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 Augmedix, Inc. (NADAQ:AUGX) 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 medical professional interacting with a touch-screen device, emphasizing the company’s modern approach to patient care.
Augmedix, Inc. (NADAQ:AUGX)
Number of Hedge Fund Investors: 27
Augmedix, Inc. (NASDAQ:AUGX), a San Francisco-based healthcare technology company, offers live clinical support services and remote medical documentation solutions to the top healthcare systems in the United States using ambient AI technology. Augmedix Live and Augmedix Notes are its systems, which include pre-visit documentation (pre-charting and digitizing of prior records/patient history), during-visit documentation, post-visit documentation, and an after-visit summary. Using mobile devices, clinicians may access its apps.
Following the company’s reduction of its full-year expectation and guidance for lower-than-expected revenue for the period, Augmedix’s shares saw a 41% drop in May 2024. In FY 2023, the company’s net loss in terms of revenue was -$19.2 million, while its adjusted EBITDA loss was -$15.2 million, indicating continued unprofitability. Cash flow concerns continue, with a $15 million operational cash flow burn and a reliance on $43 million obtained through financing operations to boost its cash balance. This has allowed AUGX to more than double its cash position YoY to $46 million in fiscal year 2023 while burning down $15 million in cash from operations. With a current trade price of $0.89, the stock is down more than 84% year to date and has returned more than 82% since its IPO. Concerns exist over profitability and the requirement for additional capital raising. It’s operating income has been negative over the years.
As per Grand View Research, the AI-driven healthcare sector, which is expected to grow at a 29.3% CAGR and reach $22 billion by 2030, presents an opportunity for Augmedix (NASDAQ:AUGX). In 2023, the company’s annual revenue growth rate exceeded 45%, outperforming the market. The company, being a leader in ambient AI medical documentation and data solutions, has shown strong financial performance, with annual revenue increasing every year. Revenue surged from $22.17 million in 2021 to $30.93 million in 2022 and then $44.85 million in 2023, further increasing to $48.70 million during the last 12 months. Strong client demand and the effective implementation of their new AI-powered medical documentation solutions have resulted in a rise in Augmedix’s revenue.
Its robust clientele includes HCA Healthcare and Dignity Health. Augmedix reported total sales of $13.5 million in Q1 2024, a 40% increase from the same quarter last year, despite an adjusted EBITDA loss of $5.1 million, outperforming projections and consensus. The reported quarterly EPS of $0.12 was in line with analysts’ expectations.
Augmedix Go’s testing in an emergency department environment with HCA Healthcare, as well as its anticipated full launch in March 2024, demonstrate the potential for product growth and higher market penetration. Furthermore, Augmedix’s business plan calls for recurrent monthly payments under annual agreements, indicating a steady and predictable source of income.
Overall AUGX ranks 1st 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 AUGX 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 AUGX 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.
