In this article, we’re going to explore a few things about penny stocks, what they are, and how to do research. We’ll also talk a bit about 5 of these stocks that analysts rate a buy right now. So let’s dive in.What Are Penny Stocks?
Penny stocks are shares of companies trading for less than $5. This is according to the Securities & Exchange Commission’s definition of penny stocks. Needless to say, some traders have set their own rules with it comes to these stocks. Many focus on stocks under $1. Others actually increase that $5 limit to $7 or $10. Whatever the case may be, we’re going to be sticking with the SEC’s standard definition for this article.Trading VS Investing In Penny Stocks
When it comes to research, there’s really an endless amount of information you can go off of. A lot of the ways that traders and investors do their research starts with what style of market participant they are. What I mean by this is ask yourself, “Am I investing or trading?” and if you’re proficient at both, then it might be a situational approach. Are you expecting the stock to be a day trade or are you looking for an opportunity to begin investing in it? No two strategies need to be identical. Furthermore, sometimes your initial strategy might pan out to be different altogether.
Let’s say you aim to day trade a stock but then the company begins reaching major milestones. That day trade might end up turning into an investment. On the other hand, if you initially set a goal to invest for a long period of time but the stock ends up reaching certain levels much sooner than expected, then your investment may turn into a trade. Taking profit now to reinvest later is one way some investors utilize larger price spikes in short periods of time.Researching Penny Stocks
But when it comes to research, there are a few go-to things to look at. First, check the company’s headlines. Here you can see what they’ve announced, are planning on, recent financial headlines, etc. Next, review the company’s financial statements. We discussed things like insider trading earlier today.
It also doesn’t hurt to take a look at what the sentiment is on stocks by checking out what analysts are saying. This is where today’s article comes into play. But just because analysts might say “buy” or “sell”, that doesn’t mean it’s what you should do “right now”. So with this in mind, here’s a list of penny stocks analysts appear bullish on. Do you agree?Penny Stocks To Buy According To 5 Analysts
- Gevo Inc. (GEVO Stock Analyst Forecast)
- Lexicon Pharmaceuticals Inc. (LXRX Stock Analyst Forecast)
- Xeris Pharmaceuticals Inc. (XERS Stock Analyst Forecast)
- Check-Cap Ltd. (CHEK Stock Analyst Forecast)
- Mustang Bio Inc. (MBIO Stock Analyst Forecast)
Gevo is no stranger to our lists of penny stocks to watch. The company is part of the emerging ESG and alternative energy stock trends we’re seeing emerge. Both tend to go hand-in-hand. ESG or “Environmental, Social, and Governance,” focuses on companies that look to decreasing their carbon footprint, create a welcoming company environment, and run operations ethically and efficiently, keeping in mind the communities surrounding operations.
In this case, Gevo is building its foothold in the renewable chemicals and biofuels segment of the energy industry. More recent attention has focused on the company’s expanded upon one of its largest contracts we discussed back in August. Back then, the company inked a deal with Trafigura Trading LLC, which sparked the initial momentum for the stock during the second half of the year. The off-take agreement brought Gevo’s total off-take total to about 48MGPY, collectively representing roughly $1.5 billion of revenue across the life of its contracts. Jump ahead to December, and the latest milestone secures control of a 239 acre site to meet the conditions required by its contract that Trafigura.
As 2021 begins, this is likely something to keep track of. Furthermore, analysts remain bullish on the stock. Just before the end of the year, Noble Financial boosted their target on GEVO stock to $5. The firm also maintained its Outperform rating on the stock.Penny Stocks To Buy [Citigroup]: Lexicon Pharmaceuticals Inc. (NASDAQ:LXRX)
Lexington is one of the biotech penny stocks we’ve begun following at the end of 2020. Those who’ve read our articles long enough may even remember the strong move LXRX stock had during the 4th quarter of 2019 as well. In any case, the company is back in the spotlight after a stellar last few weeks of the year.
Some of the things that aided this move stem from its Phase 3 Studies, SOLOIST & SCORED. Both reached their primary endpoints targeting the treatment of heart disease. As a result, Lexicon gained interest from the analyst community. Both Gabelli & Co, and Citigroup upgraded the company to Buy. Citigroup went further and raised its $2.10 price target to $6 putting an LXRX stock forecast at roughly 75% from New Year’s Eve’s closing price.
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Something else to take account of is Lexington’s closing update in 2020. The company commenced dosing patients in a phase 2 study of its LX9211 to treat post-herpetic neuralgia. Earlier last month, LX9211 received a fast-track designation from the FDA to treat diabetic peripheral neuropathic pain. In response to the more recent Phase 2 initiation, Praveen Tyle, executive vice president of research and development said, “We believe LX9211 has the potential to offer a novel therapeutic approach to treating post-herpetic neuralgia.”Penny Stocks To Buy [Mizuho]: Xeris Pharmaceuticals Inc. (NASDAQ:XERS)
Xeris has experienced a more mixed end to the year. However, during the second half of 2020, shares far outperformed compared to the first half. Since the beginning of the third quarter, XERS stock managed to climb as much as 153%. This came as the company continued demonstrating meaningful progress on its pipeline. This type of bullishness has also been echoed by analysts more recently. Mizuho reiterated its Buy rating on the penny stock during the fourth quarter. It also has a price target of $14; a XERS stock forecast price 184% higher than where it finished the week off last week.
Something to keep in mind heading into the new year remains the company’s pipeline. Specifically, its Gvoke® (glucagon injection) product for the treatment of severe hypoglycemia in people with diabetes. In fact, Xeris just signed a distribution agreement with a company to commercialize Gvoke® in Israel and the Palestinian Authority. Gvoke® will also be available in Israel prior to registration on a named patient basis starting in early 2021.
Furthermore, its recent win in Europe brings its Ogluo™ (glucagon) one step closer to commercialization. Xeris received a positive Opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP). The CHMP recommended Ogluo for the treatment of severe hypoglycaemia in adults, adolescents, and children aged 2 years and over with diabetes mellitus. A final decision on the Marketing Authorization Application for Ogluo in the European Union is expected in the first quarter of 2021. If proven successful, the company could launch Ogluo in certain European countries in the second half of this year.Penny Stocks To Buy [HC Wainwright]: Check-Cap Ltd. (NASDAQ:CHEK)
Check-Cap is another one of the biotech penny stocks we’ve followed for a while. Most recently, however, trading momentum has really picked up. In fact, on December 31st, CHEK stock saw its second-highest trading volume of the year with more than 26 million shares traded by the closing bell. What’s more, is that this momentum continued well into the aftermarket session. CHECK reached extended hours highs of 60 cents before finally settling out around $0.552. This was 20% higher than the $0.46 price it closed at during the regular session.
Not only has the company received a favorable response thanks to a new lease on life from Nasdaq, but Check-Cap could also have some other fundamental things to keep tabs on. First, late last week, Nasdaq granted a 180-day extension to the company to regain compliance with the market operator’s minimum bid price requirement. While this is favorable and prevents any delisting in the near term, Check-Cap also has potential milestones to consider. The most recent of which was discussed in its November business update. An Investigational Device Exemption application was submitted to the FDA for a pivotal study of C-Scan. This is the company’s screening test to detect polyps before they may transform into colorectal cancer.
Alex Ovadia, chief executive officer of Check-Cap said that the company plans “to provide a further investor update on the timelines for the initiation of the U.S. pivotal study, expected in 2021, following guidance from the FDA.”
In light of this, analysts have grown more bullish. Right now HC Wainwright has a Buy on the company. It also placed a $1.50 price target, 226% higher than Thursday’s closing price.Penny Stocks To Buy [B. Riley]: Mustang Bio Inc. (NASDAQ:MBIO)
Mustang Bio also saw a stronger second half in 2020. Despite highly volatile, weekly swings, shares of MBIO stock remained higher by New Year’s Eve compared to where they traded at the start of July. Furthermore, you’ll notice that the second half of December was strong as well. MBIO managed to claw back from an earlier sell-off, which took the stock from $3.99 down to $2.55. This drop followed news that the presentation of interim Phase 1/2 data of its lymphoma treatment, MB-106.
However, some significant insider buying along with the start of a new Phase 1 trial seems to have corrected things a bit. Director Lindsay Rosenwald picked up 100,000 shares of MBIO stock at an average price of $2.66 mid-Month. As far as its Phase 1 trial, the focus is on the safety and feasibility of administering MB-101 to patients with leptomeningeal brain tumors.
At the end of the day, analysts have remained bullish on the penny stock. Toward the end of December, B. Riley reinstated Mustang with a Buy rating. It also has a $13 price target on the stock. Considering MBIO closed last Thursday at $3.79, B.Riley’s MBIO stock forecast price is 243% higher than current trading levels.