In this piece, we will take a look at the ten penny stocks poised to explode. If you want to skip our introduction to these tricky stocks, then jump ahead to 5 Penny Stocks Poised To Explode.
The ongoing bloodbath in the stock market that has been compounded by high inflation and monetary policy tightening has left investors fleeing to safe assets and the market shuddering in the aftermath. In this backdrop, it is believed that the broader market indexes have already incorporated the effects of future interest rate hikes as well, and investors are now left in the elusive search of a bottom - that magical place where the market finally starts to demonstrate the early stages of a bull run.
This opens the door for potential returns, as the share prices of almost every firm start to look attractive due to non fundamental and macroeconomic driven drops. One segment that often attracts attention, especially for the budget conscious investor, is the penny stock segment. The Securities and Exchange Commission (SEC) defines a penny stock that is less than $5, and the definition came after the Securities and Exchange Act was passed to regulate transactions between third parties in 1934.
Investing in penny stocks has its upsides and downsides. Due to their low price, they offer the potential for explosive returns, since even small dollar amounts in growth translate into huge percentage gains. However, on the flip side, these large gains can be only on paper, as the demand for a stock on the market determines the number of shares that can be sold. Similarly, even small share price drops can cause large losses if an investor concentrates all resources on a single stock. Additionally, while common thought outlines that large firms such as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) started out as penny stocks, this is a misconception since the low share prices estimated for these firms do not take stock splits into account.
However, the drawbacks do not mean that penny stocks require absolute shunning. The right stocks carry great potential for returns, after careful stock selection. And the low share price is not a bad thing either. For instance, a report from Bloomberg estimates that stocks priced lower than $2 had managed to deliver 12% year to date returns by the start of 2021.
Therefore, the penny stock segment of the market merits a deeper look, and our list today does just this. The top picks on the list are Allego N.V. (NYSE:ALLG), Canoo Inc. (NASDAQ:GOEV), and Aurora Innovation, Inc. (NASDAQ:AUR).
10 Penny Stocks Poised To Explode
Our Methodology
We simply took a look at Insider Monkey's database of 895 hedge funds to pick the top ten penny stocks out of the thousands of firms that the funds have invested in. We have ranked these stocks based on the number of hedge funds having stakes in them as of the end of the second quarter.
Bird Global, Inc. (NYSE:BRDS) is a transportation services provider that allows users to share vehicles for short distances. Its portfolio includes electric scooters and electric bikes, which it offers through a website. The firm also sells vehicles to customers through retailers, distributors, and directly. It is headquartered in Miami, Florida, the United States.
Bird Global, Inc. (NYSE:BRDS)'s rides and revenues rebounded during its second fiscal quarter, as they grew by 39% and 34%, respectively. The firm's first half of 2022 saw its business revenue from vehicle sharing grow at a compounded annual growth rate (CAGR) of 26% since 2019, as it recovered from the coronavirus pandemic's disruptions. The firm's revenue in the second quarter was $77 million.
Bird Global, Inc. (NYSE:BRDS) is also increasing its presence across the United States, and the firm announced in August 2022 that it has extended its mobility programs in five cities, including San Diego and Memphis. Bird Global, Inc. (NYSE:BRDS) also entered Bradenton and Knoxville in August. Insider Monkey's Q2 2022 survey of 895 hedge funds outlined that 16 had invested in the firm.
Out of these, Bird Global, Inc. (NYSE:BRDS)'s largest investor is Ben Levine, Andrew Manuel, and Stefan Renold's LMR Partners which owns 2 million shares that are worth $954,000.
Along with Canoo Inc. (NASDAQ:GOEV), Allego N.V. (NYSE:ALLG), and Aurora Innovation, Inc. (NASDAQ:AUR), Bird Global, Inc. (NYSE:BRDS) is a penny stock on the hedge fund radar.
BARK, Inc. (NYSE:BARK) designs and sells dog products such as toys, personal meal plans, supplements, treats, beds, bowls, collars, and harnesses. It is headquartered in New York, New York, the United States.
Despite the turbulence in the economic environment, BARK, Inc. (NYSE:BARK) grew its average orders by 7% annually and 3% sequentially in its latest quarter. The firm also has recurring revenue through subscriptions, and its latest quarter saw subscriptions fuel 6% of the revenue growth. At the same time, revenue from new customers grew by 10%, indicating that the firm is firing on all fronts.
BARK, Inc. (NYSE:BARK) also has a strong balance sheet, with $177 million in cash and only $76 million in debt. Jefferies set an $8 share price target for the firm in October 2022, sharing that early results from an ongoing business model transformation are promising. By the end of this year's second quarter, 16 out of the 895 hedge funds polled by Insider Monkey had owned the company's shares.
BARK, Inc. (NYSE:BARK)'s largest investor is Jim Simons' Renaissance Technologies which owns 2.2 million shares that are worth $2.9 million.
Ardelyx, Inc. (NASDAQ:ARDX) is a biopharmaceutical company that designs and sells treatments for gastrointestinal, heart, and kidney diseases. These include irritable bowel syndrome, chronic kidney disease, and heart disease. The firm is based out of Waltham, Massachusetts.
Ardelyx, Inc. (NASDAQ:ARDX)'s Ibsrela drug is for patients with irritable bowel syndrome, a disease that effects more than 11 million people in the U.S. annually. This lends its market a total addressable value of $3 billion, and even capturing a fraction of this market can lead to millions of dollars in revenue for the firm. The firm is also targeting the kidney disease market with the active ingredient of the irritable bowel syndrome medicine, for a market of another 440,000 patients.
Ardelyx, Inc. (NASDAQ:ARDX) has also entered partnerships with firms in Canada, Japan, and China, and its product licenses brought the firm $44 million in revenue in its latest quarter. Insider Monkey scanned 895 hedge funds for their June quarter of 2022 investments and discovered that 16 had bought a stake in the firm.
Out of these, Ardelyx, Inc. (NASDAQ:ARDX)'s largest investor is Steve Cohen's Point72 Asset Management which owns five million shares that are worth $2.9 million.
biote Corp. (NASDAQ:BTMD) is a hormone optimization firm that allows its customers, which are its certified medical practitioners, to prescribe hormone therapies and vitamin supplements and optimize the hormonal balance of their patients. The firm is headquartered in Irvine, Texas, the United States.
biote Corp. (NASDAQ:BTMD) delivered stellar results in its second fiscal quarter, which saw the firm bring in $41 million in revenue, $13 million in operating income, and $49.7 million in net income. These marked for solid 19%, 21%, and a whopping 409% growths, respectively.
Truist set a $10 share price target (current share price is $4.4) for the company in September 2022 as it stated that biote Corp. (NASDAQ:BTMD) is a leader in the hormone optimization space and that it will continue to use its strong business model to generate operating income growth in the future. 16 out of the 895 hedge funds part of Insider Monkey's Q2 2022 survey had held biote Corp. (NASDAQ:BTMD)'s shares.
Sientra, Inc. (NASDAQ:SIEN) is a medical aesthetics firm that is headquartered in Santa Barbara, California, the United States. The company offers a wide variety of products such as those used in breast augmentation and breast reconstruction. It also sells facial and nasal implants.
Sientra, Inc. (NASDAQ:SIEN) scored a big win in September 2022 when it announced that it had secured approval to sell its breast implant products in Saudi Arabia. The firm's chief executive officer shared that he intends to use this as the first step for the firm's expansion into the cash rich and highly lucrative Middle East market.
Sientra, Inc. (NASDAQ:SIEN) second fiscal quarter saw the firm grow revenue by 7% to $21.5 million, as it added close to 300 new accounts to its portfolio - setting a new record. During the same quarter, the firm's gross margin stood at 59%, as it grew by 3 percentage points annually. Sientra, Inc. (NASDAQ:SIEN) also aims to post revenue ranging between $90 million to $95 million in the full year 2022, as compared to $80.7 million posted last year.
Insider Monkey's Q2 2022 survey of 895 hedge funds outlined that 17 had bought Sientra, Inc. (NASDAQ:SIEN)'s shares.
Out of these, Richard Mashaal's Rima Senvest Management is Sientra, Inc. (NASDAQ:SIEN)'s largest investor. It owns three million shares that are worth $2.6 million.
In addition to Allego N.V. (NYSE:ALLG), Canoo Inc. (NASDAQ:GOEV), and Aurora Innovation, Inc. (NASDAQ:AUR), Sientra, Inc. (NASDAQ:SIEN) is a penny stock that hedge funds are piling into.
