We recently compiled a list of the 10 Best One-Dollar Stocks To Buy Now. In this article, we are going to take a look at where Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) stands against the other one-dollar stocks.
The upward trend in the stock market has resumed, supported by strong first-quarter and second-quarter results that have relieved investor concerns about inflation. The US economy had a very strong year in 2023. Economic activity increased steadily, job creation was high, unemployment was low, real earnings rose, and inflation declined. Furthermore, the Federal Reserve maintained high interest rates throughout this time in an attempt to control inflation. June recorded a market increase of more than 10%. The large-cap market of the 500 biggest companies has already surged over 17% so far this year as analysts look forward to reduced interest rates in the second half of 2024, along with higher earnings growth and lower inflation.
Historically, since 1928, July has been the strongest month of the year for stocks in terms of performance. The market rose by 1.7% in July. Given that the market posted gains in May and June despite notable economic uncertainty, investors remain bullish that the market can sustain its positive trend.
In a May speech to the Foreign Bankers’ Association, Federal Reserve Chair Jerome Powell recognized the difficulty of bringing inflation down to the desired level. Powell stated that it could be essential to keep interest rates at their present levels for a longer period of time. Interest rates have been fluctuating between 5.25% and 5.5% since July 2023.
Amid concerns over an impending recession brought on by higher interest rates, the US labor market still remains stable. According to the Labor Department, the US economy created 175,000 new jobs in April, although this was less than the 240,000 jobs that economists had predicted. The US labor market maintains a low unemployment rate of 3.9%, while US wages have risen 3.9% YoY. Nonetheless, recession fears are maintained by the historical recession predictor, the inverted U.S. Treasury yield curve, and the New York Fed’s model, which projects a 50% chance of a recession within the next 12 months.
The second quarter of 2024 saw a gain of more than 3% in the US stock market. Under the hood, tech companies continued to lead the artificial intelligence trade, which showed no signs of slowing down throughout the quarter. One striking trend in the stock market this year has been the outperformance of the biggest companies. The large-cap market of the 500 biggest companies gained 4.4% in Q2, bringing its 2024 return to more than 15%. By comparison, the small-cap market had a decline of 3.3%, resulting in a reduced 2024 return of 1.6%.
With over half of 2024 already gone, the US stock market is expected to see significant increases for the second year in a row.
According to DataTrek Research co-founder Nicholas Colas, the 2024 stock market surge is about more than just this year; it also includes the outlook for 2025 and 2026. Colas stated:
“Markets are convinced that U.S. large cap companies will see many years (not just one) of improving earnings. Earnings for 2024 only have to come through slightly better than last year, and nothing occurs on the macro side (economic growth, geopolitics) to derail further earnings growth in 2025 and 2026.”
Investor confidence is supported by historical trends and recent earnings performance. The stock market does well in election years, according to historical statistics, especially when the president is serving his first term, as is the case with Joe Biden.
Methodology:
In this article, we first used a stock screener, Finviz, to list down all stocks trading under $1.5 and above $0.85 (as of the writing of this article) with over 40% institutional ownership. From the resultant 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. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested. We only considered stocks that received “buy” or “strong buy” recommendations from analysts.
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 biological researcher studying the interaction of GABAA receptors on a computer screen.
Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS)
Number of Hedge Fund Investors: 19
A biopharmaceutical company, Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) is dedicated to the development and marketing of medicinal solutions for rare hereditary epilepsies and seizure disorders. ZTALMY, also known as ganaxolone, is the company’s primary asset. It was approved in early 2022 to treat seizures in both adult and pediatric patients caused by cyclin-dependent kinase-like 5 deficiency disorder (CDD). Ganaxolone is presently being evaluated by Marinus for other indications, which might lead to market expansion. With a market value of about $81.02 million, the stock trades at $1.48 per share as of June 17.
The management of the RAISE project has opted to cease patient enrollment, despite the recommendation of the independent data monitoring committee (IDMC) to continue the research involving about 100 patients. The outcome was an almost 80% decline in MRNS shares in April 2024, following the lead drug’s failure in the seizure study.
When Marinus Pharmaceuticals (NASDAQ:MRNS) said it was reducing staff by around 20% to cut costs, its shares dropped 9% following the release of its Q1 results report. Furthermore, it stated that in order to analyze research data and reassess its development plans for IV ganaxolone, it was postponing manufacturing investments in the drug and halting enrollment in its Phase 3 RAISE and RAISE II clinical trials.
The good news was that the revenue in Q1 2024 for Marinus’ medication Ztalmy, often referred to as ganaxolone, made an impressive growth by 125% to $7.5 million compared to the same quarter last year, indicating the future growth potential of not only the drug but also the company as a whole. However, the company’s performance fell short of street projections in terms of both top and bottom lines.
Despite the challenges, the company has long-term potential for Ganaxolone since it increased its initial projection of $32 million to $35 million in net product revenue in 2024, to $33 million to $35 million. MRNS’s management reaffirmed that ZTALMY and TSC initiatives are its top priorities. Moreover, Ganaxolone’s clinical trials showed a definite improvement in RSE patients. In Q3, there were 140 patients on ZTALMY, up from 120 in Q2.
The firm has beaten analyst EPS estimates in three out of its four latest quarters. Annual revenue jumped over the last three years. In 2023, it increased by 21.63% to $30.99 million from 2022 due to net product revenue growth.
Hence, due to the growth potential of its product, ZTALMY, and diverse pipeline, the stock has earned a consensus “buy” rating. Analysts predict an average price target of $10.86 within the next 12 months. The average price target represents a potential upside of over 638.78% from the current stock price of $1.47. In Q1 2024, 19 hedge funds were bullish on Marinus Pharmaceuticals Inc (NASDAQ:MRNS). Aaron Cowen’s Suvretta Capital Management is the largest stakeholder, with 5,108,520 shares valued at $46.18 million.
Orio Corporation, per agreement with MRNS, is working on the commercial launch of YMLATZ in a few European countries during the second half of 2024, planning to eventually expand access worldwide. This indicates that the company is expanding in the market.
Ganaxolone’s clinical results are critical to the company’s success; any setbacks or unfavorable findings might harm the company’s chances. Risks to market potential and revenue development are also posed by intense competition in the biotech industry and regulatory obstacles. The performance of ZTALMY is a major factor in the current bullishness among investors toward the company.
Overall MRNS ranks 5th on our list of the best one-dollar stocks to buy. You can visit 10 Best One-Dollar Stocks To Buy Now to see the other one-dollar stocks that are on hedge funds’ radar. While we acknowledge the potential of MRNS 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 MRNS 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.