In this article, we discuss the 10 penny stocks that can explode in 2022. In order to skip our detailed analysis of penny stocks, go directly to 5 Penny Stocks That Can Explode in 2022.
Small companies that have yet to prove their mettle, or struggling firms trading below $5 in the market, are called penny stocks, and they provide an ‘in’ for amateur investors with little money and huge ambitions. The average ‘smartphone investor’ does not have big money like Wall Street does, and using trading apps like Robinhood Markets, Inc. (NASDAQ:HOOD), they have become a crucial part of the investing economy, especially after the pandemic lockdowns which boosted amateur and retail investing.
Kate Rooney of CNBC reported in March 2021 that OTC (over the counter) markets where penny stocks usually trade recorded a 2000% jump year-on-year in trading volume, coming in at over $1.9 trillion. The GameStop ‘meme stock’ frenzy, initiated by amateur investors on Reddit, was also a driving force behind this trend. But come 2022, and penny stocks are not enjoying the same enthused public support anymore. January recorded an 11th consecutive monthly decline in the volume of OTC trades, falling more than 70% from last year’s highs, according to data provided by Finra, the US regulatory body for exchanges and brokers.
Cash at hand from stimulus cheques, opportunity from beaten-down assets, and lockdown boredom enabled this boom in penny stock investing during the pandemic, but the situation stands changed now. The Russia-Ukraine war, increasing interest rates, and inflationary pressure weighing down on all sectors of the economy have led investors to seek big companies with proven track records.
Executive vice-president at OTC Markets Group Jason Paltrowitz noted in February that over-the-counter activity remained above pre-pandemic levels, and he expects this ‘new normal’ to sustain in the long-term, even though penny stock investing by amateur investors had leveled off.
Not everyone can initiate their investing journey with stocks such as Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL), so we’ve come up with 10 penny stocks we think carry enormous growth potential in 2022.
Photo by Adam Nowakowski on Unsplash
Our Methodology
To compile the following list, we picked 10 penny stocks with positive analyst ratings and growth catalysts in the near-term. We also looked for solid business fundamentals and companies working on products with large addressable markets.
10 Penny Stocks That Can Explode in 2022
10. Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ)
Number of Hedge Fund Holders: 2
Share Price (as of March 18): $1.56
Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ) is first up on our list of penny stocks to buy in 2022. The firm offers stem cell treatments for adults in the field of immunology, orthopedics, urology, and neurology. Its treatments include StemSpine which is used for the treatment of chronic lower back pain, ImmCelz for the treatment of stroke patients, OvaStem for the treatment of female infertility, and CaverStem for the treatment of erectile dysfunction. Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ) also offers OncoCyte, which is a diagnostic test for cancer patients which helps optimize treatment, and TheraSure, a monitoring test for transplant rejection.
As of November 8 2021, Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ) shares traded at $0.01, and have jumped 38,000% in the last 12 months, currently standing at $1.56 as of March 18.
On February 25, Roth Capital analyst Jonathan Aschoff initiated coverage of Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ) with a ‘Buy’ rating and $10 price target. The analyst arrived at his target by projecting future US revenue from the firm’s CaverStem, FemCelz, StemSpine, OvaStem, and ImmCelz treatments in their respective initial disease indications, and his current valuation does not include potential commercial upside from other indications early in development.
Out of all the hedge funds tracked by Insider Monkey, 2 hedge funds initiated their positions in Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ) during the fourth quarter, with combined stakes worth $199,000.
Unlike blue chip stocks such as Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL); Creative Medical Technology Holdings, Inc. (NASDAQ:CELZ) an affordable option for beginner investors.
9. Mullen Automotive, Inc. (NASDAQ:MULN)
Number of Hedge Fund Holders: 3
Share Price (as of March 18): $2.90
Mullen Automotive, Inc. (NASDAQ:MULN) is an electric vehicle firm based in California. It has gained 375.41% in the last month, and is a pioneer in the field of solid-state polymer battery technology, which is an upgrade over the lithium-ion batteries currently deployed in electric vehicles.
On March 17, Mullen Automotive, Inc. (NASDAQ:MULN) was featured on Yahoo Finance Live as an ‘EV stock standout’. Reporters Rachelle Akuffo and Brad Smith said the top reasons for the stock’s impressive growth included its progress on solid-state battery technology, positive coverage on CarBuzz, strong performance in a recent EV market study, and a significant domestic presence.
In February Mullen Automotive, Inc. (NASDAQ:MULN) posted an update on its efforts to produce electric car batteries that will replace the lithium-ion technology. It said that testing revealed the potential for a 150-kilowatt-hour battery pack which can deliver around 600-plus miles of range, and gives 300 miles of range with an 18-minute DC fast charge. Mullen Automotive, Inc. (NASDAQ:MULN) is expected to perform in-vehicle prototype testing of this battery technology by 2025.
Mullen Automotive, Inc. (NASDAQ:MULN) produces the Mullen 5 electric vehicle, which is competing strongly with established electric cars such as Ford Mach-E and Tesla Y, as reported by a recently conducted study. 3 hedge funds were bullish on Mullen Automotive, Inc. (NASDAQ:MULN) shares at the close of the fourth quarter, with combined positions worth $512,000. This is up from 2 hedge funds in the third quarter with stakes worth $318,000.
8. Eos Energy Enterprises, Inc. (NASDAQ:EOSE)
Number of Hedge Fund Holders: 5
Share Price (as of March 18): $4.11
Next up is Eos Energy Enterprises, Inc. (NASDAQ:EOSE), a New Jersey-based firm that develops battery storage solutions for the commercial, industrial, utility, and renewable energy markets in the United States. The Eos Znyth DC battery system, its zinc-based flagship product, is a crucial upgrade to the existing lithium-ion technology and is designed to provide uninterrupted backup power and efficient electricity storage.
Eos Energy Enterprises, Inc.’s (NASDAQ:EOSE) revenue for the fourth quarter stood at $3.10 million, which was an astounding increase of 1,586.96% compared to the year-ago period. Analyst Christopher Souther of research firm B. Riley maintained a ‘Buy’ rating on Eos Energy Enterprises, Inc. (NASDAQ:EOSE) stock on February 28, noting that he likes the firm’s long-term outlook. He revised the price target to $13 from $14.
As of March 18, shares of Eos Energy Enterprises, Inc. (NASDAQ:EOSE) gained 39.32% in the last month. The firm has seen insider buying recently, with its top executives including the CEO, CFO, General Counsel and Director buying a total of around 108,000 shares.
As of the fourth quarter, 5 hedge funds held positions worth $3.06 million in Eos Energy Enterprises, Inc. (NASDAQ:EOSE), the same number of hedge funds as the previous quarter. Royce & Associates was the top shareholder of Eos Energy Enterprises, Inc. (NASDAQ:EOSE) in the fourth quarter, holding 90,000 shares worth $677,000.
Evermore Global Advisors, an investment firm, mentioned Eos Energy Enterprises, Inc. (NASDAQ:EOSE) in its Q4 2020 investor letter, stating:
“Eos Energy Enterprises, Inc. (Country: U.S.; Ticker: EOSE US) is a $1.2 billion market capitalization (on a fully diluted share count basis) designer and manufacturer of stationary, large-scale, and modular zinc-based battery systems sold to electric utilities, power producers, and industrial energy end users. Its batteries are predominantly used to store renewable power generated during low demand “off-peak” hours, and discharge at times of higher demand and/or elevated spot electricity prices. Secondarily, in areas with unreliable grids or grids that are prone to rolling brownouts (as California has been experiencing), Eos solutions can provide uninterrupted backup power supply for industrial customers. Based in Edison, New Jersey, the company came to market in November 2020 via its merger into a special purpose acquisition company (or “SPAC”), B. Riley Principal Merger Corp. II (old ticker: BMRG US), in a deal that left Eos with approximately $130 million of net cash.
Until now, the small installed base of grid storage battery capacity in the U.S. has utilized lithium-ion batteries, with technology largely piggybacking off developments made for electric vehicle applications. But given the risks of fire in high temperature climates among other drawbacks (including supply chain fragility/complexity, and difficulty in end-of-life battery recyclability), lithium-ion has proven to be technologically challenging for grid storage applications, keeping a lid on the pace of deployments. Zinc-based chemistry on the other hand, like that found in the Eos Aurora solution, can operate in much wider temperature ranges than lithium-ion, with no practical risk of fire. Eos also offers a fully domestic supply chain, better recyclability, and a slower discharge rate. As a result, despite lithium-ion’s clear advantages in certain important metrics like density and round-trip-efficiency, its specific drawbacks mean that in a number of applications (or regions) Eos’ offerings ultimately yield a lower total cost of ownership to its customers.
Eos has a solid first-to-commercialize advantage within its zinc chemistry niche. We expect this, along with an extremely efficient “build as we need it” approach to manufacturing capacity, has potential to translate to a leading market share within a rapidly growing field. Global energy consultancy, Wood Mackenzie, for instance, projects 31% annual growth in deployed battery storage systems over the next decade, reaching 740 GWh installed capacity globally by 2030. While the company is in the very early stages of its revenue ramp, its sales pipeline and backlog are growing steadily. With over 130 active engagements on potential projects, Eos has disclosed that at the end of 2020 it had an opportunity pipeline of over $3 billion. At the time of its merger into the SPAC, Eos projected it would generate $50 million and $269 million in revenue for 2021 and 2022, respectively. We believe the company will comfortably exceed these levels given the pace of revenue conversion and pipeline growth it has experienced since the completion of the merger. Grid storage batteries are sold with multi-year warranties. Thus, we believe the very act of going public (complete with a bolstered balance sheet, audited financials, and a “brand name”) has helped assuage concerns of customers that might otherwise be reluctant to enter into long term agreements.
Shares of Eos have been a phenomenal performer in the short period the Fund has owned them, having appreciated by more than 100% at year-end. With such high rates of revenue growth (management expects annual topline growth of nearly 400% through 2024 in its Base Case projection), admittedly it is difficult to value the business with a high degree of precision. However, based on our expectations, the Fund paid no more than 3x 2024 projected EBITDA for what we expect to be a fast-growing, and politically popular industry.”
7. Ideanomics, Inc. (NASDAQ:IDEX)
Number of Hedge Fund Holders: 7
Share Price (as of March 18): $1.00
Ideanomics, Inc. (NASDAQ:IDEX) is a New York-based firm that is driving the adoption of commercial electric vehicles. It also offers fintech products. The firm provides end-to-end solutions to commercial EV fleet operators such as purchasing, financing, charging, and energy solutions. As zero-emissions become an important priority for governments, fleet operators are encouraged to make the switch to electric vehicles, and Ideanomics, Inc. (NASDAQ:IDEX) is at the forefront to drive and benefit from this trend.
Ideanomics, Inc. (NASDAQ:IDEX) in September 2021 increased its stake in Italian EV motorcycle manufacturing firm Energica to 70%. This deal has enabled Ideanomics, Inc. (NASDAQ:IDEX) complete OEM (original equipment manufacturer) capabilities across all vehicle body types in the EV segment. The firm also plans to open a New Jersey location in 2022, which will display its mobility products and services.
Last year, Ideanomics, Inc. (NASDAQ:IDEX) acquired VIA Motors International in a $450 million deal. VIA is a Utah-based electric vehicle developer which makes electric trucks and buses for commercial uses in the United States and Canada and now operates as a distinct business unit after the acquisition.
On February 11, Cantor Fitzgerald analyst Andres Sheppard initiated coverage of Ideanomics, Inc. (NASDAQ:IDEX) with an ‘Overweight’ rating and $3 price target, noting that he believes the company’s different business segments are being undervalued in the market, and this dislocation in valuation presents an interesting upside opportunity.
Out of all the hedge funds tracked by Insider Monkey, 7 hedge funds held stakes worth $8.68 million in Ideanomics, Inc. (NASDAQ:IDEX) at the close of the fourth quarter. D E Shaw upped its stake in the firm by 31% in the fourth quarter to consist of 5.3 million shares valued at $6.35 million, making it the top shareholder of Ideanomics, Inc. (NASDAQ:IDEX).
6. Limelight Networks, Inc. (NASDAQ:LLNW)
Number of Hedge Fund Holders: 11
Share Price (as of March 18): $4.78
Limelight Networks, Inc. (NASDAQ:LLNW) provides services related to content delivery networks, live and on-demand video delivery services, edge computing, and cloud security services.
In early March, Limelight Networks, Inc. (NASDAQ:LLNW) agreed to acquire Yahoo’s Edgecast, which is a provider of security, content delivery, and video services. Edgecast, formerly Verizon Digital Media Services, is a subsidiary of Yahoo and will be acquired in an all-stock transaction worth $300 million.
Raymond James analyst Frank Louthan on March 11 gave Limelight Networks, Inc. (NASDAQ:LLNW) a ‘Strong Buy’ rating and raised the price target to $8 from $5, noting his belief that this acquisition can drive higher sales and a stronger valuation over the next few quarters.
On March 17, Cowen analyst Michael Elias upgraded Limelight Networks, Inc. (NASDAQ:LLNW) to ‘Outperform’ from ‘Market Perform’, and set a price target of $6, up from $4. Elias noted potential upside from the firm regaining lost traffic share, and sees attractive risk/reward at current levels. He also sees the Edgecast deal positioning the company for accelerated growth and profitability.
As of March 18, Limelight Networks, Inc. (NASDAQ:LLNW) has gained 35.03% in the last 12 months, and 95.10% in the last 6 months. EPS for the fourth quarter was recorded at $0.02, above estimates by $0.01.
11 hedge funds out of the 924 tracked by Insider Monkey were long Limelight Networks, Inc. (NASDAQ:LLNW) in the fourth quarter of 2021, with positions worth $119.5 million. This is up from 10 hedge funds in the preceding quarter with stakes worth $95 million in the firm. Lynrock Lake was a leading shareholder of Limelight Networks, Inc. (NASDAQ:LLNW) in Q4 2021, with a position consisting of 4.1 million shares valued at $14.08 million.
Unlike blue-chip names like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL), Limelight Networks, Inc. (NASDAQ:LLNW) is a penny stock with explosive growth potential.
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Disclosure. None. 10 Penny Stocks That Can Explode in 2022 is originally published on Insider Monkey.
