3 Hot Penny Stocks To Buy For Under $3, Worth It?
Penny stocks are some of the most volatile assets in the stock market today. But is the risk worth the reward? That’s something traders grapple with daily. One unique thing about 2022 is that there are far more companies with share prices trading below $5 per share due to the stock market sell-off. You’ve got some of the most recognizable names in different industries trading for pennies on the dollar in some cases.
That might be troublesome for long-term investors holding positions from when the stocks traded much higher. However, for anyone that limits their search criteria to penny stocks under $5, this has been a year that offered an opportunity to see supposed “top-tier” companies trading in what some hope is the bargain bin. Whether or not they are a “bargain” is to be seen.
Heading into the new and final month of 2022, December is hopeful to see a Santa Claus rally. However, much of the anticipation isn’t on earnings or guidance right now. The next few weeks will have key Fed speakers and economic data in focus. This week, particularly, has a slew of central bankers speaking, including Fed Chair Jerome Powell and, later, the final round of CPI inflation data.
What happens in the next few weeks could define how traders and investors approach the market in 2023. Today, we look at some of the most beaten-down stocks analysts are bullish on. Some have even given price targets as high as 317%.
3 Penny Stocks To Watch
- 23AndMe Holding (NASDAQ: ME)
- Butterfly Network Inc. (NASDAQ: BFLY)
- OmniAb Inc. (NASDAQ: OABI)
23AndMe Holding (ME)
You’ve probably seen or used products from 23AndMe at one point. Initially billed as an ancestry-finding app, the company has evolved into something much more. It has developed platforms in human genetics, biopharmaceuticals, and a new addition of telehealth to its revenue model. For the second fiscal quarter, 2023, 23AndMe reported 37% revenue growth to $76 million. Consumer revenues also grew double digits by 27% thanks to the addition of telehealth revenue.
23andMe has the world’s largest re-contactable database for genetic research, which makes us best positioned to unlock the potential of the human genome to treat and prevent disease. With our acquisition and integration of telehealth and digital pharmacy services, we will be able to provide our customers with one of the first large-scale personalized, genetics-based health services,” said Anne Wojcicki, Chief Executive Officer and Co-Founder of 23andMe in its last quarterly update.
The company has also made inroads with genome treatment candidates like its 23ME-00610, which recently had Phase 1 study data presented at the Society for Immunotherapy of Cancer meeting. Details of a poster presented showed that “the drug targets based on human genetics are more likely to prove successful than those with no underlying human genetic evidence,” said Jennifer Low, MD, Ph.D., Head of Therapeutics Development at 23andMe. “We are testing if our antibody has activity in a variety of tumor types, including those that traditionally don’t respond to anti-PD(L)-1 treatment. We hope that 23ME-00610 will ultimately provide clinical benefit to patients with cancer.”
Analysts at Barenberg Bank are optimistic about the prospects for ME stock. The firm currently has a $7 target and Buy rating. That target is 154% higher than the previous closing prices for the penny stock.
Butterfly Network Inc. (BFLY)
Another health-forward company, Butterfly Network, has also gained momentum following its latest round of earnings results. The company provides a handheld, whole-body ultrasound platform and supporting technology, Cloud2.0, which has come into focus this month. Butterfly reported total revenue of $19.6 million in Q3, 2022. This was up more than 34% from Q3 in 2021.
The company also reached several milestones to progress its platforms, including a clinical study with the John Muir Cardiovascular Institution Research department. Butterfly’s tool is under evaluation to provide novice clinicians and patients with a way to assess pulmonary congestion on their own.
Management explained, “Looking at our 2022 guidance. Interest in Butterfly is strong, and the long-term opportunity and available market for our products is clear…we believe it is prudent to revise our full-year guidance to $73-$76 million. However, due to the actions taken in Q3 and additional control measures, we are able to reiterate our adjusted EBITDA guidance in the range of a loss of $155-$145 million.”
Against this backdrop, some analysts at B. Riley have become bullish on the penny stock. The firm set a $7.50 target (153% higher than Monday’s close) and gave a Buy rating on BFLY stock.
– Why Buying Penny Stocks in 2022 is Unlike Any Other Time
OmniAb Inc. (OABI)
OmniAb was a spin-off company from Ligand Pharmaceuticals (NASDAQ: LGND) and then combined with Avista Public Acquisition Corp II, a SPAC. Like most SPAC “deals,” share prices imploded once they hit public markets. It may have been bad for those looking at it prior to OABI becoming a penny stock, but now it seems there is much more attention from the retail community due to its unfortunate decline. Nevertheless, OmniAb has made progress in expanding its initiatives.
This includes a recent presentation circuit at Credit Suisse’s and Stifel’s Healthcare conferences. In the company’s latest quarterly update, CEO Matt Foehr touched on several plans for the company.
“OmniAb is leveraging its leading technology foundation with a growing number of partners to address the significant market opportunity for antibody-based therapeutics. Partners have announced numerous positive updates, including Janssen’s recent regulatory approvals in the U.S. and European Union for TECVAYLI ™.”
– 10 Top Penny Stocks To Watch Under $1 Right Now
Despite the recent performance in the stock market, today, more analysts jumped on the bandwagon for an optimistic outlook for OABI stock. SVB Securities started the company with an Outperform rating and a $6 price target. But what some are more enticed by is Stifel’s from earlier this week. The firm also has a Buy rating but a price target set at $12, roughly 317% higher than recent closing prices.
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