10 Best Quality Penny Stocks To Buy

5. RLX Technology Inc. (NYSE:RLX)

Stock Price as of September 3: $1.68

Number of Hedge Fund Holders: 14

RLX Technology Inc. (NYSE:RLX) is a China-based company that is a leading player in the e-vapor industry. Through its subsidiaries and a variable interest entity, the company focuses on developing, manufacturing, and selling e-vapor products. Its operations span the entire supply chain, from production to offline distribution as the company aims to provide high-quality, compliant products for adult smokers.

The company targets consumers with varying income levels through its new product lines. In China, the introduction of the mega-sized Daqian series, featuring 6-ml and 10-ml pods at more affordable prices than its flagship Infinity pods, provides value-conscious consumers with cost-effective alternatives. This move helps the company grow stronger in its home market by meeting the rising demand for affordable products while maintaining good quality.

For international markets, RLX (NYSE:RLX) has launched the RELX Pod Pro series, which offers up to 1,000 puffs per pod, nearly double the capacity of standard pods, which delivers a better value for consumers in regions with different economic conditions. The company tailors its product lines to meet the specific needs of different income groups, which broadens the company’s market appeal and puts it in a stronger competitive position across global markets.

RLX (NYSE:RLX) reported its Q2 results on August 16. While the company’s revenue missed the analyst estimates by a slight margin, the revenue showed a nearly 66% increase at $86.3 million. Its EPS of $0.02 was in line with the estimates and was up 100% year-over-year.

Analysts see the company stock in a positive light as all 4 analysts that have covered the stock maintain a Buy-equivalent rating with an average price target of $2.76. It represents over 64% upside to the company’s stock at current levels on September 3.

In the second quarter, 14 hedge funds had stakes worth $60.8 million in RLX (NYSE:RLX). As of June 30, Wildcat Capital Management is the company’s most prominent stakeholder with 18.046 million shares worth $33.2 million. This brings the company to the 5th position on our list of best penny quality penny stocks to buy.