The Top 3 Penny Stocks According to Leerink – Make Triple-Digit Gains
The term penny stock is used to refer to the stock of a small organization trading at a value that is less than $5 for each share. While a few of them are traded on the major stock exchanges, most trades are conducted over the counter through the OTC Makers Group and Bulletin Board. As it so happens, the majority of penny stocks trading at less than $1 for each share do not provide much promise in terms of return.
In 2019, the average volume of daily trading was greater than 1 million for the 102 stocks in the USA that had a per-share price less than $1. Among these, just 9.8% of the stocks showed positive returns. This tells us that investing in penny stocks comes with its fair share of risks.
Should you invest in penny stocks?
While dealing with penny stocks, you shouldn't get fooled by the low Price-to-Earnings ratio because they are unlikely to rise from that level. Many times you may face a situation where the spreads have widened too much, or the volumes have disappeared all of a sudden. This happens due to a group of people forming an accord with some promoters to create a false demand by boosting a stock's price, after which the value of the stocks falls sharply because of the withdrawal of support.
Many companies try to promote large orders by paying for them, but the entire construct disappears in the end, with the company’s net worth falling to a negative value. The people who brought these shares are then left with no choice but to sell them at a price much lower than what they were bought for. Penny Stocks are opaque because these small organizations are often not tracked by any authority.
As a general rule, you should consider a penny stock to be reliable if it has a higher trade volume. You should concentrate on penny stocks, where more than 100,000 shares are traded every season. Furthermore, you should avoid those stocks that are priced below 50 cents for every share because they are mostly unproven and attached to companies that don’t have a good track record.
After identifying a stock that can bring you potential profits, take some time before buying it. You should keep your eye on the stock for about seven days, see the trading performance and volume, track the price changes, and know the best entry price before confirming the purchase. Let us now take a look at the 3 penny stocks that Leerink considers to be the best options for making huge gains.
1. HTG Molecular Diagnostics (HTGM)
Since the end of March, HTG Molecular Diagnostics has remained a good bet in the penny stocks market. During that time, HTG, a company that provides high-quality diagnostic solutions, looked into the reaction of the immune system to SARS-CoV-2, and discovered that they could use it to treat patients affected by the coronavirus.
Its sister company HTG EdgeSeq is known for automating extremely complicated molecular profiling from both liquid and solid samples. In essence, it aids in identifying biological markers that are vital for medicinal purposes.
The penny stocks of HTGM performed quite well during the first couple of quarters, but at the end of the third quarter, its price has plummeted a bit. Towards the end of July, the stock price reached a value of $0.80, but after that, the price of each share has dropped back to $0.30. So essentially, it lost all the gains made during the last few quarters.
In the first week of September, nevertheless, this penny stock showed some promise. The price per stock rose from $0.30 to $0.37 during this period. The reason behind this sudden rise is said to be a contract made by the company with the government.
2. T2 Biosystems (TTOO)
This company is a known manufacturer of molecular test panels and diagnostic devices. T2 Biosystems has a long history of struggle, and normally this is a cause for concern, but according to Leerink, the per-share price of $1.07 gives traders a great opportunity to ride the turnaround wave.
This stock’s good performance can be attributed to the testing solutions it has been providing for COVID. In the second quarter of 2020, the company said that the demand was quite high for these tests. They were carried out mostly on hospitalized patients to rule out instances of sepsis.
Moreover, the company’s balance sheet is now quite strong, with the perfunctory cash position reaching $69 million. Analysts are predicting a bull market with the stock’s price target kept around $3. Overall, this stock is showing a strong buy signal.
3. Genocea Biosciences (GNCA)
This cancer vaccine development company currently has a current per-share price of $2.24, and as per Leerink, it holds great potential. GNCA's innovative research on neoantigens has placed it in a unique position in the market. In February 2020, the CEO of the company, along with its president, held an important conference.
Since history has shown us that biotech stocks often rise or fall after important meetings, this could be a sign that the company is up to something big. Analysts suggest the upside potential for this stock to be 128%, and the price target is set at $5.
There is no point pretending that investing in penny stocks is a high-risk affair. As such, you always need to know how a particular stock is performing and what the future predictions for the same. The threepenny stocks mentioned above showed great potential recently and should be safe investments for you.