In this article, we will take a look at the 10 penny stocks that can grow big in 2023. If you want to see more stocks in this selection, go to the 5 Penny Stocks That Can Grow Big in 2023.
Numerous speculative asset classes, including cryptocurrency and penny stocks, have suffered at the hands of economic uncertainty this year. Although some penny stocks might have outperformed the market, the broader view taken by the market regarding penny stocks has been bearish. The Russell 2000 Index, which comprises the 2,000 smallest companies in the Russell 3000 Index, saw a decline of 19.5% since the start of the year and has lost as much as 26% multiple times this year. The Russell 3000 Index comprises small-cap companies only. This reflected a reversal of the trend of 2021 when penny stocks were in the limelight and the talk of the town. During 2021, the Russell 2000 Index saw a rise of 13.7%. However, we anticipate a turn of fortunes in the penny stock universe in 2023. This is because the level of economic uncertainty can be expected to ease as experts believe that inflation has peaked in the US. In 2023, once the economy cools down and inflation rates stabilize, the US Federal Reserve can be expected to take expansionary actions that can result in a rally for penny stocks.
It must be noted that investing in penny stocks comes with a significant level of uncertainty. The stock price movement of penny stocks can be unpredictable, especially when investors start to take an interest in a penny stock for speculative purposes only. However, some small-cap companies operating in the leading sectors, such as biotechnology, artificial intelligence (AI), and electric vehicles (EVs), have the potential to expand rapidly in 2023. Taking a stake in these companies can allow investors to benefit from solid returns in a short period of time. Some of the best penny stocks attracting hedge fund investment currently include WeWork Inc. (NYSE:WE), Clover Health Investments, Corp. (NASDAQ:CLOV), and Riot Blockchain, Inc. (NASDAQ:RIOT).
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Our Methodology
The penny stocks included in this list are trading under $5 and have a market capitalization between $300 million to $2 billion as of December 12. We have shortlisted these stocks based on the growth potential offered by each one of them. These small-cap companies are expected to grow to become mid-cap companies based on the growth catalysts. Furthermore, we have also taken a look at analyst ratings. We have avoided penny stocks with a market capitalization of less than $300 million as these companies may not be the best investment options currently due to rampant inflation and rising benchmark interest rates. We have used Insider Monkey’s database of 920 hedge funds as of Q3 2022 to rank the best penny stocks.
10 Penny Stocks That Can Grow Big in 2023
10. Geron Corporation (NASDAQ:GERN)
Number of Hedge Fund Holders: 16
Geron Corporation (NASDAQ:GERN) is a Menlo Park, California-based late-stage clinical biotech company focused on developing and commercializing a first-in-class telomerase inhibitor known as imetelstat. The therapeutic is being developed to treat certain types of cancer.
Geron Corporation (NASDAQ:GERN) is anticipating positive results of phase three trials for one of its therapeutics in January. The market also appears to agree that the company will be successful in its efforts to obtain clearance for Imetelstat. Considering that the management expects the drug’s peak sales of $1.2 billion in Lower Risk Myelodysplastic Syndrome (LRMDS) alone, Geron Corporation’s (NASDAQ:GERN) market capitalization is expected to rise after new data is published in early 2023. Analysts believe a favorable outcome could result in significant growth for the company as it intends to submit a New Drug Administration (NDA) with the US Food and Drug Administration (FDA) and a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) during 2023.
Robert Driscoll at Wedbush initiated coverage on Geron Corporation (NASDAQ:GERN) stock with an Outperform rating and a target price of $5 in a research note issued on October 28. The analyst also expects a positive outcome of the Phase 3 drug trials that could pave the way for a commercial launch in 2024, providing a further boost to the stock price. Experts are bullish on the long-term outlook of Geron Corporation (NASDAQ:GERN) as one of the best penny stocks in the market.
9. Ardelyx, Inc. (NASDAQ:ARDX)
Number of Hedge Fund Holders: 19
Ardelyx, Inc. (NASDAQ:ARDX) is a Waltham, Massachusetts-based biotech company founded in 2007. The company has the distinction of developing and commercializing the first-in-class therapeutic for the treatment of irritable bowel syndrome. Furthermore, the company has therapeutics for the treatment of hyperphosphatemia, hyperkalemia, and metabolic acidosis in the pipeline.
In a report issued to investors on November 17, Christopher Raymond at Piper Sandler upgraded Ardelyx, Inc. (NASDAQ:ARDX) stock from a Neutral to an Overweight rating and increased the target price from $3 to $8. The target price reflects a potential upside of more than 346% from the closing price as of December 12. Raymond welcomed the surprising ruling by the FDA advisory in favor of tenapanor for its role in addressing dependent chronic kidney disease. The analyst is anticipating Ardelyx, Inc. (NASDAQ:ARDX) to receive approval to treat renal diseases and launch tenapanor in 2023 with a strong uptake.
In accordance with the company’s contract with HealthCare Royalty Partners (HCR), Ardelyx, Inc. (NASDAQ:ARDX) also received a $10 million advance payment in June. The company anticipates receiving another $5 million after its Japanese partner, Kyowa Kirin Corporation (KKC), receives regulatory permission for another drug application next year. In Q3 2022, Ardelyx, Inc. (NASDAQ:ARDX) reported revenue of $4.99 million, reflecting a YoY increase of 325%. The company’s strong fundamentals merit its inclusion in our list of the best penny stocks to invest in.
8. Sorrento Therapeutics, Inc. (NASDAQ:SRNE)
Number of Hedge Fund Holders: 10
Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is a San Diego, California-based biotech company focused on developing therapeutics to combat cancer, intractable pain, and COVID-19.
Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is the third biotech company on our list of the best penny stocks. The company is considered to have the greatest growth outlook as it focuses on developing and commercializing therapeutics in high-value areas. On November 2, Brandon Folkes at Cantor Fitzgerald initiated coverage on Sorrento Therapeutics, Inc. (NASDAQ:SRNE) stock with a target price of $5 along with an Overweight rating. The analyst thinks that the company has the potential to come up with best-in-class therapeutics in the field of infectious diseases, oncology, and pain. Folkes thinks that the current depressed valuation of the penny stock is due to the breadth of its pipeline. However, the pipeline provides an attractive risk and return profile for the company that is skewed toward offering high returns over the next year.
As of Q3 2022, Sorrento Therapeutics, Inc. (NASDAQ:SRNE) was held by 10 hedge funds.
7. 23andMe Holding Co. (NASDAQ:ME)
Number of Hedge Fund Holders: 11
23andMe Holding Co. (NASDAQ:ME) is a San Francisco, California-based company founded in 2006 that is a provider of detailed DNA genetic testing for ancestry, traits, and health-related purposes.
On November 28, Gaurav Goparaju at Berenberg commenced coverage on 23andMe Holding Co. (NASDAQ:ME) stock with a target price of $7 and a Buy rating. The analyst thinks that the company is in a strong position to develop a completely personalized and integrated next-generation healthcare and therapeutics platform by leveraging the power of customer genetics data. This could establish the company as a transformational player that can redefine the individualized healthcare ecosystem by bringing innovation in the field of genetics. 23andMe Holding Co.’s (NASDAQ:ME) strong growth prospects make it one of the best penny stocks to invest in.
According to data compiled by Insider Monkey, Jim Simons’ Euclidean Capital is the biggest hedge fund investor in 23andMe Holding Co. (NASDAQ:ME) as of Q3, with a stake of over 10.24 million shares, equivalent to 3.5% of the outstanding shares of the company.
6. Nikola Corporation (NASDAQ:NKLA)
Number of Hedge Fund Holders: 11
Nikola Corporation (NASDAQ:NKLA) is a Phoenix, Arizona-based producer of commercial and heavy-duty battery and fuel cell-powered electric vehicles (EVs) founded in 2014. The company has launched numerous concept vehicles from 2016 onwards and completed the acquisition of battery-pack producer Romeo Power in October 2022.
During these uncertain economic times, Nikola Corporation (NASDAQ:NKLA) is streamlining its operations to emerge as a leaner organization. Furthermore, the company has revealed that the loan application for its Phoenix Hydrogen Hub LLC project has reached the second round of review at the Department of Energy (DOE) Loan Program Office. The hub aims to create essential renewable energy solutions and contribute to a carbon-free transportation industry.
In November, Nikola Corporation (NASDAQ:NKLA) also established a partnership with Campbell, California-based ChargePoint holdings. The deal is aimed at expanding the EV charging infrastructure across the US. Based on these developments, Jeffrey Osborne at Cowen gave Nikola Corporation (NASDAQ:NKLA) stock an Outperform rating with a target price of $10 in a note issued to investors on November 4.
In addition to Nikola Corporation (NASDAQ:NKLA), companies like WeWork Inc. (NYSE:WE), Clover Health Investments, Corp. (NASDAQ:CLOV), and Riot Blockchain, Inc. (NASDAQ:RIOT) are also considered as some of the best penny stocks due to their strong growth prospects.
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Disclosure: None. 10 Penny Stocks That Can Grow Big in 2023 is originally published on Insider Monkey.
