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 Kopin Corporation (NASDAQ:KOPN) 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 team of engineers analyzing electronic components in a modern laboratory.
Kopin Corporation (NASDAQ:KOPN)
Number of Hedge Fund Investors: 19
Kopin Corporation (NASDAQ:KOPN) is a leading developer and global supplier of high-performance application-specific optical solutions, including high-resolution microdisplays, microdisplay subassemblies, and associated components for defense, business, industrial, and consumer products. The company’s products are employed in consumer wearable augmented reality and virtual reality headset systems, industrial, public safety, and medical headsets, soldier, avionic, armored vehicle, training, and simulation defense applications.
Kopin Corporation’s stock has declined by almost 98% since the launch due to more cash burn compared to the slow revenue growth, which has been made worse by serious operational and legal issues. The company’s diminishing cash reserves, which were $17.9 million at the end of Q4 2023, a significant drop from prior levels, served as one indicator of the strain on the company’s financial performance. Its financial situation has been made more difficult by operational losses and significant legal costs, especially due to the continuing legal battle with BlueRadios. Investor worries were raised by the recent unfavorable judgment ruling that awarded the company almost $25 million in damages. Investor mood has soured due to the possibility of having to raise significant money to satisfy legal requirements and fund operations, while cash reserves have burned $20.58 million since 2021.
On the other hand, Michael Murray, the company’s innovative CEO, has improved operational efficiency and increased client orders, as seen by a strong 2.7:1 book-to-bill ratio in Q1 2024, which lends credence to Kopin Corporation’s bullish outlook. Kopin Corporation demonstrated its strong market position in the defense industry by reporting an 18% increase in product revenues for the first quarter of 2024. This gain was primarily driven by a significant 28% increase in revenues from military products. Kopin demonstrated its capacity to draw in big, expensive projects by landing many new client orders, including a $20.5 million contract for a novel weapon sight configuration and a Naval Warfare Research Contract. In 2024, the company anticipates double-digit revenue increase above 2023, demonstrating confidence in its continuous market expansion and strategic efforts. Kopin is creating innovative AI-driven display technologies and wearable AR/VR solutions, such as NeuralDisplay, which adjusts to the surroundings of its users.
Hence, Kopin Corporation (NASDAQ:KOPN) has a positive analyst outlook with a “strong buy” rating and an average 12-month price target of $2.75, suggesting a potential upside of over 202.20%.
Insider Monkey disclosed 19 funds that owned Kopin Corporation (NASDAQ:KOPN) hedge funds in Q1 2024. Constantinos J. Christofilis’s Archon Capital Management is the largest stakeholder in the company, with 3,192,786 shares worth $5.74 million.
Overall KOPN ranks 5th 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 KOPN 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 KOPN 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.
