Boston Consulting Group.
As of the first quarter of 2024, 12 hedge funds had stakes in Cipher Mining (NASDAQ:CIFR) worth $19.45 million.
9. Angi Inc. (NASDAQ:ANGI)
Share Price as of July 12: $1.98
Number of Hedge Fund Holders: 13
Angi Inc. (NASDAQ:ANGI), a subsidiary of IAC Inc. (NASDAQ:IAC), is a services company that operates home services websites and platforms. The company helps people find and hire professionals for home improvement projects, like fixing a leaky faucet, painting a room, or even building a new deck among other things. It connects millions of homeowners with trusted service professionals across the United States and internationally.
In the first quarter, 13 hedge funds held positions in the stock worth $40.545 million. As of March 31, Westerly Capital Management is the most dominant shareholder with a position worth $8.266 million.
Angi (NASDAQ:ANGI) is restructuring to boost efficiency and profitability. The company is cutting non-profitable ventures, like the CraftJack acquisition made 11 years ago, which hasn’t been profitable. In the Q1 2024 earnings call, Christopher Halpin, CFO and COO of IAC commented that CraftJack “essentially was a drag on the business”. This initiative reflects the company’s commitment to shedding underperforming assets, described by management as ’empty calorie’ businesses, which do not contribute positively to the company’s financial health.
Despite lower revenues recently, Angi (NASDAQ:ANGI) saw improvements in the first quarter by removing less profitable revenue streams. Management is committed to enhancing user experiences for both consumers and professionals to drive sustained growth.
Looking ahead, Angi’s (NASDAQ:ANGI) management expects adjusted EBITDA to exceed $30 million per quarter for the rest of the year, which reflects its commitment to financial discipline and operational improvements.
While Angi (NASDAQ:ANGI) is still unprofitable, it has significantly reduced its losses over time. In Q1, the company posted breakeven EPS, up from a loss per share of $0.03 in the same quarter last year. Additionally, Wall Street analysts keep an optimistic outlook on the company stock and have an average price target of $3.25, representing an over 64% upside to Angi’s stock, as of July 12.
8. Organogenesis Holdings Inc. (NASDAQ:ORGO)
Share Price as of July 12: $2.91
Number of Hedge Fund Holders: 16
Organogenesis (NASDAQ:ORGO) is a leading regenerative medicine company in the United States. Specializing in advanced wound care, surgical solutions, and sports medicine markets, the company develops, manufactures, and commercializes a diverse range of products. Its advanced wound care line includes innovative treatments such as Affinity, Novachor, Apligraf, Dermagraft, NuShield, and PuraPly AM, which are all designed to promote healing through the preservation of viable cells and essential growth factors. It ranks 8th on our list of best NASDAQ penny stocks.
Organogenesis (NASDAQ:ORGO) has a strong product pipeline but a significant driver of the company’s future growth lies in the promising results of its ReNu program which targets knee osteoarthritis. The Phase III clinical trial for ReNu has shown significant improvements in pain management and patient function. If ReNu is approved, it could revolutionize the knee osteoarthritis treatment market as it addresses an unmet clinical need for millions of patients. An estimated 34.4 million Americans are projected to be affected by knee osteoarthritis by 2027, which positions ReNu as a transformative product and a solid revenue stream for Organogenesis (NASDAQ:ORGO).
Wall Street analysts are also bullish on Organogenesis’ (NASDAQ:ORGO) stock, especially because of its ReNu program. On June 28, Lake Street analyst Brooks O’Neil initiated coverage on the company stock with a Buy rating and a $5 price target. The analyst likes the company’s solid and clinically proven product line, in addition to a promising pipeline, especially its knee osteoarthritis product. O’Neil believes the company’s strong brand, established commercial infrastructure, and plans for clinical validation provide significant competitive advantages. 4 Wall Street analysts have an average price target of $4.25 on Organogenesis (NASDAQ:ORGO), which implies an upside of 46% from current levels, as of July 12.
As of March 31, 16 hedge funds held shares worth $39.677 million in Organogenesis Holdings Inc. (NASDAQ:ORGO). Soleus Capital is the company’s most prominent shareholder with 9.57 million shares worth $27.2 million.
7. Conduent Incorporated (NASDAQ:CNDT)
Share Price as of July 12: $3.55
Number of Hedge Fund Holders: 16
Conduent Incorporated (NASDAQ:CNDT) is a New Jersey-based technology services provider that offers a range of digital solutions and business process services through Commercial, Government Services, and Transportation segments. For healthcare, Conduent offers services to manage administrative tasks, support clinical work, and oversee medical care. For transportation, the company provides solutions for easier mobility and payments and aims to reduce traffic and make travel better. The company serves both government and commercial clients in different industries including automotive, healthcare, public sector, transportation, and more.
Conduent (NASDAQ:CNDT) is actively reshaping its business strategy to boost profitability and drive future growth. The company has been making strategic moves like selling off non-core divisions and debt reduction initiatives to streamline operations and strengthen its financial position.
The company finalized the sale of its casualty claims solutions division to MedRisk in May 2024, a transaction that injected $240 million into the company’s debt repayment efforts. Earlier this year, Conduent also sold its curbside management and public safety business to Modaxo for $230 million plus debt assumption. These divestitures are part of Conduent’s broader plan to reduce debt and enhance overall financial health.
Along with these strategic sales, Conduent Incorporated (NASDAQ:CNDT) has diligently pursued its $1 billion debt reduction and share repurchase program. By the end of the first quarter, the company had already allocated around $300 million towards this initiative. Conduent Incorporated (NASDAQ:CNDT) made significant progress by making prepayments of $164 million on its Term Loan B, with an additional $95 million in April.
Additionally, the company recently completed a $132 million share buyback from affiliates of Carl Icahn, a move that aligns with its goal of reducing debt leverage ratios and returning value to shareholders. For investors, these efforts signal a proactive approach to managing financial resources and positioning the company for sustainable growth in the future.
Conduent Incorporated (NASDAQ:CNDT) was held by 16 hedge funds in the first quarter and the stakes amounted to $166.035 million. Icahn Capital LP is the largest shareholder of the company and has a position worth $129 million as of Q1. It is one of the best NASDAQ penny stocks to invest in and it has received Buy ratings from 2 Wall Street analysts. The average price target of $6.00 has an upside of 69%, as of July 12.
6. PowerFleet, Inc. (NASDAQ:AIOT)
Share Price as of July 12: $4.69
Number of Hedge Fund Holders: 17
PowerFleet, Inc. (NASDAQ:AIOT), previously known as I.D. Systems, Inc., offers Internet-of-Things solutions, including SaaS cloud-based application data, hosting, maintenance, support and consulting services, and more. The products track, manage, and optimize mobile assets/resources (such as industrial trucks, trailers, containers, and vehicle fleets) and collect data. The company’s technology enables businesses to monitor where their mobile assets are and how they’re doing in real-time, using wireless connections. It helps them handle their assets better by improving how they’re used, maintained, and operated. The technology also keeps assets safe from unauthorized use by controlling access and monitoring them closely. PowerFleet provides real-time visibility, control, and security over mobile assets, helping customers save time, money, and resources while enhancing safety and meeting regulations. This technology is used in various industries such as transportation, warehousing, manufacturing, and retail. The company provides its products under the PowerFleet, Pointer, and Cellocator brands.
In the first quarter, 17 hedge funds had stakes in PowerFleet, Inc. (NASDAQ:AIOT), with total positions worth $85.531 million. With over 6 million shares worth $32.16 million, Private Capital Management is the most prominent shareholder in the company, as of March 31. It takes the 6th spot on our list of best NASDAQ penny stocks to invest in.
In 2023, PowerFleet, Inc. (NASDAQ:AIOT) began a major effort to improve its position in the fast-growing IoT industry, which is expected to grow to $4.06 trillion by 2032 from $714.48 billion in 2024, according to a report by Fortune Business Insights.
The company introduced a new software platform called Unity that uses AI and data analysis to better manage assets and operations. This platform has been a big success for the company, helping it work more efficiently and find new sales opportunities among its current customers. As a result, it is spending less to find new customers and increased revenue streams.
In the last quarter of 2023, the company’s high-quality software revenue grew by 16% compared to the previous year. Moreover, total revenue performance in Q4 of 2023 marked a significant milestone, growing by 9% year-over-year, and it represented the company’s strongest performance in six quarters.
According to PowerFleet’s (NASDAQ:AIOT) management, market signals and customer feedback point to the effectiveness of the Unity platform in addressing critical points across the mobile asset market. The platform’s success in North America, a primary focus area for Unity’s go-to-market strategy, and a substantial 16% annual revenue growth is a testament to its success and adoption in the market.
The growth indicates that PowerFleet (NASDAQ:AIOT) is expanding its share of wallet (SOW) with existing customers and is able to attract new enterprise-level accounts. Looking forward, PowerFleet (NASDAQ:AIOT) anticipates that Unity will evolve and become a comprehensive IoT platform.
Wall Street analysts also look at PowerFleet’s (NASDAQ:AIOT) stock quite favorably as 7 analysts maintain a Buy-equivalent rating on the company and the stock has an average price target of $8.00, which represents an upside of 70.6%, as of July 12.
5. Evolv Technologies Holdings, Inc. (NASDAQ:EVLV)
Share Price as of July 12: $2.86
Number of Hedge Fund Holders: 21
Our 5th best NASDAQ penny stock to invest in, Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) offers artificial intelligence (AI)-based weapons detection for security screening. The company’s product offerings include a touchless security screening system called Evolv Express and Evolv Insights that offers self-serve access to data and analytics for clients to be able to carry out security screening operations.
All over the world, concerns over public safety have reached an all-time high with the increasing frequency of tragic events such as mass shootings and other acts of violence. Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) is one of the companies of choice because of its approach to security screening. The company uses touchless screening technology powered by AI and advanced sensors to offer solutions designed to assess threat levels while minimizing false alarms to venues across various sectors like schools, retail outlets, workplaces, hospitals, and more.
Evolv Technologies (NASDAQ:EVLV) has been continuously seeing new customer acquisitions, expanded deployments among existing customers, and strengthened partnerships with channel distributors, which led to a 17% year-over-year increase in revenue in Q1. The growth points to the company’s focus on subscription-based models, and its moving away from traditional one-time product sales.
Evolv has seen significant adoption across major sporting events, as it has deployed around 75 Evolv Express systems since the beginning of 2024, including at high-profile events like the world’s largest sporting event in France (which one, name it) and in support of security operations for the Detroit Police Department.
Evolv Technologies Holdings, Inc.’s (NASDAQ:EVLV) management has mentioned that its Evolv Visual Gun Detect has sparked customer interest as it addresses a critical need across multiple vertical markets. The new offering enhances security measures by identifying individuals carrying concealed or openly displayed firearms within or near venues.
The strong market interest in Evolv Visual Gun Detect points to its potential to become an important solution in the ever-changing landscape of threat detection technologies. Evolv Technologies (NASDAQ:EVLV) expects its subscription-based products to further customer relationships and extend the reach of the Evolv ecosystem.
Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) was part of 21 hedge funds’ portfolios in the first quarter with a total stake value of $91.515 million. The stock has a consensus Buy rating among 6 analysts, and its average price target of $5.88 represents an upside of 105.5% from current levels, as of July 12.
Even though Evolv Technologies (NASDAQ:EVLV) is unprofitable right now and might even be risky to invest in, its offerings, which will be both digital and physical, will be designed to meet the specific security requirements of diverse customer segments. The company is part of an industry that is expected to reach $2.3 billion by 2033 from $707 million in 2023, growing at a CAGR of 12.4%, as per a report by Future Market Insights.
Evolv Technologies (NASDAQ:EVLV) is one of the best penny stocks to invest in, given that its addressable market is going to expand and it has a lot of room to run, as evidenced by its balance sheet. As of Q1, the company had cash, cash equivalents, marketable securities, restricted cash of $81.3 million, and no debt. Moreover, the company has a strong recurring revenue model which grew by 96% annually by the end of Q1 to $82.5 million.
4. Sabre Corporation (NASDAQ:SABR)
Share Price as of July 12: $3.12
Number of Hedge Fund Holders: 23
Sabre Corporation (NASDAQ:SABR) is a software and tech company that runs through the Travel Solutions and Hospitality Solutions segments. The company offers a range of software technology products and solutions through software-as-a-service (SaaS) and hosted delivery models in the travel industry. The company’s travel distribution platform caters to travel suppliers, including airlines, hotels, and others, as well as clients like agencies and corporations.
It is one of the largest global distribution systems (GDS) providers for air bookings. Through its global distribution system, Sabre (NASDAQ:SABR) connects travel suppliers such as airlines and hotels with travel sellers like agencies that offer real-time availability and pricing which are crucial for corporate travel management.
Sabre (NASDAQ:SABR) is thriving in the distribution industry, as it showed strong growth in Q1 2024 with its market share expanding consistently for the fifth consecutive quarter. The company is tackling the complexities of today’s travel market with advanced distribution solutions.
The company’s multi-source platform is a standout, and now features content from 20 new low-cost airlines. The platform integrates new distribution capabilities with the company’s own APIs and business logic, which allows airlines to effectively manage their inventory and pricing strategies across different sales channels. The integration aims to provide customers with better choices, transparency, and efficiency when booking flights.
Sabre’s (NASDAQ:SABR) position is strong because of its strategic partnerships and enhanced capabilities. Recently, the company’s strengthened ties with Air India increased booking volumes and market reach. Essential renewals with Southwest Airlines and Alaska Airlines further solidify Sabre’s (NASDAQ:SABR) growth, as both airlines surpass industry distribution booking rates.
Management is optimistic about future prospects based on multiple factors, including a robust pipeline of upcoming business opportunities. anticipated collaborations with global airlines such as Air India, and its multi-source platform’s distribution capabilities.
Despite its current lack of profitability, the company’s strategic dominance as a GDS provider for air bookings, consistent growth, strategic partnerships with major airlines, and ongoing innovations position it favorably to capitalize on the increasing demand for travel technology solutions. The company’s strategic initiatives, including cost efficiency and restructuring efforts, are also expected to be significantly beneficial for the company.
For example, the cost reduction plan initiated in 2023 is aimed at structurally reducing Sabre’s cost base, which is anticipated to positively impact financials in 2024 and 2025. A key component of this transformation is the ongoing migration to Google Cloud, which has substantially lowered the costs involved in running their computing operations. Additionally, Sabre has successfully reduced its adjusted SG&A (Selling, General & Administrative) expenses and technology expenses by 16% year-over-year in the first quarter of 2024. The introduction of generative AI tools to approximately 800 of their software engineers has further accelerated product development and innovation, contributing to lower development costs. Moreover, the implementation of new productivity-enhancing tools and processes, including AI and automation, has improved overall efficiency. By achieving its operational cost savings targets, Sabre expects to realize an overall technology cost reduction exceeding $150 million by 2025 compared to 2023.
Additionally, Sabre’s track record in successful business segment sales, such as the sale of AirCentre for $392 million in 2022, suggests potential future divestitures that could further enhance financial flexibility and reduce debt. According to the consensus opinion of 10 analysts, the stock is a Buy and the average price target of $4.00 has an upside of 28.2% to present levels, as of July 12.
Moreover, Sabre’s (NASDAQ:SABR) guidance for 2024 and 2025 projects significant growth, with expectations of $3 billion in revenue and $500 million in Adjusted EBITDA for 2024, and adjusted EBITDA of over $700 million and free cash flow close to $200 million for 2025. If the company realizes these projections, the company’s valuation could improve significantly and add to investor confidence.
At a stake value of $126.147 million, 23 hedge funds held positions in Sabre Corporation (NASDAQ:SABR) in the first quarter. As of March 31, Fundsmith LLP is the most dominant shareholder in the company and has a position worth $52.456 million.
3. Taboola.com Ltd. (NASDAQ:TBLA)
Share Price as of July 12: $3.25
Number of Hedge Fund Holders: 27
Taboola.com Ltd. (NASDAQ:TBLA) is a New York-based company that offers its signature platform, Taboola, to deliver personalized content and ad recommendations to users across the open web. Its platform is powered by deep learning and artificial intelligence and the company has a client network of 18,000 advertisers. The company’s discovery platform enables advertisers to promote their brands to target audiences. It is one of the best NASDAQ penny stocks to invest in.
Taboola (NASDAQ:TBLA) has set itself up for significant growth by teaming up with major players like Yahoo and Apple. These partnerships are important as they help the company diversify where its revenue streams and make its mark in the market. Taboola (NASDAQ:TBLA) has a long-term commercial agreement with Yahoo, spanning 30 years.
The company has been actively migrating Yahoo’s tier-one omnichannel advertisers to its platform and achieved a significant milestone by surpassing $100 million in revenue from Yahoo supply in Q1. The successful migration is proof of Taboola.com Ltd.’s (NASDAQ:TBLA) operational efficiency and its ability to capitalize on high-value partnerships to drive substantial revenue growth.
Additionally, Taboola.com Ltd. (NASDAQ:TBLA) has forged a partnership with Apple, initially as an authorized reseller for Apple News and Apple Stocks in Australia and Canada. The collaboration has since expanded to include the profitable U.S. and U.K. markets, which highlights Apple’s confidence in Taboola’s technology and platform capabilities. Management anticipates that Apple will emerge as an important partner.
These strategic alliances with Yahoo and Apple are key in diversifying the company’s revenue streams and easing investor concerns while also improving market positioning. With a market share of over 58%, Taboola (NASDAQ:TBLA) holds the most dominant share in the content discovery platforms category, according to 6sense. The company is well-positioned to attract a growing roster of prestigious global brands as it expands its partner network.
Finally, Taboola (NASDAQ:TBLA) is trading at 10.8x its 2024 estimated earnings, a 14.6% discount to its industry median of 12.64. The company has outperformed its EPS estimates for the last two years and is expected to grow by over 250% in 2024. The stock has a consensus Buy rating from 7 analysts and the average price target of $6.00 implies an upside of 85% from the current levels, as of July 12.
In the first quarter, 27 hedge funds had stakes in Taboola.com Ltd. (NASDAQ:TBLA), with total positions worth $59.73 million. As of Q1, G2 Investment Partners Management is the biggest shareholder in the company and has a position worth $10.55 million.
2. Talkspace, Inc. (NASDAQ:TALK)
Share Price as of July 12: $2.14
Number of Hedge Fund Holders: 37
Talkspace, Inc. (NASDAQ:TALK) is a New York-based virtual behavioral healthcare company that provides psychotherapy and psychiatry services via its platform. The platform offers a variety of services, including text-based therapy, live video, and audio sessions for users seeking psychiatric and therapeutic support, catering to different age groups from teens to seniors. The company provides customized solutions for individuals, businesses, and health plans, including services like employee assistance programs and collaborations with organizations to improve mental health.
Hedge fund sentiment was positive toward Talkspace, Inc. (NASDAQ:TALK) in Q1 as hedge funds with investments in the stock were 27 in the quarter, with positions worth $106.061 million. This is compared to 19 funds with positions worth $59.3 million in the preceding quarter. Hudson Executive Capital is the top investor in the company, as of March 31, and has a stake worth $35 million.
Talkspace, Inc. (NASDAQ:TALK) is set for significant growth in the behavioral healthcare market, which is expected to grow to $115.21 billion by 2030 from $83.7 billion in 2023 in the US. A key part of Talkspace’s strategy is the upcoming Medicare coverage rollout in multiple states, including California and New York, covering over 10 million people with traditional Medicare.
The company is also making progress with Medicare Advantage networks, which shows its appeal as a partner in behavioral health solutions. It aims to be in-network in all 50 states by year-end, establishing itself as a leader in accessible and affordable mental health services.
The stock has consensus Buy ratings among 4 Wall Street analysts. The average price target of $4.00 has an upside of 87%, as of July 12.
1. Grab Holdings Limited (NASDAQ:GRAB)
Share Price as of July 12: $3.61
Number of Hedge Fund Holders: 37
Grab Holdings Limited (NASDAQ:GRAB) is a Singapore-based company known for its super-app that integrates ride-hailing, food delivery, and digital payment services. It is the top stock on our list of best NASDAQ penny stocks. It operates in eight Southeast Asian countries including Singapore, Malaysia, Indonesia, and Vietnam among others. The company’s mobility segment provides users with transportation options, while the delivery segment offers on-demand food and logistics services across the region.
The company has become a key player in Southeast Asia. A Momentum Works report indicates that Grab (NASDAQ:GRAB) controls 55% of the region’s total gross merchandise value (GMV) in food delivery platforms and has a larger share in the ride-hailing sector. Additionally, the Wall Street Journal reports that the company covers 63.5% of Indonesia’s ride-hailing market and 47.8% of the country’s food delivery market. We covered it in detail in our best Robinhood stocks article.
What makes Grab (NASDAQ:GRAB) an attractive investment prospect despite its unprofitability is its leading market position in Southeast Asia. The company holds a near monopoly status in the region, especially after its acquisition of Uber’s Southeast Asia operations in 2018, and in 2023 it announced the acquisition of Trans-cab, Singapore’s third-largest taxi operator. The acquisition is facing some regulatory hurdles, but if it goes through, Grab could completely dominate the Southeast Asian market, a region that comprises nearly 8.5% of the world’s population.
Moreover, the company has a strong cash position as it closed out the first quarter with $2.1 billion in cash, which is enough to sustain the company’s growth for the foreseeable future. Analysts are also looking at the stock in a favorable light as according to the consensus opinion of 26 analysts, the company stock is a Strong Buy with an average price target of $4.7, representing a 30.2% upside to current levels on July 12.
In the first quarter, 37 hedge funds had stakes in Grab Holdings Limited (NASDAQ:GRAB), with total positions worth $612.785 million.
While we acknowledge the potential of Grab Holdings Limited (NASDAQ:GRAB) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
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