In this article, we will be taking a look at the 10 best stocks to buy for a stock market game. To see more of these stocks, you can go directly to see the 5 Best Stocks To Buy For A Stock Market Game.
Investing in Penny Stocks
In a time when the markets are shrouded with uncertainty, gambling on the success of stocks that have been generating massive returns can be an effective investment strategy. There are many stocks today that have been posting large returns, such as Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Gilead Sciences, Inc. (NASDAQ:GILD). These stocks have returned 40.6%, 23.3%, and 36.94%, respectively, over the past year. This stock performance on the part of these companies can thus be a reliable indicator of the prospective future success of these stocks, making them worth the risk for many investors. Additionally, those who are entering the financial markets with prior knowledge of how to navigate them are more likely to take on such risks. Many companies and universities today use stock market simulations to teach their employees and students the basics of investing. The Harvard Business School offers a range of courses and programs on the stock market, and it has been noted that these programs give 92% of their students strengthened analytical skills while their return on investment increases 10x.
The University of Illinois offers its own online stock market simulation by the name of The Stock Market Game as well. Such programs and simulations exist to teach new investors and brokers the financial and economic concepts they need to be successful traders.
For those who have been trained on how to approach the markets in this manner, risky investment strategies like picking cheap stocks with high momentum can be an exciting endeavor. For example, investing in a penny stock under $5, which has posted returns of 30% or more over the past year, can be an adventurous way for an investor to cash in on large profits. Such cheap stocks with high momentum and positive price returns are often the best options for a stock market game since they add an element of adventure and uncertainty to the trade, and it can often be a challenge to make the right bet on the right stock. Thus, while penny stocks have always been risky investments, they can be incredibly attractive for those who can stomach the risk and stick with a stock they truly believe has the potential to rise to great heights. Additionally, many renowned stocks that have made investors rich today were once penny stocks. As one of our previous articles pointed out, examples of penny stocks that made it big include Micron Technology, Inc. (NASDAQ:MU), QUALCOMM Incorporated (NASDAQ:QCOM), Tesla, Inc. (NASDAQ:TSLA), and even Amazon.com, Inc. (NASDAQ:AMZN). With the exception of the first of these stocks, all of them have grown to be worth over $100 per share.
Source: pexels
Let’s now take a look at the 10 best stocks to buy for a stock market game.
Our Methodology
To compile our list below, we have selected penny stocks with positive price momentum as of April 25. We used a stock screener to find stocks with prices below $5 and with positive price returns of over 30% year to date as of April 25.
Best Stocks To Buy For A Stock Market Game
10. Performant Financial Corporation (NASDAQ:PFMT)
One-Year Return as of April 25: 30.83%
Number of Hedge Fund Holders: 13
Performant Financial Corporation (NASDAQ:PFMT) is an industrial company based in Livermore, California. It provides technology-enabled audit, recovery, and analytics services in the US. The company also identifies improper payments resulting from incorrect coding, among more.
Analysts on Wall Street have placed an average price target of $7 on Performant Financial Corporation (NASDAQ:PFMT) shares, which were trading at $3.14 as of April 25. This gives the stock an upside potential of 122.93%. Wall Street analysts view the stock as a Moderate Buy. In the fourth quarter, Performant Financial Corporation (NASDAQ:PFMT) generated revenues of $29.24 million, beating the company’s revenue for the previous quarter, which stood at $27.18 million.
Trellus Management Company was the largest shareholder in Performant Financial Corporation (NASDAQ:PFMT) at the end of the fourth quarter, holding 325,000 shares in the company. In total, 13 hedge funds were long the stock, with a total stake value of $92.8 million.
Performant Financial Corporation (NASDAQ:PFMT), like Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Gilead Sciences, Inc. (NASDAQ:GILD), is a popular stock with immense price momentum.
9. Gaotu Techedu Inc. (NYSE:GOTU)
One-Year Return as of April 25: 103.67%
Number of Hedge Fund Holders: 13
Gaotu Techedu Inc. (NYSE:GOTU) is a company operating within the education services industry. It is based in Beijing, China. It provides online K-12 after-school tutoring services in China.
Jeffrey Chan, an analyst at CLSA, upgraded shares of Gaotu Techedu Inc. (NYSE:GOTU) from Underperform to Outperform on February 13.
In the fourth quarter, Gaotu Techedu Inc. (NYSE:GOTU) reported revenues of $91 million. This figure represented the third consecutive quarterly revenue growth for the company on a sequential basis. The company’s gross margin also improved in the fourth quarter to 74.7%, from the 69.7% gross margin from a year ago. Shares of Gaotu Techedu Inc. (NYSE:GOTU) have posted one-year returns of over 100%, showing that the stock has immense price momentum.
Gaotu Techedu Inc. (NYSE:GOTU) had 13 hedge funds long its stock in the fourth quarter. Their total stake value was $15.7 million.
8. Ardelyx Inc. (NASDAQ:ARDX)
One-Year Return as of April 25: 373.23%
Number of Hedge Fund Holders: 13
Ardelyx Inc. (NASDAQ:ARDX) is a biopharmaceutical company based in Waltham, Massachusetts. The company develops and commercialized medicines to treat gastrointestinal and cardiorenal therapeutic areas.
Laura Chico, an analyst at Wedbush, holds an Outperform rating on Ardelyx Inc. (NASDAQ:ARDX) shares as of March 3.
In the fourth quarter, Ardelyx Inc. (NASDAQ:ARDX) generated about $8.7 million in net product sales and $36.6 million in collaboration revenue. Analysts on Wall Street have placed an average price target of $8 on the shares, which were trading at $4.61 on April 25. This gives shares of Ardelyx Inc. (NASDAQ:ARDX) an upside potential of 73.54%.
There were 13 hedge funds long Ardelyx Inc. (NASDAQ:ARDX) in the fourth quarter, with a total stake value of $59.9 million. Woodline Partners was the largest shareholder in the company, holding 3.5 million shares.
7. Nordic American Tankers Ltd. (NYSE:NAT)
One-Year Return as of April 25: 48.98%
Number of Hedge Fund Holders: 16
Nordic American Tankers Ltd. (NYSE:NAT) is an oil and gas storage and transportation company. It is based in Hamilton, Bermuda. The company acquires and charters double-hull tankers in Bermuda and internationally.
A Buy rating was reiterated on shares of Nordic American Tankers Ltd. (NYSE:NAT) on February 28 by analyst Liam Burke at B. Riley.
Nordic American Tankers Ltd. (NYSE:NAT) generated revenues of $71.1 million in the fourth quarter, representing an increase of over 215% year-over-year. The company is expected to generate $329 million in net voyage revenues and $165 million in net income for 2023. Wall Street analysts have placed an average price target of $5.13 on Nordic American Tankers Ltd. (NYSE:NAT) shares, which were trading at $3.69 on April 25. This gives the shares an upside potential of 39.21%.
Out of the 943 hedge funds tracked by Insider Monkey in the fourth quarter, 16 funds were long Nordic American Tankers Ltd. (NYSE:NAT). Their total stake value was $51.9 million.
6. Larimar Therapeutics, Inc. (NASDAQ:LRMR)
One-Year Return as of April 25: 32.35%
Number of Hedge Fund Holders: 18
Larimar Therapeutics, Inc. (NASDAQ:LRMR) is a biotechnology company based in Bala Cynwyd, Pennsylvania. The company works to develop treatments for rare diseases using its novel cell-penetrating peptide technology platform.
The average price target placed by Wall Street analysts on Larimar Therapeutics, Inc. (NASDAQ:LRMR) is $13.50, and its shares were trading at $4.5 on April 25. This gives the shares an upside potential of 200%. Analysts also consider the stock to be a Moderate Buy at present.
Larimar Therapeutics, Inc. (NASDAQ:LRMR) was found among the 13F holdings of 18 hedge funds in the fourth quarter, with a total stake value of $122 million. Solstein Capital was the largest shareholder in the company at the end of the fourth quarter, holding 4,477 shares.
Larimar Therapeutics, Inc. (NASDAQ:LRMR), like Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Gilead Sciences, Inc. (NASDAQ:GILD), is a stock many hedge funds are piling into today.
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Disclosure: None. 10 Best Stocks To Buy For A Stock Market Game is originally published on Insider Monkey.