In this piece, we will take a look at the top ten penny stocks that are too cheap to ignore.
Out of the thousands of stocks that are traded on public markets and are available to retail investors, penny stocks rank right at the top of the list of favorites. This is simply due to the fact that these stocks are very cheap as their share price is below $5. Therefore, not only are they an easy way to enter trading with those on a budget, but they also provide the opportunity for large profits should their share prices jump even slightly in the future.
Perhaps the most successful example of a penny stock that exceeded everyone’s expectations is Advanced Micro Devices, Inc. (NASDAQ:AMD). The firm’s shares sank to $2.60 in October 1990, and if you had invested in them back then (hindsight is 20/20 after all), today you would have grown every dollar invested in the company to a whopping $2130. This is the power of penny stocks, as even a single dollar can turn into thousands if an investor is lucky (and savvy) enough to have invested in the right name.
However, the sector itself comes with a handful of caveats. For instance, since the share price is low and public interest is limited, an investor can find it hard to unload penny stocks once the gains are made given the risks related to liquidity and trading volumes. Furthermore, the path to easy profits is also fraught with the risk of massive losses. As an illustrative example, if AMD’s shares had instead dropped to $1.3, then $1,000 invested in the firm would have been cut down to $500, despite the stock price only falling by a little more than a dollar.
Our list for you today narrows down the focus to some impressive penny stocks, with the top names being Canoo Inc. (NASDAQ:GOEV), Wheels Up Experience Inc. (NYSE:UP), and Ambev S.A. (NYSE:ABEV).
Image by Steve Buissinne from Pixabay
Our Methodology
We scoured through the countless penny stocks present on the stock market to pick out a handful that have strong business models, strong analyst sentiment, and stable revenues. They were then ranked according to Insider Monkey’s 895 hedge fund survey for the second quarter of this year.
10 Penny Stocks To Buy That Are Too Cheap To Ignore
10. Skylight Health Group Inc. (OTCMKTS:SLHGF)
Number of Hedge Fund Holders: N/A
Skylight Health Group Inc. (OTCMKTS:SLHGF) is a Canadian healthcare company that provides its services in the United States, the United Kingdom, and Colombia. These include running healthcare networks that offer diagnostics and care services. The firm is based in Mississauga, Canada.
Skylight Health Group Inc. (OTCMKTS:SLHGF) is aiming towards breaking even with its operating costs by the end of this year, and on this front, the company reduced its annual cost point basis by $10 million during its second quarter. The firm receives a $12,000 per member capitation fee for providing its services for Medicare and Medicare Advantage patients. Additionally, it scored a big win in October 2022, when Skylight Health Group Inc. (OTCMKTS:SLHGF) announced that it had secured a $5 million commitment from a multi billion dollar American healthcare investment firm.
Skylight Health Group Inc. (OTCMKTS:SLHGF), Wheels Up Experience Inc. (NYSE:UP), Canoo Inc. (NASDAQ:GOEV), and Ambev S.A. (NYSE:ABEV) are some of the hottest penny stocks for you to consider.
9. Air Industries Group (NYSE:AIRI)
Number of Hedge Fund Holders: 2
Air Industries Group (NYSE:AIRI) is a defense contractor that manufactures parts and assemblies for the Department of Defense (DoD). These include aircraft landing gears, arresting gears, flight controls, and engine components. The company is headquartered in Bay Shore, New York, the United States.
Air Industries Group (NYSE:AIRI)’s parts are used in a host of aircraft for the U.S. Army, U.S. Navy, and Air Force. These include landing gears for the F-18 and the F-35, components for the Blackhawk, B1-B and Hawkeye, and thrust struts for the GTF Jet Engine. The firm’s second fiscal quarter saw it bring in $14 million in revenue, which beat analyst expectations at a time when its supply chain was struggling due to the Russian invasion of Ukraine.
Air Industries Group (NYSE:AIRI) also won two contracts worth $5 million for jet engine and the Blackhawk contracts in September 2022, providing the firm with a stable revenue base that is associated with government contracts. By the end of this year’s second quarter, two out of the 895 hedge funds polled by Insider Monkey had owned a stake in it.
Out of these, Jim Simons’ Renaissance Technologies is Air Industries Group (NYSE:AIRI)’s largest investor. It owns 21,500 shares that are worth $15,000.
8. Medicenna Therapeutics Corp. (NASDAQ:MDNA)
Number of Hedge Fund Holders: 3
Medicenna Therapeutics Corp. (NASDAQ:MDNA) is a Canadian biotechnology company. It develops drugs and treatments for cancer and brain tumors, and its treatments also target autoimmune diseases such as multiple sclerosis. The firm is headquartered in Toronto.
Medicenna Therapeutics Corp. (NASDAQ:MDNA) had CAD19.3 million in cash and equivalents as of June 2022, which is sufficient to cover its latest research and development costs of CAD2.4 million in the second quarter of last year for more than a year. The firm also raised CAD20 million as part of a new offering in 2022, and it announced in September 2022 that it has entered into an agreement with the pharmaceutical giant Merck to test its cancer drug.
Oppenheimer kept its $8 share price target for Medicenna Therapeutics Corp. (NASDAQ:MDNA) in September 2022 as it noted that the company’s drugs are underappreciated by the stock market. As of this year’s June quarter, three out of the 895 hedge funds polled by Insider Monkey had invested in Medicenna Therapeutics Corp. (NASDAQ:MDNA).
Medicenna Therapeutics Corp. (NASDAQ:MDNA)’s largest investor is Orin Hirschman’s AIGH Investment Partners which owns 2.2 million shares that are worth $2.6 million.
7. Bionano Genomics, Inc. (NASDAQ:BNGO)
Number of Hedge Fund Holders: 6
Bionano Genomics, Inc. (NASDAQ:BNGO) is a medical diagnostics firm that provides platforms to allow its customers to conduct genomic analysis and understand genetic variation and gene function. The firm is headquartered in San Diego, California, the United States.
Bionano Genomics, Inc. (NASDAQ:BNGO)’s trailing 12 month revenue stood at $23 million as of June 2022, and the firm had $187 million in cash and equivalents at the same time for a comfortable balance sheet position. The firm also announced in October 2022 that its Long String VANTAGE system for high throughput genomic aberration detection is commercially available. This came after Bionano Genomics, Inc. (NASDAQ:BNGO) shared a research study earlier in the month that showed that optical genome mapping (employed by its platforms) was better at detecting cancer than whole gene sequencing.
Bionano Genomics, Inc. (NASDAQ:BNGO) Q2 2022 revenues of $6.67 million beat consensus estimates of $6.28 million, and during the same time period, six out of the 895 hedge funds polled by Insider Monkey had bought its shares.
Bionano Genomics, Inc. (NASDAQ:BNGO)’s largest investor is Jim Simons’ Renaissance Technologies which owns 3.6 million shares that are worth $5 million.
6. Seelos Therapeutics, Inc. (NASDAQ:SEEL)
Number of Hedge Fund Holders: 9
Seelos Therapeutics, Inc. (NASDAQ:SEEL) is a biopharmaceutical company that is headquartered in New York, New York, the United States. The firm develops a variety of treatments for central nervous systems and respiratory disorders.
Seelos Therapeutics, Inc. (NASDAQ:SEEL) has two drugs in human trials, for treatments of major depression and Lou Gehrig’s disease. Out of these, the latter drug (called SLS-005) is on its way to getting approval for the FDA to gather funds for its approval – a development that raises Seelos Therapeutics, Inc. (NASDAQ:SEEL)’s revenue prospects. The company also announced in August 2022 that it had won a grant for conducting research for its drugs to cure Parkinson’s disease.
Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that nine had held a stake in Seelos Therapeutics, Inc. (NASDAQ:SEEL).
Out of these, Jeffrey Gendell’s Tontine Asset Management is Seelos Therapeutics, Inc. (NASDAQ:SEEL)’s largest investor as it owns 4.9 million shares that are worth $3.3 million.
Canoo Inc. (NASDAQ:GOEV), Wheels Up Experience Inc. (NYSE:UP), and Ambev S.A. (NYSE:ABEV) are met by Seelos Therapeutics, Inc. (NASDAQ:SEEL) in our list of cheap penny stocks.
5. Banco Santander, S.A. (NYSE:SAN)
Number of Hedge Fund Holders: 15
Banco Santander, S.A. (NYSE:SAN) is a Spanish bank that is one of the oldest of its kind after being set up in 1856. It offers accounts, mortgages, loans, and working capital solutions.
Banco Santander, S.A. (NYSE:SAN) posted EUR9.5 billion in net interest income during its second fiscal quarter, which marked an 8% growth. This translated into a net income of 2.6 billion Euros, and earnings per share of EUR0.131. Cumulatively, all these led to Banco Santander, S.A. (NYSE:SAN)’s tangible book value per share sitting at EUR4.24, which is significantly higher than its current share price of $2.61.
Banco Santander, S.A. (NYSE:SAN) also pays a 3 cent dividend for a 4.21% yield. Insider Monkey’s Q2 2022 survey covering 895 hedge funds revealed that nine had invested in the bank.
Banco Santander, S.A. (NYSE:SAN)’s largest investor is John W. Rogers’ Ariel Investments which owns one million shares that are worth $16 million.
4. Ambev S.A. (NYSE:ABEV)
Number of Hedge Fund Holders: 18
Ambev S.A. (NYSE:ABEV) is a beverage company headquartered in Sao Paulo, Brazil. The firm sells drinks such as beers and soft drinks alongside other products like powdered and natural juices.
Ambev S.A. (NYSE:ABEV) is Latin America’s largest beverage distributor, and the firm is recovering from the devastation of the coronavirus pandemic as its second quarter earnings revealed that it had earned BRL 10 billion in revenue for 15% annual growth and BRL 5.5 billion operating income for an 18% organic annual growth. Ambev S.A. (NYSE:ABEV) is also set to benefit from the FIFA World Cup in Qatar starting in November 2022, as the festivities will see a major demand uptick for its beer.
Ambev S.A. (NYSE:ABEV) pays a 5 cent dividend for a 6.93% yield and its shares are up by 6.25% year to date. As part of their June quarter of 2022 holdings, 18 out of the 895 hedge funds polled by Insider Monkey had invested in the company.
Ambev S.A. (NYSE:ABEV)’s largest investor is Jean-Marie Eveillard’s First Eagle Investment Management which owns 279 million shares that are worth $700 million.
Harding Loevner mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“This quarter, individual stock selection decisions led to a reduction in our overweight to Consumer Staples. We sold Ambev S.A. (NYSE:ABEV), Brazil’s dominant brewer with strong franchises across South and Central America, which we owned since 2003. Its profit margins have declined in recent years, and management’s strategy to restore them is to entice Brazilians (whose beer consumption is already high) to trade up to premium brands. Despite our high regard for Ambev’s management, we think this strategy will be unsuccessful so long as the Brazilian consumer is under financial pressure from inflation and high unemployment. Ambev is still a high-quality, growing company, but we think there are more appealing opportunities in Brazil and beyond.”
3. Allego N.V. (NYSE:ALLG)
Number of Hedge Fund Holders: 19
Allego N.V. (NYSE:ALLG) is an electric vehicle charging company that is based in Arnhem, the Netherlands. The firm has more than thirty thousand charging ports in Europe that provide services for cars, buses, trucks, and motors.
Allego N.V. (NYSE:ALLG) uses a proprietary software solution that lets it identify areas with the strongest demand and revenue for its products. It uses these outputs to tailor its products to the market, and the charging sites are OEM-agnostic, which then allows the company to cast a wide net with its chargers. Allego N.V. (NYSE:ALLG) already has 12% of the European electric vehicle charging market, and it targets each of its markets through subsidiaries, which ensures that decision making is swift and in line with local market conditions.
Credit Suisse set a $10 share price target for Allego N.V. (NYSE:ALLG) in September 2022 as it stated that the firm’s revenues are estimated to grow by a whopping compounded annual growth rate of 44% between 2022 and 2030. 19 out of the 895 hedge funds polled by Insider Monkey as part of their second quarter of 2022 investments had held a stake in Allego N.V. (NYSE:ALLG).
2. Wheels Up Experience Inc. (NYSE:UP)
Number of Hedge Fund Holders: 19
Wheels Up Experience Inc. (NYSE:UP) is an American company that provides private aviation services. These include on demand flights, aircraft management, a variety of charter packages, signature events, and special solutions. It is headquartered in New York, New York.
Wheels Up Experience Inc. (NYSE:UP) is aiming to bring in $1.5 billion in revenue by the end of this year, for more than fourfold growth over 2018 when the firm had posted $300 million in the same metric. The firm reported $425 million in revenue during its second quarter, which marked a strong 50% annual growth. Wheels Up Experience Inc. (NYSE:UP) has a partnership with Delta Airlines as well, and the firm has now deployed its own fleet management system (FMS) that allows it to have end to end visibility in its aircraft visibility and maintenance.
Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 19 had held a stake in Wheels Up Experience Inc. (NYSE:UP).
Ben Levine, Andrew Manuel, and Stefan Renold’s LMR Partners is Wheels Up Experience Inc. (NYSE:UP)’s largest investor. It owns 13 million shares that are worth $2.6 million.
1. Canoo Inc. (NASDAQ:GOEV)
Number of Hedge Fund Holders: 20
Canoo Inc. (NASDAQ:GOEV) is an American electric vehicle company that is headquartered in Torrance, California. The firm designs electric vehicles for personal and consumer use and it also sells a skateboard chassis platform for other companies to build their cars on.
Canoo Inc. (NASDAQ:GOEV) is aiming to leverage the scale and brand presence of Walmart to drive up its product sales. The company is slated to begin its electric vehicle production in 2023, and it recently moved its headquartered to Bentonville, Arkansas – the city in which Walmart is also based. It has also entered into an agreement to sell 4,500 last mile delivery vans to the retailer, with the option of adding on another 5,500 vehicles. Canoo Inc. (NASDAQ:GOEV) has received $300 million from Walmart for this contract and it has also issued a large share warrant of 61.2 million shares to the company with an exercise price of $2.15 per share.
Stifel set a $4 share price target for the company in September 2022 as it shared that Canoo Inc. (NASDAQ:GOEV) is targeting the most profitable automotive segment. As this year’s June quarter ended, 20 out of the 895 hedge funds polled by Insider Monkey had bought Canoo Inc. (NASDAQ:GOEV)’s shares.
Out of these, Canoo Inc. (NASDAQ:GOEV)’s largest investor is Jim Simons’ Renaissance Technologies which owns one million shares that are worth $1.9 million.
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Disclosure: None. 10 Penny Stocks To Buy That Are Too Cheap To Ignore is originally published on Insider Monkey.
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