In this article, we discuss the 10 new penny stocks Redditors are buying. If you want to skip our detailed analysis of these stocks, go directly to the 5 New Penny Stocks Redditors are Buying.
Penny stocks have started gaining traction on popular Reddit forums in the past few months as retail investors, who are often willing to bet on growth domains like software, biotechnology, and space, become an important market force. In June, investment bank Morgan Stanley revealed that retail investors accounted for roughly 10% of daily trading volume on the Russell 3000 – the broadest US stock index. At the peak of retail investor interest in the market last year, these investors were responsible for 15% of the daily trading volume on the Russell 3000.
When viewed in context of a JPMorgan report earlier this year that a retail investor boom in the market was just beginning and that these investors were set to pour over $1 trillion into equities this year, the interest around penny stocks has exploded. Reddit forums, often the social media platform of choice for these retail investors, are full of discussions around the next big penny stocks. Some of these stocks are discussed in detail below. However, Reddit forums are also focused around more expensive growth offerings as well.
Some of the stocks presently popular on Reddit include Apple Inc. (NASDAQ: AAPL), Advanced Micro Devices, Inc. (NASDAQ: AMD), Tesla, Inc. (NASDAQ: TSLA), Alibaba Group Holding Limited (NYSE: BABA), and NVIDIA Corporation (NASDAQ: NVDA), among others. Nikolaos Panigirtzoglou, a global markets strategist at JPMorgan, estimates that retail investors have already invested close to $500 billion into stocks this year. In a report, he highlighted the significance of the market transformation as a result of this.
According to Panigirtzoglou, a list of stocks popular with retail traders in the US had rebounded in May and had outperformed the benchmark S&P 500 since March 2020. The strategist also highlighted how a basket of stocks containing NASDAQ-listed and Russell 2000 firms had also outperformed the S&P 500 since mid-May, underscoring the market shift towards growth and small-caps. This retail investor frenzy has also upended the world of finance, resulting in the rise of fintech and cryptocurrencies.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Our Methodology
With this context in mind, here is our list of the 10 new penny stocks Redditors are buying. They were picked keeping in mind the hype around the companies on Reddit forums like WallStreetBets. All the stocks listed below are priced under $5 per share.
The hedge fund sentiment around the stocks was gauged using data of 873 hedge funds tracked by Insider Monkey. The list is compiled according to the number of hedge funds having stakes in each stock.
The analyst ratings of the companies and their basic business fundamentals are also discussed to provide readers with some more context for their investment decisions.
New Penny Stocks Redditors are Buying
10. Cinedigm Corp. (NASDAQ: CIDM)
Number of Hedge Fund Holders: 2
Cinedigm Corp. (NASDAQ: CIDM) is placed tenth on our list of 10 new penny stocks Redditors are buying. The company engages in the distribution and marketing of short-form content in different forms and is headquartered in New York.
On August 2, investment advisory Alliance Global Partners maintained a Buy rating on Cinedigm Corp. (NASDAQ: CIDM) stock and raised the price target to $3.25 from $3, noting that the firm was well positioned for continued growth.
At the end of the second quarter of 2021, 2 hedge funds in the database of Insider Monkey held stakes worth $5.9 million in Cinedigm Corp. (NASDAQ: CIDM), down from 5 in the previous quarter worth $695,000.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Cinedigm Corp. (NASDAQ: CIDM) with 4.2 million shares worth more than $5.4 million.
Just like Apple Inc. (NASDAQ: AAPL), Advanced Micro Devices, Inc. (NASDAQ: AMD), Tesla, Inc. (NASDAQ: TSLA), Alibaba Group Holding Limited (NYSE: BABA), and NVIDIA Corporation (NASDAQ: NVDA), Cinedigm Corp. (NASDAQ: CIDM) is one of the stocks attracting retail investor interest on Reddit.
9. Verb Technology Company, Inc. (NASDAQ: VERB)
Number of Hedge Fund Holders: 3
Verb Technology Company, Inc. (NASDAQ: VERB) is ranked ninth on our list of 10 new penny stocks Redditors are buying. The company offers software-related services for business clients and is headquartered in Utah.
On July 23, investment advisory Alliance Global Partners reiterated a Buy rating on Verb Technology Company, Inc. (NASDAQ: VERB) stock and raised the price target to $4 from $2.75, noting that the firm was past a development stage and entering monetization.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $710,000 in Verb Technology Company, Inc. (NASDAQ: VERB), the same as in the previous quarter worth $195,000.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Verb Technology Company, Inc. (NASDAQ: VERB) with 273,806 shares worth more than $561,000.
Along with Apple Inc. (NASDAQ: AAPL), Advanced Micro Devices, Inc. (NASDAQ: AMD), Tesla, Inc. (NASDAQ: TSLA), Alibaba Group Holding Limited (NYSE: BABA), and NVIDIA Corporation (NASDAQ: NVDA), Verb Technology Company, Inc. (NASDAQ: VERB) is one of the stocks trending on Reddit.
8. BEST Inc. (NYSE: BEST)
Number of Hedge Fund Holders: 3
BEST Inc. (NYSE: BEST) is a China-based company that markets smart supply chain solutions through a technology platform that uses the cloud. It is placed eighth on our list of 10 new penny stocks Redditors are buying.
On August 2, BEST Inc. (NYSE: BEST) announced that it was launching a full chain logistics service to ship parcels from China to Thailand, Vietnam, and Cambodia. The firm launched the service in partnership with Cainiao Smart Logistics Network.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Soros Fund Management is a leading shareholder in BEST Inc. (NYSE: BEST) with 22 million shares worth more than $14 million.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $2.1 million in BEST Inc. (NYSE: BEST), down from 5 in the preceding quarter worth $857,000.
In addition to Apple Inc. (NASDAQ: AAPL), Advanced Micro Devices, Inc. (NASDAQ: AMD), Tesla, Inc. (NASDAQ: TSLA), Alibaba Group Holding Limited (NYSE: BABA), and NVIDIA Corporation (NASDAQ: NVDA), BEST Inc. (NYSE: BEST) is one of the stocks commanding attention on Reddit.
7. Citius Pharmaceuticals, Inc. (NASDAQ: CTXR)
Number of Hedge Fund Holders: 3
Citius Pharmaceuticals, Inc. (NASDAQ: CTXR) is a New Jersey-based specialty pharmaceutical firm that develops and markets drugs for critical care. It is ranked seventh on our list of 10 new penny stocks Redditors are buying.
On September 7, Citius Pharmaceuticals, Inc. (NASDAQ: CTXR) announced that it had signed an agreement with Dr. Reddy’s Laboratories for exclusive licensing of E7777, an oncology immunotherapy for the treatment of cutaneous T-cell lymphoma.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Citius Pharmaceuticals, Inc. (NASDAQ: CTXR) with 1.8 million shares worth more than $6.6 million.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $7.5 million in Citius Pharmaceuticals, Inc. (NASDAQ: CTXR), down from 5 in the previous quarter worth $2.7 million.
Apple Inc. (NASDAQ: AAPL), Advanced Micro Devices, Inc. (NASDAQ: AMD), Tesla, Inc. (NASDAQ: TSLA), Alibaba Group Holding Limited (NYSE: BABA), and NVIDIA Corporation (NASDAQ: NVDA) are some of the most popular stocks on Reddit, just like Citius Pharmaceuticals, Inc. (NASDAQ: CTXR).
6. CorMedix Inc. (NASDAQ: CRMD)
Number of Hedge Fund Holders: 5
CorMedix Inc. (NASDAQ: CRMD) is placed sixth on our list of 10 new penny stocks Redditors are buying. The company operates from New Jersey and concentrates on the development of drugs for the treatment of infectious diseases.
In March, investment advisory Truist maintained a Buy rating on CorMedix Inc. (NASDAQ: CRMD) stock but lowered the price target to $27 from $30, underlining that the enthusiasm for Defencath, a pipeline drug of the firm, remained unchanged despite cash overhang.
At the end of the second quarter of 2021, 5 hedge funds in the database of Insider Monkey held stakes worth $12.4 million in CorMedix Inc. (NASDAQ: CRMD), up from 3 in the previous quarter worth $17.5 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Elliott Management is a leading shareholder in CorMedix Inc. (NASDAQ: CRMD) with 1.5 million shares worth more than $10.6 million.
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Disclosure. None. 10 New Penny Stocks Redditors are Buying is originally published on Insider Monkey.
