We recently compiled a list of the 10 Best Penny Stocks to Buy Under $1. In this article, we are going to take a look at where Nuvve Holding Corp. (NASDAQ:NVVE) stands against the other penny stocks under $1.
Penny stocks are defined by the Securities and Exchange Commission (SEC) as stocks that trade for less than $5 per share. They exhibit high price volatility due to their low pricing. Even a slight movement in the stock price can translate into a substantial percentage gain. Despite this advantage, it’s important to be aware of the risks associated with penny stocks. A study conducted by the Securities and Exchange Commission (SEC) found that most penny stocks are speculative and have low liquidity, which makes it challenging to trade them. Only around one in 1,000 penny stocks goes on to become profitable mid-cap or large-cap businesses, according to the study. Therefore, even if penny stocks seem attractive, investing in them needs a thorough assessment of the dangers as well as the possible benefits.
Penny stocks may provide large profits, with particular industries expected to develop in 2024 as a result of technological improvements, legislative changes, and altering customer tastes. These dynamic industries may be of interest to investors looking to diversify their portfolios or seek strong growth potential.
Among the industries where one might look for penny stocks to purchase in 2024 is renewable energy. It has experienced tremendous growth in recent years. The global renewable energy industry was estimated at $1.21 trillion in 2023, with a compound annual growth rate (CAGR) of 17.2% between 2024 and 2030, per Grand View Research. In 2023, Asia Pacific had a noteworthy revenue share of 40.98%.
The IEA’s Renewables 2023 study states that in 2023, the capacity of renewable energy worldwide increased by 50% to approximately 510 GW, with solar photovoltaics accounting for three-quarters of these increases. Leading the way, China added twice as much solar PV as the rest of the world in 2022 and had a 66% rise in wind power. According to IEA 50, renewable energy capacity increased at unprecedented rates in Brazil, the United States, and Europe. As per the latest IEA research, under present policies and market circumstances, worldwide renewable capacity would rise by two and a half times by 2030. Hence, investors may interact with innovative companies at the forefront of solar, wind, and other renewable technologies by purchasing penny stocks in the renewable energy space.
Biotech penny stocks also provide a unique investment opportunity for investors interested in medical innovation and the potential of major breakthroughs in healthcare. Recent analysis by investment bank Jefferies indicates that biotechnology businesses raised about $10 billion in follow-on stock offerings in January and February, signaling increased optimism in the industry.
The size of the worldwide biotechnology industry was assessed to be worth $1.38 trillion in 2023 and is expected to grow at a CAGR of 11.8% from 2024 to 2033, predicted to be worth around $4.25 trillion, per Precedence Research. Currently, the biotechnology industry consists of 673 publicly traded stocks, including penny stocks, with a combined market capitalization of $1,511.21 billion.
Investors interested in biotech stocks may question which sectors are prone to buyouts. Laura Chico, Senior Biotechnology Analyst at Wedbush Securities, noted key areas to keep an eye out for possible buyouts:
“Obesity has been a really big theme in 2023, and will probably continue for the foreseeable future, but across the area, at least in these recent M&A transactions, it’s been really broad-based, and I think that’s really a testament to the innovation in the space. We have several deals in oncology, immunology, inflammation, neuro, and even rare diseases. So it’s not just within certain verticals at this point.”
Methodology:
In this article, we first used a stock screener to list down all stocks trading under $1 (as of the writing of this article) with over 40% institutional ownership. From the resulting dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 920 hedge funds in Q1 2024 to gauge hedge fund sentiment for stocks.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A technician connecting an EV battery to the Grid Integrated Vehicle platform.
Nuvve Holding Corp. (NASDAQ:NVVE)
Number of Hedge Fund Investors: 5
Among the best penny stocks to buy under $1 is Nuvve Holding Corp. (NASDAQ:NVVE), a green energy technology company that specializes in vehicle-to-grid (V2G) technologies in the United States, the United Kingdom, France, and Denmark. With the help of the company’s Grid Integrated Vehicle platform, utility companies can create a virtual power plant out of EV batteries by storing and selling their excess energy back to the local electric grid. Additionally, Nuvve provides networked charging stations, software, hardware, expert services, warranties, and support for fleets of electric vehicles. The company generates revenue by selling excess power, reducing building energy peak consumption, and offering EV fleet solutions to automobile manufacturers, charge station operators, and owners/operators of fleets of vehicles.
The company intends to convert large fleets of school buses into electric buses and partially fund its large investment by utilizing the vehicles’ batteries as storage for utility companies.
This company’s stock price was $800 three years ago and is now worth $0.63. As of right now, its market capitalization is $4.50 million, and three years ago, it was worth $250.40 million. As of July 10, it has lost 99.9% of its value. NVVE is a cash-burning startup with low sales and a high burn rate. Since 2021, it has lost almost $31 million in cash, and its sales are insufficient to offset this loss. In three years, the company’s revenue plummeted due to a persistently high burn rate and poor sales. It’s working hard to continue adhering to Nasdaq’s listing regulations. To increase the value of its shares, it initially divided 40 for 1, reducing the number of outstanding shares from 50 million to around 1.3 million. However, this had little effect other than investors selling it even more. Then, by issuing 4.8 million shares, it raised almost $10 million; it will probably burn it all again. Secondly, investors became more cautious in 2021, and the general excitement around EV companies subsided. The stock price decrease was probably caused by this general mood in the market. From a peak of $380 in 2021 to a current trade price of $252.94, a 33.44% loss as of June 9, 2024, Tesla, one of the top EV manufacturers, also saw a decline in its stock price.
In addition to celebrating the installation of its 500th electric school bus, EVSE, Nuvve was chosen for the $16 million fleet electrification project by Fresno EOC. As of March 31, 2024, there were 26.6 megawatts under control, a 6.0% increase from the same quarter last year. Despite a 57.96% decrease in revenue in Q1 from the same quarter last year, the company has seen strong revenue growth in the last three out of four quarters. Revenue in Q1 dropped due to product revenue decreasing by $0.95 million and service revenue decreasing by $0.1 million, owing to reduced client sales orders and shipments.
Although it is still negative, net income and EPS improved significantly from $12.84 to $1.69 compared to the same quarter last year because of reduced expenses. In Q1, the net loss dropped in terms of revenue by $0.9 million to $6.7 million, while operating expenditures (apart from cost of sales) were reduced to $7.5 million from the same quarter last year. The annual revenue increased over the last two years by 28.22% in 2022 and 55.06% in 2023. The rise is explained by an increase in grants, product revenue, and service revenue as a result of increased client sales orders and shipments.
Analysts recommend a “strong buy” on NVVE, which is now trading at $0.80. The stock has an average price target of 100 and offers investors a potential upside of 12,415.64%.
Insider Monkey monitored that 5 hedge funds out of the 920 hedge funds held a position in Nuvve Holding Corp. (NASDAQ:NVVE) as of the end of the first quarter of 2024. Amin Nathoo and Moez Kassam’s Anson Investments is the only stakeholder in the company, with 195,000 shares worth $214,500.
Overall NVVE ranks 10th on our list of the best penny stocks to buy under $1. You can visit 10 Best Penny Stocks to Buy Under $1 to see the other penny stocks that are on hedge funds’ radar. While we acknowledge the potential of NVVE as an investment, our conviction lies in the belief that some 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 NVVE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.