Are Analysts Right About These Penny Stocks To Buy?
Who’s ready for another busy week with penny stocks? I know after a short week last week – and a volatile one at that – many are anticipating what to expect this week. Surely we’ll see continued attention on the pandemic and vaccine data. We’ve also got the outcome of the stimulus decision. Something else that’s becoming even more evident is the growing bullishness coming from retail traders.
Brian Culpepper, a money manager at James Investment Research, told Bloomberg, “It’s been truly amazing. Everyone just thinks the stock market is going to go, go, go,” he added. “Whether it’s herd mentality, or fear of being left behind, that’s what you’re seeing.”
Is this a bubble or the “new normal” in the stock market? While sentiment remains bullish, it doesn’t negate undertones of a risk-off scenario where traders begin hedging against a potential bubble. Some of this was seen late last week as markets ran into some turbulence. The S&P 500 ETF (SPY), for example, stumbled during the shortened holiday week partially due to economic data. And while Treasury Secretary Janet Yellen advocated for further stimulus, it wasn’t enough to see the ETF finish green for the week. Year-to-date, the SPY is up about 4% as of Friday’s closing bell.
This brings me to my next point, small-cap stocks. This is a very different story. While the S&P dipped, small-cap ETFs like the Russell 2000 (IWM) ended up recovering relatively strongly. Though it also closed the week slightly red, Friday’s session was much different for the IWM. By the closing bell, the ETF had jumped back by more than 2.5% from last week’s low. Furthermore, the year-to-date climb supports the underlying bullishness in smaller companies. The IWM is up roughly 14% as of Friday’s closing bell.
What Do Analysts Think About Penny Stocks?
This begs the question: what’s the take on penny stocks based on analysts’ outlook? While I can’t speak to the broader opinion of most, what I can say is that at least two analyst firms are bullish on certain stocks under $5. The question you need to answer is if analysts are bullish, what’s the reason why?
Penny Stocks To Buy [according to analysts]
- Cinedigm Corp (NASDAQ: CIDM)
- InspireMD Inc. (NYSE: NSPR)
- Uranium Energy Corp. (NYSE: UEC)
- Novan Inc. (NASDAQ: NOVN)
- Corvus Pharmaceuticals Inc. (NASDAQ: CRVS)
Penny Stocks To Buy [According To Alliance Global]: Cinedigm Corp.
Price Target: $3
Alliance Global analysts are bullish on Cinedigm Corp. The firm carries a Buy rating as well as a $3 target. Considering that the stock closed at $1.97 Friday, that target is 52% higher than current levels. So what’s happening with CIDM stock that has analysts excited?
Cinedigm Corp. is a company that we’ve written about for quite some time. In the past few months, shares of CIDM stock have rocketed up substantially. While part of this was due to the AMC stock price debacle, the other part is the potential post-covid entertainment industry recovery.
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Earlier in the month, Cinedigm announced that it had hired two new executives to streamline the business. Erick Opeka, Chief Strategy Officer at Cinedigm, stated that “as we continue to execute our strategy of entertaining the world through our portfolio of enthusiast networks, it is important to bring in the best and brightest people working in the streamline ecosystem to Cinedigm…They exemplify the new capability-driven culture we are building here every day as we build the next great streaming company, and we wholeheartedly welcome them to the team.”
While new hires may not seem like a big deal, it helps determine the company’s future. Cinedigm continues to be one of the largest providers of streaming channels and content globally. Because the pandemic is still running its course, the demand for online entertainment is at an all-time high. In light of this, it could make sense to keep track of streaming content companies right now.
Penny Stocks To Buy [According To H.C. Wainwright]: InspireMD Inc.
Price Target: $2
InspireMD is another one of the penny stocks analysts are bullish on. This time, H.C. Wainwright is the firm issuing the Buy rating. H.C. also has placed a $2 target on NSPR. Based on the penny stock’s close of $1.19 on Friday, that represents a forecast of roughly 68% right now. Will that ultimately be the case? InspireMD is definitely in a hot sector of the stock market. Biotech stocks have been on fire lately. Obviously, the pandemic has helped bring attention to companies, in general. But in InspireMD’s case, the company focuses specifically on vascular and coronary diseases.
Its CGuard ® Embolic Protection System has been the point of focus most recently. This is InspireMD’s platform for the prevention of stroke caused by carotid artery disease. Earlier this month, the company secured a partner in China for the intended registration and distribution of CGuard EPS in mainland China. InspireMD’s agreement was with three China-based investment partners. It stipulates that the Chinese partners will be responsible for handling all necessary registration trials for commercial approval, followed by an eight-year exclusive distribution right in China. The company also appointed Chris Metzger, M.D., system chair of clinical research at Ballad Health System in Eastern Tennessee as the principal investigator for its planned FDA registration trial for CGuard EPS.
The company was also able to raise over $20 million in a recent funding round. Some of the participants in the round were directors and officers of the company. You can see this in the series of FORM 4s filed earlier this month. Director Gary Roubin picked up the largest position in the offering with 241,930 shares.
Uranium Energy Corp.
Price Target: $3.60
H.C. Wainwright also issued a Buy on Uranium Energy Corp. Something that you’ll notice is that based on Friday’s closing price of $2.50, H.C.’s target price sits 44% higher right now. Something you should also consider is current trends in the energy industry. Specifically, alternative energy and “green energy” have taken the spotlight. President Joe Biden’s plan to build a carbon-neutral economy has been at the center of attention of traders and analysts alike.
In Uranium Energy’s case, the name says it all. The company specializes in uranium mining and exploration. At the end of January, Uranium Energy announced its 2021 production area development at its Burke Hollow ISR project. This project is in South Texas, and the initial production area is the newest and largest ISR wellfield being developed in the U.S., according to the company.
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Amir Adnani, President and CEO, added, “UEC is positioned as the leader in U.S. low-cost, environmentally friendly and fully permitted ISR projects. Burke Hollow’s initial production area is amongst the largest uranium ISR wellfields ever developed in the 45-year history of uranium mining in South Texas…The low-impact ISR method of uranium recovery being developed at Burke Hollow is the most environmentally friendly way to mine uranium which is now responsible for approximately 50% of global production.”
With more attention on nuclear power as an alternative energy source, UEC could be one of the penny stocks to watch right now.
Novan Inc.
Price Target: $1.50
Something noticeable about the price target from H.C. Wainwright is that shares of NOVN stock have already surpassed this level. Friday afternoon, shares of the biotech company traded at $2.06, now 37% higher than H.C.’s initial target. Does this mean it has reached its peak? Obviously, time will tell, but the company’s recent milestones have helped propel the penny stock much higher. In particular, Friday was a strong day for NOVN, with shares jumping from early morning lows of $1.71 to over $2 by the end of the day.
One of the focus points for traders has been on the company’s skin infection treatment, SB206. Novan recently completed enrollment in a late-stage trial of SB206 in treating molluscum contagiosum. The drugmaker said it expects topline efficacy data before the end of Q2.
Right now, there aren’t any FDA-approved therapies for treating molluscum. In this case, Novan believes SB206 could fill this gap as a topical, at-home, caregiver-applied therapy. The first hurdle will obviously proving its effectiveness in the Phase-3 study. With data expected before the end of Q2, NOVN could be on the radar as speculation begins building.
Corvus Pharmaceuticals Inc.
Price Target: $12
Finally, with a price target of $12 and a Buy rating from H.C. Wainwright, Corvus has the largest percentage difference in its current price and the analyst’s forecast. Based on Friday’s close of $3.76, the CRVS stock price target is 219% higher right now. But why are analysts so bullish?
If you look at the CRVS stock chart, there hasn’t been much of a bullish or bearish trend. Aside from a few 1-day jumps here and there, the trend is sideways overall. Corvus recently raised $31.8 million in its latest funding round at $3.50 per share. Corvus said that it expects to use the net proceeds from that offering to fund its Phase 3 clinical trial of CPI-006 and the development of its other product candidates.
CPI-006 is the company’s immunotherapy. It’s begin evaluated in a Phase 3 clinical study for treating hospitalized patients with COVID-19. In a Phase 1 study involving 28 hospitalized, high-risk patients with moderate COVID-19 treated with CPI-006, no patients progressed to requiring mechanical ventilation. So this could be an early sign of potential opportunity for the treatment. Furthermore, CPI-006 is in a multi-center Phase 1/1b oncology trial as a single agent, in combination with ciforadenant (CPI-444) and pembrolizumab, which goes by its commercial name, KEYTRUDA®.
With numerous indications and multiple phase trials underway, will CRVS live up to the outlook of H.C. Wainwright analysts?
Final Thoughts On Penny Stocks & Ratings
The long and short of analyst ratings should be used as one small piece of your research process. In many cases, especially with penny stocks, companies can shift the direction of their business model without notice. Furthermore, changes in sentiment surrounding small-cap stocks can also play a role in how penny stocks perform in general. So if you’re looking for penny stocks to buy right now, keep this in mind as you put your watch list together.
1 comment
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