Penny stocks are shares usually below $5, representing small companies, most of which trade by over-the-counter (OTC) transactions, while there are some that trade on traditional exchanges.
Essentially, the risk and reward in these stocks stem from the same place, as stocks priced in pennies, which see an increase of a few cents, can bring significant returns to investors. On the other hand, if the stocks fall by just a couple of cents, the losses can be enormous.
Therefore, investors can look to analysts’ expert opinions to better gauge which penny stocks could bring in profit while limiting the downside. Finbold analyzed the TipRanks database and found two penny stocks with a ‘strong buy’ consensus and a potential upside of 300%.
Picks for you
Medicenna Therapeutics (TSE: MDNA)
Medicenna Therapeutics developed a novel approach to treating aggressive forms of cancer; however, the initial products won’t hit the markets in a couple of years, so this would represent a long-term investment.
Further, it seems that the most significant asset the firm currently has is its MDNA55 therapy, also called a molecular trojan horse which is an anti-cancer therapy for the treatment of brain tumors. Oppenheimer’s Matthew Biegler now sees the stock presenting a solid entry position, giving it an outperform rating.
Meanwhile, the short-term trend is negative as the stock traded from $0.88 to $1.88 in the past month. MDNA is currently in the lower part of its 52-week range, with technical analysis indicating a support line at $0.98 and a resistance at $1.75.
TipRanks analysts have a ‘strong buy’ rating consensus, seeing the average price in the next 12 months reaching $6.20, 507.39% higher than the current trading price of $1.02; notably, there is no hold or sell recommendations.
Longboard Pharmaceuticals (NASDAQ: LBPH)
The firm is working towards advancing treatment candidates for epilepsies and other central nervous system conditions, producing promising results in the early Phase 1 trial. Initially, the firm was founded as a group within a parent firm Arena Pharmaceuticals, to develop a portfolio of treatments for epilepsies and other severe neurological conditions.
Moreover, the lead candidate is LP352 in Phase 2 human trials, designed to treat epileptic seizures. Cantor Fitzgerald’s 5-star analyst Charles Duncan sees a lot of opportunity in the stock at, what he deems, an attractive entry point.
In the last month, LBPH has been trading in the $3.10 to $5.15 range, with increased trading volume in the previous few sessions. Notably, the short-term trend is positive, while the long-term trend is neutral. Furthermore, a support zone is located from $3.91 to $3.92, and the resistance line is at $4.65.
Analysts on Wall Street rate the shares a ‘strong buy,’ seeing the average 12-month price reaching $18, 358.02% higher than the current trading price of $3.93, with no hold or sell ratings.
The above two penny stocks have solid analyst coverage, with primarily bullish views on the possible performance.
As both firms are pharmaceuticals in the production stage for their major drug candidates, a lot of patience and risk appetite will be needed for these flowers to bloom and bring the promised returns to their shareholders fully.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
