|Source : AI|
Penny stocks offer the allure of massive gains from small investments. While risky, savvy investors can find overlooked gems poised for a breakout.
This guide explores 7 penny stocks with potential for explosive growth in 2023.
Note: Penny stocks involve high risk. Conduct thorough due diligence before investing. This article should not be considered financial advice.
Table of Contents
- Penny Stock #1: The Oncology Institute (TOI)
- Penny Stock #2: Clover Health Investments (CLOV)
- Penny Stock #3: Senseonics Holdings (SENS)
- Penny Stock #4: Sandstorm Gold (SAND)
- Penny Stock #5: American Lithium (AMLI)
- Penny Stock #6: Microvast Holdings (MVST)
- Penny Stock #7: Wag! Group (PET)
- How to Find the Best Penny Stocks
- Penny Stock Investment Strategy
Penny stocks, defined as stocks trading under $5 per share, offer explosive upside potential compared to traditional stocks. With penny stocks, small investments can translate into enormous percentage returns.
However, penny stocks also come with substantial risks. Many penny stock companies lack solid fundamentals or have questionable business models. Fraud is also a concern in some cases.
With diligent research, though, investors can identify promising penny stocks before they catch mainstream attention. Getting in early allows you to maximize gains as sentiment shifts and share prices surge.
This article highlights 7 penny stocks that could realistically double or triple your money in 2023 based on current fundamentals and growth trajectories.
Penny Stock #1: The Oncology Institute (TOI)
The Oncology Institute (NASDAQ: TOI) provides value-based cancer care services, including dispensary, clinical trials, and patient support programs.
Despite the massive addressable market in oncology, TOI trades as a penny stock due to its relatively recent IPO via SPAC merger in 2021. The entire SPAC sector fell out of favor amid regulatory concerns, causing even quality companies like TOI to be oversold.
Now TOI appears deeply undervalued relative to its long-term growth prospects in the oncology space. The company’s innovative AI partnership with Massive Bio helps match cancer patients with clinical trials using machine learning.
TOI also enjoys strong institutional backing, with firms like General Atlantic and Vivo Capital owning over 70% of shares outstanding. As TOI executes operationally, its fundamentals should catch up to analyst targets. Two analysts have set price targets of $6.50, representing 950% upside.
Penny Stock #2: Clover Health Investments (CLOV)
Clover Health (NASDAQ: CLOV) provides Medicare Advantage health plans, leveraging artificial intelligence to enhance outcomes and reduce costs. Medicare Advantage represents a huge market opportunity, as more seniors opt for privatized plans over traditional Medicare.
Despite this promise, CLOV has struggled to scale efficiently and achieve profitability. The stock debuted on public markets via SPAC merger in 2020 and initially spiked over $28 per share amid Reddit-fueled meme stock mania. Shares have since crashed back below $2 as CLOV failed to meet expectations.
However, CLOV recently announced narrowed losses and may finally be on track towards profitability in 2023–2024. If CLOV can execute its tech-driven strategy and capture market share, the stock could quickly rebound 3–4x. Leading insurance ratings firm AM Best recently upgraded CLOV’s outlook to positive.
Penny Stock #3: Senseonics Holdings (SENS)
Medical device maker Senseonics (NYSEAMERICAN: SENS) develops implantable continuous glucose monitoring systems for diabetes patients. Its flagship product is the Eversense CMD system.
Despite strong product reviews, Eversense adoption has lagged due to lack of insurance coverage. But that changed in July 2022 when UnitedHealthcare agreed to cover the system, opening it up to nearly all insured American adults.
This watershed insurance coverage sparked a rally back over $2 per share, but SENS has since slid back under $1. However, analysts see substantial additional upside, with a consensus price target of $1.25.
With the key reimbursement hurdle cleared, Senseonics is primed for commercial scale, making SENS a compelling turnaround play.
Penny Stock #4: Sandstorm Gold (SAND)
While not a penny stock by the strictest definition, gold royalty company Sandstorm Gold (NYSE: SAND) has traded under $5 for much of 2022. But with gold prices rising, SAND offers upside well beyond the penny stock threshold.
Sandstorm provides non-operating exposure to gold, collecting royalties from other miners. This generates strong cash flow with minimal risk compared to operators.
With inflation soaring globally, gold should continue its ascent as a hedge and safe haven asset. Analysts see significant upside for SAND, reflected in a consensus price target of $8.94. That represents 72% upside from current trading levels.
While gold stocks can be volatile, SAND offers leverage to rising gold prices along with a healthy 1.4% dividend yield.
Penny Stock #5: American Lithium (AMLI)
Lithium stocks have exploded higher in recent years due to surging EV demand. But the sector remains turbulent, with prices fluctuating wildly amid supply chain concerns.
American Lithium (NASDAQ: AMLI) has not escaped this volatility. However, it remains one of the most prospective lithium development plays in mining.
The company is rapidly advancing its flagship TLC Project in Nevada, recently receiving key permits and government grants for expansion. American Lithium is also exploring additional lithium acreage in Peru.
Despite no revenue yet, AMLI boasts a market cap nearing $500 million. As American Lithium builds out production capacity over the next 2–3 years, its valuation could multiply exponentially higher.
Penny Stock #6: Microvast Holdings (MVST)
Another EV-adjacent pick is battery technology company Microvast (NASDAQ: MVST). Microvast specializes in batteries for commercial vehicles like buses, trucks, and mining equipment. This niche focus gives it an edge.
MVST went public via SPAC merger in 2021 at prices above $15. Shares have since plummeted below $2 due to execution setbacks. However, analysts remain universally bullish, with a consensus target of $8 (387% upside).
Recent denial of a U.S. Department of Energy loan poses additional headwinds for Microvast. But its partnerships with Oshkosh, BMW, and other major OEMs underscore its long-term potential. As Microvast scales up and improves margins, MVST could stage a massive comeback.
Penny Stock #7: Wag! Group (PET)
Surging pet ownership has fueled growth for Wag! Group (NASDAQ: PET), which operates an online marketplace connecting pet parents with pet caregivers.
Wag! offers a widening array of on-demand pet services including dog walking, boarding, house sitting, and expert advice. This has enabled strong 30%+ revenue growth as demand surges post-pandemic.
Despite its early stage, PET has gained institutional support, with firms like General Catalyst owning nearly 90% of shares outstanding. This provides a solid floor, limiting downside risk.
As Wag! achieves scale and increases margins, profitability appears within reach. With the tailwinds of the pet industry propelling growth, PET could easily double or triple within 12–24 months.
How to Find the Best Penny Stocks
The penny stocks above demonstrate potential, but how do you identify the highest upside opportunities in this risky sector? Here are some tips:
- Screen for catalysts — Look for upcoming milestones like clinical trial data, FDA approvals, or earnings that could positively impact shares.
- Evaluate management teams — The right leaders with skin in the game increase odds of execution success.
- Research company financials — While penny stocks are speculative, favor companies with robust sales growth, reasonable valuations, and clear paths to profitability.
- Analyze insider and institutional ownership — High levels indicate conviction in the company’s future.
- Leverage analyst coverage — Many penny stocks have limited or no coverage, so capitalize when analysts issue bullish reports.
- Stay informed on the sector — Focus on fast-growing spaces like biotech, mining, and energy to improve your odds.
Penny Stock Investment Strategy
Here are some tips for investing in penny stocks to maximize gains and manage risk:
- Invest only a small portion of your capital, as these are highly speculative stocks. Never wager money you cannot afford to lose.
- Diversify across multiple penny stocks and sectors to mitigate company-specific risks.
- Use limit orders, not market orders, when trading penny stocks to protect against volatility.
- Set stop losses on all positions to automatically sell if shares fall below a defined threshold.
- Book profits regularly as shares run up. Don’t get greedy waiting for more gains.
- Keep position sizes small, under 5% of your portfolio. This prevents overexposure.
- Research penny stocks thoroughly before buying to ensure you understand the risks involved.
- Avoid flashy penny stocks promoted on social media forums. Focus on quality companies with strong fundamentals.
While inherently risky, penny stocks offer accredited investors the potential for life-changing wealth creation. A small investment in the right company can multiply 1000% or more.
This guide highlighted 7 penny stocks across diverse sectors poised for massive upside in 2023. Each displays strong fundamentals and catalysts that could propel shares higher.
Of course, penny stocks remain highly speculative. But with rigorous due diligence and measured position sizing, substantial profits are attainable.
Are you intrigued by any of the penny stocks profiled above? What other overlooked gems have caught your interest? Let me know in the comments!
And if you found this guide helpful, don’t forget to share with fellow investors who could benefit.
Now get out there, do your research, and go hunt for the next 10X return penny stock pick!
Q: What are penny stocks?
A: Penny stocks are shares of small companies that trade for under $5 per share. They offer explosive upside potential but also carry significant risk.
Q: How much can you make from penny stocks?
A: While risky, penny stocks can generate returns of 500–1000% or more in short periods of time. Even a small position can quickly yield large profits during a breakout.
Q: Are penny stocks safe to invest in?
A: No, penny stocks are highly speculative investments suitable only for investors with high risk tolerance and capital they can afford to lose. The lack of regulation and financial reporting requirements also increases fraud risk.
Q: How do I find good penny stocks to invest in?
A: Focus on fast-growing companies with strong management teams and promising products or services. Screen for upcoming catalysts and high levels of insider/institutional ownership. But still research thoroughly and diversify holdings.
Q: Should I buy penny stocks on Robinhood?
A: Robinhood offers commission-free trading of penny stocks. However, many experts advise against using Robinhood for penny stocks due to its gamified nature, lack of screening tools, and history of platform outages during volatility.