In this article, we will take a look at the 11 best long-term penny stocks to buy now. To see more such companies, go directly to 5 Best Long-Term Penny Stocks to Buy Now.
The Federal Reserve’s historic battle against inflation that started in 2022 has highlighted the importance of an already-known fact: if you want to beat inflation always invest money wisely with a long-term perspective. A report by Weston Banks Wealth Partners shares some interesting data points which show how inflation eats away your cash savings and why is it important to invest for long term if you want to increase your wealth. The report said that "an assumed inflation rate of 4 percent will reduce the value of a $100,000 portfolio invested today to approximately $67,500 in just ten years." The report said that these numbers mean your investments will have to grow to $148,000 during these ten years to simply keep up with the rising costs.
What’s the ideal way for an average person who wants to hedge against inflation and save their money from being eaten away from the inflation monster? The report said that while many people turn to fixed-income investments, they are highly exposed to inflation risk and they don’t have the same capital appreciation potential as equities. The report then compares the performance of fixed-income investments and stocks. During 1928 to 2014, the S&P 500 returned 11.5% annually per year, while 10-year Treasury bonds returned just 3.5%.
But that does not mean investing in stocks is straightforward and easy. Had it been easy, everyone would have been minting money investing in the market. The report advised clients to never follow the herd since by the time your friends, family or neighbors are aware of a stock or trend, you should know that that investment has become quite common and may not be trading at ideal prices. But never following the herd advice should not be taken too literally. The report also advises investors not to go against the tide every time just for the sake of it.
The only answer to all the above questions and risks is diversification. If you diversify enough and don’t put all your eggs in one basket, you will be able to hedge against risks. But the most important thing is having a long-term perspective. But it’s easier said than done. Since humans are highly emotional creatures, most investors are not able to take full advantage of even the broader market indices. For example, the report quoted a study which shows that even though the S&P 500 returned 9.9% between 1995 and 2014, the average investor just made about 2.5% in returns during the same period. Why? Because the average investor is too emotional to wait and they did not let the markets do their work. They don’t invest with an intention of staying invested, missing out on real profits that realize over the long run.
But having a long-term outlook is also easier said than done. As the report adds:
“Many common investing mistakes can be attributed to emotional decision-making. Whenever you make financial or investment decisions, you will confront the challenges of overcoming fear and greed. Fear can cause you to run for the exits when markets decline or your portfolio takes losses. Greed can encourage you to chase fads and take on too much risk in the pursuit of a big score. However, by recognizing your emotional triggers and engaging your rational mind, you can overcome your impulses and cultivate discipline.”
The importance of long-term investing comes to light when you analyze the returns of equity investing over longer periods of time and compare them to other investing methods. A 2020 report from T. Rowe Price compared portfolios of two hypothetical investors: the bond investor and the balanced investor. The balanced investor goes with the traditional 40-60 bond-stock portfolio, while the bond investor solely sticks with bonds when things go south. T. Rowe’s analysis of these two portfolios over a course a decade shows that over the long run, the balanced investor does well assuming they stay invested in the market, initially losing money when markets crash but regaining all the lost money and then some when markets rebound.
Best Long-Term Penny Stocks to Buy Now
Our Methodology
For this article we first used a stock screener to find penny stocks with estimated annual EPS growth of 10% for the next five years and positive sales growth over the past five years. We got a long list of penny stocks as a result. From this dataset we picked 11 stocks with the highest number of hedge fund investors. Hedge funds invest in companies for long term after a lot of research and hence we decided to use hedge fund sentiment as a final condition to pick these penny stocks for the long term.
Cardiovascular disease treatment company Amarin Corporation plc (NASDAQ:AMRN) ranks 11th in our list of the best long-term penny stocks to buy now. Amarin Corporation plc (NASDAQ:AMRN) recently signed a marketing and commercialization agreement with Neopharm to sell its triglyceride-lowering drug Vazkepa (icosapent ethyl) in Israel.
In August, Amarin Corporation plc (NASDAQ:AMRN) posted Q2 results. Adjusted EPS in the quarter came in at $0.02, beating estimates by $0.05. Revenue in the quarter fell 15.1% year over year to $80.17 million, beating estimates by $5.65 million. As of the end of the first quarter of 2023, 19 hedge funds tracked by Insider Monkey were long Amarin Corporation plc (NASDAQ:AMRN).
Protein engineering company Codexis, Inc. (NASDAQ:CDXS) shares have lost about 74% over the past one year but the stock could be a decent bet for the long term. Earlier in August Codexis, Inc. (NASDAQ:CDXS) posted upbeat Q2 results. GAAP EPS in the quarter came in at -$0.17, beating estimates by $0.04. Revenue in the quarter fell 44.5% year over year to $21.32 million, meeting analyst estimates. Codexis, Inc. (NASDAQ:CDXS) reiterated its FY’2023 guidance. Codexis, Inc. (NASDAQ:CDXS) expects product revenues in the year to come in the range of $30 million to $35 million, excluding enzyme sales related to PAXLOVID.
As of the end of the first quarter of 2023, 19 hedge funds in Insider Monkey’s database reported having stakes in Codexis, Inc. (NASDAQ:CDXS). The biggest stakeholder of Codexis, Inc. (NASDAQ:CDXS) during this period was Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management which owns a $21.3 million stake in the company.
Educational technology company 2U, Inc. (NASDAQ:TWOU) ranks 9th in our list of the long-term penny stocks to buy now. As of the end of the first quarter of 2023, 20 hedge funds out of the 943 funds tracked by Insider Monkey reported having stakes in 2U, Inc. (NASDAQ:TWOU). The most significant shareholder of 2U, Inc. (NASDAQ:TWOU) during this period was Catherine D. Wood’s ARK Investment Management which had a $64 million stake in the company. 2U, Inc. (NASDAQ:TWOU) in 2021 completed purchase of edX, becoming a behemoth in the online education domain. However, 2U, Inc. (NASDAQ:TWOU) has been struggling lately amid a declining revenue from Degree program business driven by lack of spending from consumers.
2U, Inc. (NASDAQ:TWOU)’s Q2 results also missed expectations on both EPS and revenue. For full-year 2023 2U, Inc. (NASDAQ:TWOU) expects its revenue to come in the range of $985 million to $995 million, representing growth of 3% at the midpoint
Conversational technologies company LivePerson, Inc. (NASDAQ:LPSN) shares have gained about 9% over the past one month through August 10.
Investment firm Craig Hallum upgraded LivePerson, Inc. (NASDAQ:LPSN) to Buy from Hold after the company posted Q2 results and announced CEO transition. Craig Hallum’s analyst Jeff Van Rhee upped his price target for LivePerson, Inc. (NASDAQ:LPSN) to $7 from $5. He said that “after mass chaos over the past several questions, the LivePerson, Inc. (NASDAQ:LPSN) business is settling out and the forward view gaining some clarity.”
As of the end of the first quarter of 2023, 20 hedge funds in Insider Monkey’s database reported owning stakes in LivePerson, Inc. (NASDAQ:LPSN). The biggest stakeholder of LivePerson, Inc. (NASDAQ:LPSN) was D. E. Shaw with a $7.9 million stake in the company.
Biotech company Heron Therapeutics, Inc. (NASDAQ:HRTX) ranks 7th in our list of the top long-term penny stocks to buy. In July Heron Therapeutics, Inc. (NASDAQ:HRTX) jumped after the company said it reduced its employee count by about 25% as part of a cost-cutting plan and also initiated a private placement financing worth about $30 million.
As of the end of the first quarter of 2023, 20 hedge funds out of the 943 funds reported owning stakes in Heron Therapeutics, Inc. (NASDAQ:HRTX). The biggest stakeholder of Heron Therapeutics, Inc. (NASDAQ:HRTX) during this period was David Rosen’s Rubric Capital Management which owns a $17.7 million stake in the company.
Texas-based Braemar Hotels & Resorts Inc. (NYSE:BHR) recently posted Q2 results. FFO in the quarter came in at $0.20 in-line with estimates. Revenue in the quarter jumped 6.8% year over year to $186.71 million, beating estimates by $4.47 million.
As of the end of the first quarter of 2023, 20 hedge funds in the database of Insider Monkey had stakes in Braemar Hotels & Resorts Inc. (NYSE:BHR). The biggest stake in Braemar Hotels & Resorts Inc. (NYSE:BHR) was owned by James Dondero’s Highland Capital Management which owns a $9.1 million stake in the company.
