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 LeddarTech Holdings Inc. (NASDAQ:LDTC) 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 computer screen showcasing Artificial Intelligence and Machine Learning algorithms at work.
LeddarTech Holdings Inc. (NASDAQ:LDTC)
Number of Hedge Fund Investors: 11
Founded in 2007, LeddarTech Holdings Inc. (NASDAQ:LDTC) is a Quebec City-based company with R&D locations in Montreal and Tel Aviv, Israel. Its products include AI-based sensor fusion and perception software for parking, ADAS, and autonomous driving applications. Their program generates precise 3D models for safer navigation and improved decision-making using cutting-edge AI and computer vision. OEMs and Tier 1-2 suppliers may use LeddarTech’s technology, which enables ADAS solutions for cars and off-road vehicles. By enhancing vehicle awareness and safety, they hope to improve global transportation. They now possess over 160 patent applications, of which 87 have been approved. The company’s revenue comes primarily from selling its LiDAR technology.
Due to the news of the merger with Prospector Capital Corp. in December 2023, which was the company’s first public offering, LeddarTech’s shares fell 91% last year. It’s possible that the stock fell because long-time investors sold off their interests. Furthermore, the company’s cash burn rate surpassed its revenue growth. The company burned $26.97 million cash in 2023, and cash growth decreased by 84.21% in 2023. With just $7.07 million and decreasing by -15.13% YoY, revenues aren’t high enough to cover this loss. Hence, it merged with Prospector Capital Corp., providing it with $49 million in gross cash profits to repair the harm. LeddarTech Holdings Inc. revealed a 15.13% drop in gross profit and sales for 2023. Additionally, the company’s operating income has been negative over the years, which further alarmed the investors about the potential risk.
In spite of this, Oren Dayan was appointed Vice President of Product Line Management and Business Development at LeddarTech, and the company also announced a number of partnerships and new product launches, including a collaborative solution with Black Sesame Technologies. LeddarVision’s growth is also crucial. These programs provide a focused strategy to gain market share in the quickly expanding ADAS and AD sectors, particularly in the Chinese market, where the use of automotive technology is rising. In terms of competitiveness and market positioning, LeddarTech may be entering a transformative phase, which might be shown by the financial outcomes and strategic alliances. Financially, revenue grew by an incredible 396.68% during the fiscal second quarter of 2024, which ended on March 31, 2024, from $0.5 million to $1.9 million. The revenue rise can be attributed to the completion of last-time purchase orders, which increased legacy LiDAR revenue. This is encouraging, as it gives investors hope for LDTC. Operating expenses were cut from $87.3 million to $52.4 million, indicating attempts to limit costs. However, it’s important to keep an eye on whether these cuts affect the company’s capacity for innovation and efficient scaling.
Being an AI stock, investors are bullish on LeddarTech Holdings Inc. (NASDAQ:LDTC) and rate it as a “buy,” with an average target price of $5.00 and an upside potential of 427.98%.
Insider Monkey’s hedge fund tracking indicates that the company’s popularity proved steady in Q1, with 11 optimistic investors remaining unchanged from the previous quarter.
Overall LDTC ranks 7th 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 LDTC 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 LDTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
