In this article, we will take a look at the 12 best mulitbagger penny stocks to buy. To see more such companies, go directly to 5 Best Multibagger Penny Stocks To Buy.
Apple Inc. (NASDAQ:AAPL). Amazon.com, Inc. (NASDAQ:AMZN). Microsoft Corporation (NASDAQ:MSFT). Alphabet Inc. (NASDAQ:GOOG). Meta Platforms, Inc. (NASDAQ:META). These are the stocks almost everybody talks about. Every mainstream ETF and index fund is heavily skewed towards these large, safe stocks. But if you are a small investor with limited budget and goals of making big sums of money in a relatively limited time window, two things become important. First, your risk appetite should be huge. If you are not ready to face some kind of risks in your investing journey, you should stick to large-cap or relatively safer stocks. Second, you should look for smaller companies that are working on disruptive ideas and products.
Investing in small-cap and micro-cap stocks comes with risks but these kind of stocks have also rewarded investors in the past. A report by Artisan Partners entitled International Small Caps: A Strategic Asset Class mentions some interesting data points proving the outperformance of small-cap companies. Artisan Partners took a look at the long-term performance of international small caps (proxied by the MSCI EAFE Small Cap Index) versus other equity categories. In a 20-year period through December 2022, the annualized return of international small caps was much better than other categories, including US large caps, non-US large caps, US small caps and emerging markets. Small-cap stocks in international developed markets also outperformed their large-cap counterparts, according to the report.
The report also said that the annualized outperformance small-cap stocks in the period was 260 basis points over the similar large cap category and 30 basis points over emerging market equities.
Ever since the rising inflation and the Federal Reserve’s relentless rate hikes started to crush the stock market, investors began flocking to safe, large-cap stocks and avoid small companies where risks are higher. In normal market conditions too, small stocks get less attention. Interestingly, this creates even more opporutnities and return opportunities for investors who are interested in small- or micro-cap companies. A report by Perritt Capital Management explains this development in the following words:
“Because institutional investors tend to shy away from micro-cap stocks, it is not surprising to find that very few analysts keep tabs on their activities. In the early 1980’s, Professors Avner Arbel and Paul Strebel authored a study entitled “The Neglected and Small Firm Effects.” In this study, the authors tested the notion that the stocks of less researched companies provide greater risk-adjusted returns than more researched companies. Their study of S&P 500 Index companies indicated the less the research concentration, the greater were risk-adjusted returns. When research concentration was coupled with firm size, the favorable risk-adjusted returns were magnified. While small firms outperformed large firms during the study period, under-researched small company stocks performed even better. In other words, the absence of analyst attention distorts the risk/return characteristics of small firm stocks.”
The Perritt report also quotes data from Ibbotson & Associates to show the outperformance of small-cap stocks. The report said that Ibbotson & Associates have tracked and reported performance of stocks since 1926. According to the data, from 1026 to 2014, small-cap stocks have outperformed large-cap stocks by 2.1 percent points, which the report said is by “no means a trivial amount.” The report said that a hypothetical investment of $1 in the S&P 500 Index made at the beginning of 1926 would have grown to $5,317 at the end of 2014, while a similar hypothetical $1 investment made in a portfolio of small-cap stocks would have grown to $27,419.
However, the report notes a caveat:
“While small company stocks have historically outperformed large company stocks over the long run, they may not do so during relatively short periods of time. During 34 of the last 89 years, for example, large company stocks provided larger returns than small company stocks. But even over relatively short time periods such as one-year, the odds of achieving over performance favor small firm stocks. That is, during the last 89 years, small company stocks topped the returns of large company stocks in 55 years or 62 percent of the time.”
Rowe Price recently published an interesting report entitled Disruption Is Losing Its Ability to Surprise. The report discussed the performance of growth stocks over the past few years and unique challenges to value investors in an era where disruption and technological innovation is upending the age-old investing concepts. The report said that over the past decade the “market underestimated” the impact of innovation by underestimating growth and profitability of the new technologies.
“As a result, as the true extent of the impact of innovation (and disruption) has become clear, growth stocks have significantly outperformed value stocks—the Russell 1000 Growth Index outperformed the Russell 1000 Value Index by 5.46% per annum over the past decade,” the report added.
Photo by AlphaTradeZone
Our Methodology
For this article we used a stock screener to first identify stocks priced under $10 that have posted huge gains over the past one year. From the resultant dataset we selected penny stocks with the highest percentage gains in stock performance over the past one year. The list is ranked based on stock performance, from lowest to highest.
Best Multibagger Penny Stocks To Buy
12. Tigo Energy Inc. (NASDAQ:TYGO)
Stock Gains Over the Past One Year: 71%
California-based Tigo Energy Inc. (NASDAQ:TYGO) operates in the photovoltaic industry. Tigo Energy Inc. (NASDAQ:TYGO) jumped in May after the company’s merger with SPAC Roth CH Acquisition IV Co.
11. Biote Corp. (NASDAQ:BTMD)
Stock Gains Over the Past One Year: 84%
Texas-based Biote Corp. (NASDAQ:BTMD) offers hormone optimization solutions. Biote Corp. (NASDAQ:BTMD) offers a platform for practitioners to optimize imbalances in their patient’s hormone, vitamin, and mineral levels.
Biote Corp. (NASDAQ:BTMD) is one of the most popular penny stocks among the elite hedge funds tracked by Insider Monkey. As of the end of the first quarter of 2023, 21 hedge funds in Insider Monkey’s database had stakes in Biote Corp. (NASDAQ:BTMD).
In May, Biote Corp. (NASDAQ:BTMD) posted its Q1 results. GAAP EPS in the quarter came in at -$0.39. Revenue in the quarter jumped about 20.85% year over year to $44.8 million. Biote Corp. (NASDAQ:BTMD) maintained its FY’2023 revenue guidance of $190 million to $200 million, versus the consensus estimate of $193.87 million.
10. Tuniu Corporation (NASDAQ:TOUR)
Stock Gains Over the Past One Year: 106%
China-based online travel agency company Tuniu Corporation (NASDAQ:TOUR) ranks 10th in our list of the best multibagger penny stocks to buy. Tuniu Corporation (NASDAQ:TOUR) has gained about 106% over the past 12 months. Tuniu Corporation (NASDAQ:TOUR) recently posted Q1 results which showed strong revenue growth. Gross profit in the quarter increased by 145.9% to RMB 38.9 million. Operating expenses in the quarter fell 18.6% year-over-year to RMB 55.9 million.
Tuniu Corporation (NASDAQ:TOUR)’s management is also bullish on the future. During its Q1 earnings call, the management said:
“Firstly, we see the enthusiasm for travel continues to rise in the second quarter. We expect our net revenues to increase about 140% to 150% year-over-year in the second quarter and revenues from packaged tours to grow at a higher rate. Domestic tours currently contribute to the majority of our revenues. Compared to last year, long distance travel is gaining popularity this year. Bookings of some destinations in Xinjiang and Northwest China have reached or even surpassed 2019 level. For traditional hot destinations such as Yunnan and Hainan, we target at mid to high-end market with products focusing on visiting and experiencing. For example, we have launched a certain new tour itineraries with zero shopping trying to provide clients with enjoyment of pure travel.”
9. GlycoMimetics, Inc. (NASDAQ:GLYC)
Stock Gains Over the Past One Year: 187%
Clinical stage biotechnology company GlycoMimetics, Inc. (NASDAQ:GLYC) makes glycobiology-based therapies for cancers, including acute myeloid leukemia (AML) and inflammatory diseases. GlycoMimetics, Inc. (NASDAQ:GLYC) ranks 9th in our list of the best multibagger penny stocks to buy. GlycoMimetics, Inc. (NASDAQ:GLYC) has gained about 187% over the past one year.
8. United Insurance Holdings Corp. (NASDAQ:UIHC)
Stock Gains Over the Past One Year: 205%
United Insurance Holdings Corp. (NASDAQ:UIHC) shares have gained about 205% over the past year. United Insurance Holdings Corp. (NASDAQ:UIHC) recently rejoined the Russell 3000 and 2000 indexes. In May, United Insurance Holdings Corp. (NASDAQ:UIHC) posted its Q1 results. Adjusted EPS in the quarter came in at $0.71. Revenue in the period jumped about 1.7% year over year to $104.05 million.
7. Bit Digital, Inc. (NASDAQ:BTBT)
Stock Gains Over the Past One Year: 210%
Bitcoin rebound and the comeback of enthusiasm in the crypto markets helped Bit Digital, Inc. (NASDAQ:BTBT) over the past few months. Bit Digital, Inc. (NASDAQ:BTBT) is up 210% over the past one year. Bitcoin recently rebounded after BlackRock (NYSE:BLK) filed for a Bitcoin ETF. During its first quarter, Bit Digital, Inc. (NASDAQ:BTBT)’s adjusted EPS came in at $0.01, beating estimates by $0.16. Revenue in the quarter fell 3.2% year over year to $8.3 million, beating estimates by $0.8 million.
6. eMagin Corporation (NYSE:EMAN)
Stock Gains Over the Past One Year: 212%
US-based electronics manufacturer eMagin Corporation (NYSE:EMAN) ranks 6th in our list of the best multibagger penny stocks to buy now. In May eMagin Corporation (NYSE:EMAN) posted Q1 results, missing estimates for both earnings and revenue. Unlike Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and Meta Platforms, Inc. (NASDAQ:META), EMAN is a risky stock but one which beginner investors with high risk appetite should consider.
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Disclosure: None. 12 Best Multibagger Penny Stocks To Buy is originally published on Insider Monkey.
