We recently published a list of 10 Penny Stocks With Huge Upside Potential According To Analysts. In this article, we are going to take a look at where Adicet Bio, Inc. (NASDAQ:ACET) stands against other penny stocks with the biggest upside potential.
Penny stocks trade below $5 and attract investors looking for high returns with a small initial investment. These stocks are often associated with small-cap and mid-cap companies, which have traditionally outperformed large-cap stocks due to their growth potential and higher risk. However, in recent years, these smaller firms have struggled to keep pace, as large-cap stocks—particularly major tech companies—have led market gains. A key factor behind this trend is the changing makeup of major stock indices. The broader market, heavily influenced by a handful of mega-cap stocks, has skewed overall market performance. If the so-called Magnificent Seven stocks were excluded, the wider market’s advantage over the small-cap Russell index would be significantly reduced. Historically, small-cap stocks have tended to outperform large caps following periods of market volatility.
At the end of December 2024, Fundstrat’s Tom Lee told CNBC that with the Fed cutting rates and a pro-business administration taking over, companies would likely see 2025 as a prime time for expansion, including mergers and acquisitions. He believes this will create a strong market for small and mid-cap stocks, with financials, cyclicals, and industrials benefiting the most. Lee also pointed out that Trump’s tariff policies and potential labor market disruptions from mass deportations could impact the stock market. Another risk is if the Fed focuses too much on inflation and weakens the labor market. On a different yet interesting note, he predicted Bitcoin could hit $250,000 in 2025, with Ethereum reaching $5,000-$6,000. He was also optimistic about Solana and other altcoins.
Similarly, Jill Carey Hall, who is BofA’s Head of US Small/Mid Cap Strategy, recently commented that financials and healthcare tend to see more mergers and acquisitions under Republican administrations, which could mean a strong market in 2025 if macro conditions stay favorable. She expects banks to benefit from a more relaxed regulatory environment, improving their margins and efficiency. While there is optimism around deregulation for small-cap stocks, she cautioned that in the recent past, they did not perform as well despite deregulation because their success was tied to tariffs, trade policies, and the manufacturing recession.
Further insights came from Chris Retzler, portfolio manager for Needham’s Small Cap Growth Fund, who shared his outlook for small-caps on CNBC’s Squawk Box on January 17, 2025. He noted that small-cap companies are looking for policy certainty, and once the new administration’s direction becomes clearer, we could see growth accelerate. Globally, the EV sector is thriving, even as it faces some hurdles in the United States.
Meanwhile, innovation in semiconductors, new materials, and infrastructure, especially data centers, is driving investment, creating opportunities for small caps as well. Retzler emphasized that if the government prioritizes American manufacturing, more infrastructure will be needed, benefiting small-cap stocks. He also highlighted the potential upside of moderate, well-implemented tariff policies and deregulation, which could boost M&A activity. When small caps are acquired and integrated into larger platforms, it helps recycle assets and reduce costs. IPOs may soon pick up, and Retzler sees a strong and optimistic market for small caps in the long run.
A scientist in a lab coat, holding a Petri dish with a culture growth of Gamma Delta T Cells.
Our Methodology
We checked multiple reliable sources to find penny stocks with big catalysts and strong growth potential. To see what retail investors are buzzing about, we also looked through Reddit discussions. Then, we checked Wall Street analysts’ average upside predictions for these stocks. We have also included the number of hedge funds holding each stock as of Q4 2024. The list below ranks them in ascending order based on upside potential as of March 20.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Adicet Bio, Inc. (NASDAQ:ACET)
Average Upside Potential as of March 20: 671.80%
Number of Hedge Fund Holders: 18
Boston-based Adicet Bio, Inc. (NASDAQ:ACET) develops allogeneic gamma delta T cell therapies for cancer and autoimmune diseases. Its lead candidate, ADI-001, is in a Phase I trial for B cell non-Hodgkin’s lymphoma and autoimmune conditions, while ADI-270 targets renal cell carcinoma and other CD70+ tumors. Wall Street analysts are bullish on the ACET, making it one of the penny stocks with the biggest upside.
On February 27, Adicet Bio, Inc. (NASDAQ:ACET) announced that the FDA granted Fast Track Designation to ADI-001 for systemic sclerosis (SSc), expediting its development. ADI-001, a CAR T cell therapy targeting CD20, is also approved for lupus nephritis (LN) and systemic lupus erythematosus (SLE). The company is advancing it across six autoimmune diseases, with LN trials underway and enrollment for SLE, SSc, myositis, and stiff person syndrome starting in Q2 2025.
In Q4 2024, Adicet Bio, Inc. (NASDAQ:ACET)’s R&D expenses came in at $23.3 million, compared to $24.8 million in Q3 2024, mainly due to lower manufacturing costs. Meanwhile, G&A expenses increased to $7.5 million from $6.8 million, because of higher professional fees. The company reported a net loss of $28.7 million for the fourth quarter, slightly better than the $29.5 million loss in the same quarter last year, including non-cash stock-based compensation. As of December 31, 2024, cash and short-term investments rose to $176.3 million from $159.7 million, and the company expects to sustain operations through late 2026.
According to Insider Monkey’s fourth quarter database, 18 hedge funds were bullish on Adicet Bio, Inc. (NASDAQ:ACET), compared to the last quarter, when 17 funds had invested in the company.
Overall, ACET ranks 3rd on our list of penny stocks with huge upside potential. While we acknowledge the potential of ACET to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ACET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.