In this article, we will discuss: 10 best penny stocks to buy under $1.
Penny stocks are defined by the Securities and Exchange Commission (SEC) as stocks that trade for less than $5 per share. They exhibit high price volatility due to their low pricing. Even a slight movement in the stock price can translate into a substantial percentage gain. Despite this advantage, it’s important to be aware of the risks associated with penny stocks. A study conducted by the Securities and Exchange Commission (SEC) found that most penny stocks are speculative and have low liquidity, which makes it challenging to trade them. Only around one in 1,000 penny stocks goes on to become profitable mid-cap or large-cap businesses, according to the study. Therefore, even if penny stocks seem attractive, investing in them needs a thorough assessment of the dangers as well as the possible benefits.
Penny stocks may provide large profits, with particular industries expected to develop in 2024 as a result of technological improvements, legislative changes, and altering customer tastes. These dynamic industries may be of interest to investors looking to diversify their portfolios or seek strong growth potential.
Among the industries where one might look for penny stocks to purchase in 2024 is renewable energy. It has experienced tremendous growth in recent years. The global renewable energy industry was estimated at $1.21 trillion in 2023, with a compound annual growth rate (CAGR) of 17.2% between 2024 and 2030, per Grand View Research. In 2023, Asia Pacific had a noteworthy revenue share of 40.98%.
The IEA’s Renewables 2023 study states that in 2023, the capacity of renewable energy worldwide increased by 50% to approximately 510 GW, with solar photovoltaics accounting for three-quarters of these increases. Leading the way, China added twice as much solar PV as the rest of the world in 2022 and had a 66% rise in wind power. According to IEA 50, renewable energy capacity increased at unprecedented rates in Brazil, the United States, and Europe. As per the latest IEA research, under present policies and market circumstances, worldwide renewable capacity would rise by two and a half times by 2030. Hence, investors may interact with innovative companies at the forefront of solar, wind, and other renewable technologies by purchasing penny stocks in the renewable energy space.
Biotech penny stocks also provide a unique investment opportunity for investors interested in medical innovation and the potential of major breakthroughs in healthcare. Recent analysis by investment bank Jefferies indicates that biotechnology businesses raised about $10 billion in follow-on stock offerings in January and February, signaling increased optimism in the industry.
The size of the worldwide biotechnology industry was assessed to be worth $1.38 trillion in 2023 and is expected to grow at a CAGR of 11.8% from 2024 to 2033, predicted to be worth around $4.25 trillion, per Precedence Research. Currently, the biotechnology industry consists of 673 publicly traded stocks, including penny stocks, with a combined market capitalization of $1,511.21 billion.
Investors interested in biotech stocks may question which sectors are prone to buyouts. Laura Chico, Senior Biotechnology Analyst at Wedbush Securities, noted key areas to keep an eye out for possible buyouts:
“Obesity has been a really big theme in 2023, and will probably continue for the foreseeable future, but across the area, at least in these recent M&A transactions, it’s been really broad-based, and I think that’s really a testament to the innovation in the space. We have several deals in oncology, immunology, inflammation, neuro, and even rare diseases. So it’s not just within certain verticals at this point.”
A financial analyst looking through a microscope at stocks to determine their market value.
Methodology:
In this article, we first used a stock screener to list down all stocks trading under $1 (as of the writing of this article) with over 40% institutional ownership. From the resulting dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 920 hedge funds in Q1 2024 to gauge hedge fund sentiment for stocks.
Why are we interested in the stocks that hedge funds pile into? 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).
With that said, here are the 10 Best Penny Stocks to Buy Under $1.
10. Nuvve Holding Corp. (NASDAQ:NVVE)
Number of Hedge Fund Investors: 5
Among the best penny stocks to buy under $1 is Nuvve Holding Corp. (NASDAQ:NVVE), a green energy technology company that specializes in vehicle-to-grid (V2G) technologies in the United States, the United Kingdom, France, and Denmark. With the help of the company’s Grid Integrated Vehicle platform, utility companies can create a virtual power plant out of EV batteries by storing and selling their excess energy back to the local electric grid. Additionally, Nuvve provides networked charging stations, software, hardware, expert services, warranties, and support for fleets of electric vehicles. The company generates revenue by selling excess power, reducing building energy peak consumption, and offering EV fleet solutions to automobile manufacturers, charge station operators, and owners/operators of fleets of vehicles.
The company intends to convert large fleets of school buses into electric buses and partially fund its large investment by utilizing the vehicles’ batteries as storage for utility companies.
This company’s stock price was $800 three years ago and is now worth $0.63. As of right now, its market capitalization is $4.50 million, and three years ago, it was worth $250.40 million. As of July 10, it has lost 99.9% of its value. NVVE is a cash-burning startup with low sales and a high burn rate. Since 2021, it has lost almost $31 million in cash, and its sales are insufficient to offset this loss. In three years, the company’s revenue plummeted due to a persistently high burn rate and poor sales. It’s working hard to continue adhering to Nasdaq’s listing regulations. To increase the value of its shares, it initially divided 40 for 1, reducing the number of outstanding shares from 50 million to around 1.3 million. However, this had little effect other than investors selling it even more. Then, by issuing 4.8 million shares, it raised almost $10 million; it will probably burn it all again. Secondly, investors became more cautious in 2021, and the general excitement around EV companies subsided. The stock price decrease was probably caused by this general mood in the market. From a peak of $380 in 2021 to a current trade price of $252.94, a 33.44% loss as of June 9, 2024, Tesla, one of the top EV manufacturers, also saw a decline in its stock price.
In addition to celebrating the installation of its 500th electric school bus, EVSE, Nuvve was chosen for the $16 million fleet electrification project by Fresno EOC. As of March 31, 2024, there were 26.6 megawatts under control, a 6.0% increase from the same quarter last year. Despite a 57.96% decrease in revenue in Q1 from the same quarter last year, the company has seen strong revenue growth in the last three out of four quarters. Revenue in Q1 dropped due to product revenue decreasing by $0.95 million and service revenue decreasing by $0.1 million, owing to reduced client sales orders and shipments.
Although it is still negative, net income and EPS improved significantly from $12.84 to $1.69 compared to the same quarter last year because of reduced expenses. In Q1, the net loss dropped in terms of revenue by $0.9 million to $6.7 million, while operating expenditures (apart from cost of sales) were reduced to $7.5 million from the same quarter last year. The annual revenue increased over the last two years by 28.22% in 2022 and 55.06% in 2023. The rise is explained by an increase in grants, product revenue, and service revenue as a result of increased client sales orders and shipments.
Analysts recommend a “strong buy” on NVVE, which is now trading at $0.80. The stock has an average price target of 100 and offers investors a potential upside of 12,415.64%.
Insider Monkey monitored that 5 hedge funds out of the 920 hedge funds held a position in Nuvve Holding Corp. (NASDAQ:NVVE) as of the end of the first quarter of 2024. Amin Nathoo and Moez Kassam’s Anson Investments is the only stakeholder in the company, with 195,000 shares worth $214,500.
9. Forte Biosciences, Inc. (NASDAQ:FBRX)
Number of Hedge Fund Investors: 8
Forte Biosciences, Inc. (NASDAQ:FBRX) is a clinical-stage biopharmaceutical company that focuses on autoimmune and associated diseases. It is developing the FB-102 program to treat autoimmune diseases such as vitiligo and alopecia areata.
This company’s stock price was $261 when it launched six years ago, and now it is worth $0.53, decreasing by 99.8% as of July 10. Currently, its market capitalization is $19 million, and back then, it was worth about $203.00 million. Forte Biosciences’ (NASDAQ: FBRX) stock price fell drastically following the failure of its key product, FB-401, in clinical studies, resulting in a loss of investor confidence. Following this, there was institutional selling, as significant investors such as BVF, Orbimed, and Perceptive Advisors sold all of their holdings, demonstrating doubt about the company’s future. The net income has also significantly decreased by 126.74% in 2023 from 2022, and operating expenses increased.
Overall, with just $30.44 million in cash as of July 10, Forte Biosciences is facing severe financial restrictions. The firm is still not profitable, with a significant burn rate. It has lost over $28.33 million in cash since 2020, and its sales have not been strong enough to make up for this deficit. Given the competitive market and unpredictable clinical outcomes, the company expects to require a large amount of funding to develop its early-stage product, FB-102. This is a single asset company with a very focused bet on a very early stage asset for which there is little evidence that it has an advantage over existing treatments.
Forte had a $0.9 million increase in payroll and related expenditures from a greater workforce in Q1 2024, as well as an increase in trial expenses of $1.4 million as a result of the FB102 program’s development. Nonetheless, R&D spending dropped from $4.8 million to $4.4 million, mostly as a result of a $2.7 million drop in manufacturing expenses. Net loss per share in terms of revenue improved from $0.32 to $0.16, however, it was still negative.
Despite the challenges, the single ascending dose (SAD) component of the FB102 phase 1 study was completed successfully in 2023. According to the company, FB102 has shown a favorable safety profile thus far, even in the MAD cohorts. Forte Biosciences’s underlying company is fundamentally improving as a result of increased earnings projections and the ensuing rating upgrade. Earnings for Forte Biosciences are expected by analysts to improve in the coming year, from -$0.59 to -$0.55 per share, generating -$0.88 EPS over the last year.
Analysts have given FBRX a “strong buy” rating. The average Wall Street analyst price target for Forte Biosciences, Inc. (NASDAQ:FBRX) is $3.38, which presents a 537.74% upside potential from the current price of $0.53.
8 hedge funds made investments in this company, according to Insider Monkey’s Q1 database. With 3,624,548 shares worth $2.52 million, Eashwar Krishnan’s Tybourne Capital Management held the largest stake in the company.
8. Gevo, Inc. (NASDAQ:GEVO)
Number of Hedge Fund Investors: 10
Gevo, Inc. (NASDAQ:GEVO). is a company engaged in carbon abatement. It specializes in the conversion of renewable energy and carbon into energy-dense liquid hydrocarbons suitable for use as renewable fuels, such as sustainable aviation fuel. It concentrates on drop-in fuels for vehicles, such as diesel, jet fuel, and gasoline. Through the utilization of modern manufacturing methods and low-carbon renewable resources, their products are designed to achieve net-zero greenhouse gas emissions throughout. Gevo’s technique can also be used to make sustainable polymers like polyester from environmentally favorable materials. The sale of these low-carbon materials and fuels generates revenue. The company is positioned for substantial development in the multi-billion-dollar low-carbon fuels industry by utilizing patented fermentation and conversion methods boosted by technology obtained from Axens North America, Inc.
The business is divided into three segments: Renewable Natural Gas (which produces methane gas from dairy cow dung), Agri-Energy (which runs the Luverne facility for the manufacture of isobutanol and ethanol), and Gevo (which is concentrated on SAF, renewable hydrocarbons, and intellectual property).
Gevo’s stock, which was initially valued at $151,800, has since dropped to $0.59. It remained stagnant after the drop to date. Gevo’s stock fell as a result of excess costs, dropping oil prices, and technological challenges in scaling up biofuel production, which diminished the economic attraction of biofuels as a less expensive option. Cash is a significant element in the company’s share price suppression. The company struggles to raise the necessary capital to support its large-scale projects, which have an average cost of $850 million.
When faced with limited financial resources, GEVO frequently turns to share dilution, an approach that has gained momentum recently. Investors are alarmed by the company’s dependence on these tactics because they fear more dilution in case GEVO’s projects fail to produce the desired results. The possibility of further share dilution might put negative pressure on the stock price of the company. The company has over $376 million in cash right now, which will cover over 4 years of operating expenses if they remain the same at $91.1 million as in the last 12 months.
On the bright side, Gevo’s subsidiary Verity recently joined with ClearFlame to promote carbon traceability in US road freight transportation, with the goal of decarbonizing the sector, which consumes around 29 billion gallons of gasoline each year. Financially, Gevo has faced an incredible 1363.83% surge in annual revenue, from $1.18 million in 2022 to 17.2 million in 2023, primarily due to sales of RNG and environmental attributes from our RNG project. Gevo’s Q1 2024 report discloses that its Net-Zero 1 project has successfully managed costs, and its RNG project has produced positive results with $1.2 million in non-GAAP cash EBITDA.
One of GEVO’s major projects has been the sustainable fuel production plant in South Dakota, which aims to house considerable production while providing over 1000 employees in the area. GEVO operates in the renewable energy industry and is expected to experience strong momentum due to increasing demand for green energy generation. Most importantly, the company has the potential to make a substantial impact in the sustainable aviation fuel market, which is projected to reach $41.6 billion by 2032 at a CAGR of 46.9%, per DataHorizzon Research. Given Gevo, Inc. (NASDAQ:GEVO)’s upside potential in the renewable energy sector, it has received an average price target of $4.76, reflecting analysts’ bullish outlook on the stock. The price target reflects a potential upside of over 754.27% from the current stock price of $0.56. Meanwhile, 4 analysts have given the stock a “Buy” rating.
10 out of the 920 hedge funds polled by Insider Monkey during this year’s first quarter held a stake in Gevo, Inc. (NASDAQ:GEVO). Steve Cohen’s Point72 Asset Management held the largest stake in the company, with 1,500,000 shares worth $1.15 million.
7. LeddarTech Holdings Inc. (NASDAQ:LDTC)
Number of Hedge Fund Investors: 11
Founded in 2007, LeddarTech Holdings Inc. (NASDAQ:LDTC) is a Quebec City-based company with R&D locations in Montreal and Tel Aviv, Israel. Its products include AI-based sensor fusion and perception software for parking, ADAS, and autonomous driving applications. Their program generates precise 3D models for safer navigation and improved decision-making using cutting-edge AI and computer vision. OEMs and Tier 1-2 suppliers may use LeddarTech’s technology, which enables ADAS solutions for cars and off-road vehicles. By enhancing vehicle awareness and safety, they hope to improve global transportation. They now possess over 160 patent applications, of which 87 have been approved. The company’s revenue comes primarily from selling its LiDAR technology.
Due to the news of the merger with Prospector Capital Corp. in December 2023, which was the company’s first public offering, LeddarTech’s shares fell 91% last year. It’s possible that the stock fell because long-time investors sold off their interests. Furthermore, the company’s cash burn rate surpassed its revenue growth. The company burned $26.97 million cash in 2023, and cash growth decreased by 84.21% in 2023. With just $7.07 million and decreasing by -15.13% YoY, revenues aren’t high enough to cover this loss. Hence, it merged with Prospector Capital Corp., providing it with $49 million in gross cash profits to repair the harm. LeddarTech Holdings Inc. revealed a 15.13% drop in gross profit and sales for 2023. Additionally, the company’s operating income has been negative over the years, which further alarmed the investors about the potential risk.
In spite of this, Oren Dayan was appointed Vice President of Product Line Management and Business Development at LeddarTech, and the company also announced a number of partnerships and new product launches, including a collaborative solution with Black Sesame Technologies. LeddarVision’s growth is also crucial. These programs provide a focused strategy to gain market share in the quickly expanding ADAS and AD sectors, particularly in the Chinese market, where the use of automotive technology is rising. In terms of competitiveness and market positioning, LeddarTech may be entering a transformative phase, which might be shown by the financial outcomes and strategic alliances. Financially, revenue grew by an incredible 396.68% during the fiscal second quarter of 2024, which ended on March 31, 2024, from $0.5 million to $1.9 million. The revenue rise can be attributed to the completion of last-time purchase orders, which increased legacy LiDAR revenue. This is encouraging, as it gives investors hope for LDTC. Operating expenses were cut from $87.3 million to $52.4 million, indicating attempts to limit costs. However, it’s important to keep an eye on whether these cuts affect the company’s capacity for innovation and efficient scaling.
Being an AI stock, investors are bullish on LeddarTech Holdings Inc. (NASDAQ:LDTC) and rate it as a “buy,” with an average target price of $5.00 and an upside potential of 427.98%.
Insider Monkey’s hedge fund tracking indicates that the company’s popularity proved steady in Q1, with 11 optimistic investors remaining unchanged from the previous quarter.
6. Ovid Therapeutics Inc. (NASDAQ:OVID)
Number of Hedge Fund Investors: 12
Ovid Therapeutics Inc. (NASDAQ:OVID), a biopharmaceutical firm, creates life-altering medications for patients and families suffering from neurological disorders in the United States. The company is working on three drug candidates: OV350, a small molecule for treating epilepsies; OV329, a GABA aminotransferase inhibitor for treating seizures linked to tuberous sclerosis complex and infantile spasms; and OV101, a drug candidate that is in Phase 2A clinical trials for the treatment of fragile X syndrome. Additionally, it develops OV815 to treat neurological disorders connected with the kinesin family of proteins and OV882, a short hairpin RNA gene therapy, to treat Angelman syndrome. The firm is under licensing and partnership agreements with Marinus Pharmaceuticals, Inc., Healx, AstraZeneca AB, and H. Lundbeck A/S.
After the partnered epilepsy medication soticlestat failed to reach primary goals in late-stage studies for Lennox-Gastaut syndrome and Dravet syndrome, Ovid Therapeutics’ shares fell by more than 75% over the year. Reliance on partnerships (Takeda, Ligand, etc.) might restrict earnings. The billion-dollar epilepsy industry is competitive, and market acceptability and price are key factors. Ovid had $92.19 million in cash as of July 2024, but it may need to take on debt or dilutionary financing in the future. This might raise concerns, given regulatory uncertainty.
Ovid Therapeutics, which has demonstrated encouraging phase 2 results, is well-positioned for expansion with soticlestat in advanced phase 3 studies for LGS and DS. In Q1 2024, a pooled analysis of DS patients from the P2 ELEKTRA and P3 SKYLINE trials revealed that Soticlestat, as opposed to placebo, significantly decreased the frequency of convulsive seizures from baseline. Long-term growth potential and resilience are demonstrated by the diverse pipeline, which includes OV329, which treats persistent seizures. Following the sale of Kadmon and its ROCK2 inhibitor to Sanofi, Ovid announced a partnership with Graviton, founded by Sam Waksal. Recently, the Phase 1 trial of the OV888/GV101 capsule met safety and tolerability targets, yielded positive pharmacokinetic and pharmacodynamic results, and cleared the path for a Phase 2 investigation into cerebral cavernous malformations beginning in the second half of 2024.
Ovid is also a financially stable company, which reduces the danger of immediate dilution. As of July 10, it has $92.19 million in cash and a cash runway until mid-2026. The company showed strong revenue in Q1 2024, reporting a significant 124.24% increase from the same quarter the previous year, reaching $0.15 million due to reduced personnel costs from corporate cost-cutting efforts and headcount reductions in March 2022. This was driven by royalty and license agreements. The company has maintained growth in sales over the last 4 quarters. EPS of -$0.17 exceeded the analysis consensus of -$0.25.
Due to its diverse pipeline, the stock has earned a consensus “Strong Buy” rating. Analysts predict an average price target of $4.04 within the next 12 months, with estimates ranging from $8.00 to $1.20. The average price target represents a potential upside of over 386.81%.
12 hedge funds were long Ovid Therapeutics Inc. (NASDAQ:OVID) in Q1, with a total stake value of $59.7 million. Oleg Nodelman’s EcoR1 Capital is the largest stakeholder, with 6,117,400 shares valued at $18.66 million.
5. Kopin Corporation (NASDAQ:KOPN)
Number of Hedge Fund Investors: 19
Kopin Corporation (NASDAQ:KOPN) is a leading developer and global supplier of high-performance application-specific optical solutions, including high-resolution microdisplays, microdisplay subassemblies, and associated components for defense, business, industrial, and consumer products. The company’s products are employed in consumer wearable augmented reality and virtual reality headset systems, industrial, public safety, and medical headsets, soldier, avionic, armored vehicle, training, and simulation defense applications.
Kopin Corporation’s stock has declined by almost 98% since the launch due to more cash burn compared to the slow revenue growth, which has been made worse by serious operational and legal issues. The company’s diminishing cash reserves, which were $17.9 million at the end of Q4 2023, a significant drop from prior levels, served as one indicator of the strain on the company’s financial performance. Its financial situation has been made more difficult by operational losses and significant legal costs, especially due to the continuing legal battle with BlueRadios. Investor worries were raised by the recent unfavorable judgment ruling that awarded the company almost $25 million in damages. Investor mood has soured due to the possibility of having to raise significant money to satisfy legal requirements and fund operations, while cash reserves have burned $20.58 million since 2021.
On the other hand, Michael Murray, the company’s innovative CEO, has improved operational efficiency and increased client orders, as seen by a strong 2.7:1 book-to-bill ratio in Q1 2024, which lends credence to Kopin Corporation’s bullish outlook. Kopin Corporation demonstrated its strong market position in the defense industry by reporting an 18% increase in product revenues for the first quarter of 2024. This gain was primarily driven by a significant 28% increase in revenues from military products. Kopin demonstrated its capacity to draw in big, expensive projects by landing many new client orders, including a $20.5 million contract for a novel weapon sight configuration and a Naval Warfare Research Contract. In 2024, the company anticipates double-digit revenue increase above 2023, demonstrating confidence in its continuous market expansion and strategic efforts. Kopin is creating innovative AI-driven display technologies and wearable AR/VR solutions, such as NeuralDisplay, which adjusts to the surroundings of its users.
Hence, Kopin Corporation (NASDAQ:KOPN) has a positive analyst outlook with a “strong buy” rating and an average 12-month price target of $2.75, suggesting a potential upside of over 202.20%.
Insider Monkey disclosed 19 funds that owned Kopin Corporation (NASDAQ:KOPN) hedge funds in Q1 2024. Constantinos J. Christofilis’s Archon Capital Management is the largest stakeholder in the company, with 3,192,786 shares worth $5.74 million.
4. Karyopharm Therapeutics Inc. (NASDAQ:KPTI)
Number of Hedge Fund Investors: 19
As a commercial-stage pharmaceutical company, Karyopharm Therapeutics Inc. (NASDAQ:KPTI) discovers, develops, and distributes medications targeted to prevent nuclear export for the treatment of cancer and other diseases. The company’s conviction in cancer patients’ tremendous fortitude and courage drives its efforts. Since its inception, Karyopharm has been an industry pioneer in oral medicines that treat nuclear export dysregulation, a key mechanism of oncogenesis. Karyopharm’s main drug and first-in-class oral exportin 1 (XPO1) inhibitor, XPOVIO (selinexor), is approved in the United States and sold by the company for three cancer applications. Additionally, it has obtained regulatory approvals for a variety of indications in an increasing number of former US territories and nations, such as China, Europe, the UK (under the brand name NEXPOVIO), and the United States. Karyopharm’s pipeline is narrowly targeted, with indications for certain high unmet-need cancers, such as multiple myeloma, endometrial cancer, myelofibrosis, and diffuse large B-cell lymphoma (DLBCL).
The company has faced high cash burns over the years. It decreased by over 43% since 2019, with slow annual revenue growth over the years, resulting in its shares declining. With a high quarterly (Q1 2024) cash burn rate of 42.97% and liquid assets expected to last only four to five quarters, Karyopharm is facing significant financial issues. The company’s Q1 2024 financials show a $37.4 million net loss in terms of revenue as well as a $38.7 million drop in sales from the same quarter previous year to $33.1 million, with U.S. XPOVIO’s net product revenue forecast to be between $100.0 million and $120.0 million by 2024. Sales of selinexor have been hampered by competition in the multiple myeloma market, and revenue has been further stretched by an increase in rebates and discounts. Significant risks are associated with the impending Phase 3 studies, and mistrust is raised by earlier selinexor failures. Karyopharm is a high-risk venture because of the lengthy wait for trial results, budgetary restrictions, and the lack of early, overwhelming trial effectiveness.
Despite these obstacles, Karyopharm Therapeutics Inc. (NASDAQ: KPTI) is making great progress with its nuclear exportin 1 inhibitor, selinexor, which is being presented in seven different ways at the ASCO meeting. The company is exploring the possibility of selinexor, its key product in treating endometrial cancer and myelofibrosis, through key trials that, if successful, may revolutionize the field. The SIENDO trial accomplished its primary aim, with patients receiving Xpovio showing a statistically significant increase in median progression-free survival compared to placebo. Karyopharm has enough liquid assets ($192.4 million) to cover its operations through the end of 2025. Significant debt restructuring was announced by Karyopharm, delaying most repayments until 2028-2029 and resulting in $30 million in liquidity on the balance sheet and a reduced selinexor royalty rate. Considering that the company has three key Phase 3 studies and many shots on target, its valuation of little over $100 million seems low (undervalued). The myelofibrosis studies and the endometrial cancer research, which focuses on TP53 wild-type patients in particular, have the potential to grow selinexor’s market beyond its present usage in multiple myeloma.
Furthermore, Karyopharm Therapeutics Inc. (NASDAQ:KPTI) has received an average price target of $4.60, reflecting analysts’ bullish outlook on the stock. The price target reflects a potential upside of over 424.64% from the current stock price of $0.88. Meanwhile, 5 analysts have given the stock a “Buy” rating.
Karyopharm Therapeutics Inc. (NASDAQ:KPTI) was owned by 19 of the 920 hedge funds that Insider Monkey examined in the first quarter of this year. Jonathan Berger’s Birch Grove Capital held the largest stake in the company, with 6,000,00 shares worth $3.21 million.
3. Terran Orbital Corporation (NYSE:LLAP)
Number of Hedge Fund Investors: 19
One of the best penny stocks to buy under $1 is Terran Orbital Corporation (NYSE:LLAP), with a price of $0.82. The company produces and markets small satellites for the aerospace and defense sectors in the United States and across the world. In February 2024, the company revealed good news that a lunar satellite manufactured for a customer had completed 450 days of journeying around the Moon.
The share price of LLAP has historically dropped dramatically, returning over -92% during the last five-year period. Double-digit daily percentage movements in the share price of Terran Orbital have become the norm, indicating the company’s volatility. However, over the previous several years, the share prices of other comparable small space firms have also seen significant decreases, such as Redwire Corporation (NYSE:RDW) which is still trading at $7.10. The high expenses, need for technical competence, and space operating rules are major problems affecting these tiny space companies. Notwithstanding these obstacles, if launch costs are lowered, the space sector may witness increased profitability and $1 trillion in yearly revenue by 2040, per research. Investment in small space firms may therefore involve high risk but also tremendous gain.
Terran Orbital Corporation struggles to construct satellites profitably, as indicated by a slightly positive gross profit in 2023 and a negative gross profit in 2022, despite a strong yearly revenue increase over the years, with 44.23% in 2023. However, in Q1 2024, the firm received more than $100.0 million in new contracts, suggesting a backlog of nearly $2.8 billion. Significant worries include the company’s heavy debt load, expensive share-based remuneration, and dependence on the Rivada contract. The $171 million long-term debt that is due in 2026 and the company’s recent cash balance of $71.66 million, which only covers a few quarters of cash burn, with negative cash growth of -23.41%, serve as more evidence of the company’s financial fragility. These elements raise serious concerns about investment risks and call into question LLAP’s long-term sustainability. However, 4Q23 results were above expectations, with sales of $31.6 million over the estimated $30.7 million, showing LLAP’s capacity to outperform financially. The $500 million buyout offer made by Lockheed Marti, an American aerospace and defense manufacturer, which works out to $1 per share, highlights the strategic importance of LLAP’s technology and assets.
Analysts have recommended a “strong buy” based on the average price objective of $4.75, implying that investors may potentially profit by 505.33% from the current stock price of $0.78.
In the first quarter of 2024, there were 19 hedge funds for Terran Orbital Corporation (NYSE:LLAP) in IM’s database. The company’s biggest shareholders are Andrew Cohen, Peter Cohen, and Greg Davis’s Difesa Capital Management.
2. Lyra Therapeutics, Inc. (NASDAQ:LYRA)
Number of Hedge Fund Investors: 27
Lyra Therapeutics, Inc. (NASDAQ:LYRA), a clinical-stage biotechnology company, specializes in the development and commercialization of innovative integrated drug and delivery systems for the localized treatment of patients with ear, nose, and throat diseases. It’s XTreo technology platform is intended to deliver medications directly to the damaged tissue for extended periods of time with a single dose. The company’s product candidates include LYR-210, an anti-inflammatory implanted drug matrix for the treatment of chronic rhinosinusitis (CRS), which is in Phase III clinical trials, and LYR-220 for CRS patients with or without nasal polyps. It has signed a partnership agreement with LianBio Inflammatory Limited to develop and commercialize LYR-210 in mainland China, Hong Kong, Taiwan, Macau, South Korea, Singapore, and Thailand. The company generates collaboration revenue.
Four years ago, the stock price of this company was $18.56; today, it is only $0.29. Its market capitalization is currently $16.50 million, however, three years ago, its value was over $147.40 million. It has lost 98% of its value as of July 10. LYRA is a cash-burning company with a high burn rate and poor sales. It has lost about $22 million in cash since 2020, and its sales need to be stronger to make up for this deficit. When the company’s phase 3 study for LYR-210 failed to reach the primary goal, shares fell by 92% in May 2024. The firm is planning rapid labor cutbacks and operational modifications in order to preserve cash. For example, it recently announced the implementation of a layoff of approximately 75% of its workforce.
Positive updates from phase 2 trials and perhaps good phase 3 findings have resulted from Lyra Therapeutics’ (NASDAQ: LYRA) unique XTreo technology. The company’s cash balance is $104.15 million, allowing it to operate until 2025. In Q1 2024, LYRA’s financial growth was noteworthy. Revenue climbed by 29.76% from $410,000 to $532,000 in the same quarter of the previous year. Advances and promising results from clinical studies, especially the ENLIGHTEN 1 Phase 3 study of LYR-210 in chronic rhinosinusitis (CRS), contributed to Lyra Therapeutics increased revenue. Furthermore, there were no unfavorable product-related occurrences, indicating a positive safety profile for the company.
LYRA’s annual revenue has been consistently growing YoY over the past three years, by 378.25% in 2022, 14.31% in 2023, and 28.74% in TTM. Lyra Therapeutics, Inc (NASDAQ: LYRA) in the mental health industry is constantly making efforts to make mental care accessible to as many patients across the nation as possible. Hence, analysts are bullish, and they believe that the company’s efforts are yielding results in the financial area.
Currently trading at $0.29, Lyra Therapeutics, Inc. (NASDAQ:LYRA) has an average price target of 4.50 and a “buy” recommendation from analysts, suggesting an upside potential of 1,437.41% for investors.
27 out of the 920 hedge funds in Insider Monkey’s database had stock in LYRA. Joseph Edelman’s Perceptive Advisors is the largest stakeholder in the company, with 12,757,562 shares worth $79.35 million.
1. Augmedix, Inc. (NADAQ:AUGX)
Number of Hedge Fund Investors: 27
Augmedix, Inc. (NADAQ:AUGX), a San Francisco-based healthcare technology company, offers live clinical support services and remote medical documentation solutions to the top healthcare systems in the United States using ambient AI technology. Augmedix Live and Augmedix Notes are its systems, which include pre-visit documentation (pre-charting and digitizing of prior records/patient history), during-visit documentation, post-visit documentation, and an after-visit summary. Using mobile devices, clinicians may access its apps.
Following the company’s reduction of its full-year expectation and guidance for lower-than-expected revenue for the period, Augmedix’s shares saw a 41% drop in May 2024. In FY 2023, the company’s net loss in terms of revenue was -$19.2 million, while its adjusted EBITDA loss was -$15.2 million, indicating continued unprofitability. Cash flow concerns continue, with a $15 million operational cash flow burn and a reliance on $43 million obtained through financing operations to boost its cash balance. This has allowed AUGX to more than double its cash position YoY to $46 million in fiscal year 2023 while burning down $15 million in cash from operations. With a current trade price of $0.89, the stock is down more than 84% year to date and has returned more than 82% since its IPO. Concerns exist over profitability and the requirement for additional capital raising. It’s operating income has been negative over the years.
As per Grand View Research, the AI-driven healthcare sector, which is expected to grow at a 29.3% CAGR and reach $22 billion by 2030, presents an opportunity for Augmedix (NASDAQ: AUGX). In 2023, the company’s annual revenue growth rate exceeded 45%, outperforming the market. The company, being a leader in ambient AI medical documentation and data solutions, has shown strong financial performance, with annual revenue increasing every year. Revenue surged from $22.17 million in 2021 to $30.93 million in 2022 and then $44.85 million in 2023, further increasing to $48.70 million during the last 12 months. Strong client demand and the effective implementation of their new AI-powered medical documentation solutions have resulted in a rise in Augmedix’s revenue.
Its robust clientele includes HCA Healthcare and Dignity Health. Augmedix reported total sales of $13.5 million in Q1 2024, a 40% increase from the same quarter last year, despite an adjusted EBITDA loss of $5.1 million, outperforming projections and consensus. The reported quarterly EPS of $0.12 was in line with analysts’ expectations.
Augmedix Go’s testing in an emergency department environment with HCA Healthcare, as well as its anticipated full launch in March 2024, demonstrate the potential for product growth and higher market penetration. Furthermore, Augmedix’s business plan calls for recurrent monthly payments under annual agreements, indicating a steady and predictable source of income.
While we acknowledge the potential of penny stocks, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AUGX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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