Penny stocks are shares of companies trading for less than $5 per share. This may be the standard definition of penny stocks, but it doesn’t do the niche justice. In general, if you ask most traders and investors, they’ll tell you that penny stocks are a way to gamble in the stock market today. But if you take a deeper dive beyond the surface, plenty of small companies are doing more than just publicly trading.
As you’ll see, there are some of Wall Street’s top small- & micro-cap analysts focusing on these companies with bullish optimism. The important thing to understand about analysts, ratings, and price targets is that they are based on assumptions and comparables.
When it comes to finding penny stocks to buy, especially, the underlying companies can pivot from or completely change to a different business model to build shareholder value. This has been one of the overreaching trends for some beaten-down stocks this year. At that point, do analyst ratings matter? I’ll leave that up to you to decide.
Today’s list of penny stocks has a handful of names that are experiencing some upbeat sentiment from the analyst community.
Best Penny Stocks To Buy
- aTyr Pharma Inc. (NASDAQ: LIFE)
- 22nd Century Group Inc (NASDAQ: XXII)
- Evofem Biosciences (NASDAQ: EVFM)
aTyr Pharma Inc. (NASDAQ: LIFE)
This is the first day in quite some time that aTyr Pharma saw a meaningful move in the market. The company has focused on developing tRNA treatment candidates utilizing its synthetase biology platform. A poster on the platform was presented last month at the Keystone Symposia Tissue Fibrosis and Repair: Mechanisms, Human Disease, and Therapeutics event.
Findings demonstrated that the tRNA platform was able to bind selected s of Alanyl-tRNA Synthetase (AARS) and Aspartyl-tRNA Synthetase (DARS) fragments to human cells. anjay S. Shukla , M.D., M.S., President and CEO of aTyr. “The target receptor identified for the fragment AARS-1, FGFR4, is involved in many cellular processes including cell proliferation, differentiation and tissue repair. FGFR4 is known to play a role in diseases related to inflammation and fibrosis, including conditions where unchecked fibrosis can precede the development of certain cancers.”
Since then, LIFE stock has been rebounding from its $2.60, 52-week lows. Why is LIFE stock up today? Analysts at HC Wainwright just lit a big fuse in the market. Analyst Joseph Pantginis currently maintains a Buy on LIFE stock. However, the big catalyst came when he upped his price target more than 200% from $11 to $35. The new target is roughly 900% higher. based on current trading levels.
22nd Century Group Inc (NASDAQ: XXII)
22nd Century captivated traders late last month amid new federal proposals that would require less nicotine in U.S. cigarettes. Why does this matter for XXII traders? The company specializes in reduced nicotine tobacco products. It also has divisions developing hemp/cannabis and hops plant technologies.
In particular, 22nd Century’s VLN product line has come back into focus. At the time of the proposed ruling, John Miller, president of 22nd Century’s tobacco programs explained, “The FDA requiring tobacco companies to reduce the nicotine content in all cigarettes sold in the United States has long been seen as the most powerful tool in the fight to reduce smoking and its grave health effects on citizens.”
This week, a bit of marijuana stock hype and more news from the company has helped boost XXII stock. In particular, 22nd Century announced a $35 million offering priced at a premium to the current market, at $2.05. Further to the raise, its use of proceeds also stood out to investors. According to the company, it “intends to use the net proceeds from this offering for expansion and acceleration of the launch of its VLN® reduced nicotine content tobacco cigarettes in additional markets, research and development expenses, procurement and development of additional intellectual property rights, working capital and general corporate purposes. The proceeds will not be used to repay indebtedness or fund the operations of the Company’s subsidiary, GVB Biopharma.”
In addition, analysts at Alliance Global Partners initiated coverage on the low nicotine product company. Alliance’s Aaron Grey started 22nd Century with a Buy. He also put a $5 price target on the penny stock. Based on current trading levels, Grey appears to expect a significant move as the target is roughly 150% higher.
Evofem Biosciences (NASDAQ: EVFM)
Thanks to the latest ruling on Roe v Wade, contraceptive stocks have been red hot this summer. Evofem produces a drug called Phexxi. It’s an on-demand method of birth control for women. Results from a recent post hoc analysis of the registrations Phase 3 AMPOWER trial evaluating Phexxi’s ability to prevent pregnancy revealed strong results recently. Phexxi prevented 99% of pregnancies in the study.
With some penny stocks under $1 also creating a trend for retail traders to follow, EVFM stock seems to have benefited from multiple angles. This week a new update has brought a spotlight back to Evofem. The company partnered with a360 Media to boost support for Phexxi prescriptions.
“Our magazine and digital brands are geared towards women looking for the latest on current events and information that can help them better their health and relationships,” said Neil Goldstein, a360 Media’s EVP, Chief Revenue Officer. “We are pleased to partner with Evofem to boost Phexxi’s visibility with our readers, especially those women seeking hormone-free contraception, or those who are tired of the side effects they may be suffering from hormonal methods.”
EVFM also has a few technical catalysts to keep in mind. First, according to TDAmeritrade, the short float on the stock right now is more than 37%. This could put it on the list of short squeeze stocks to watch. In addition, Laidlaw analysts initiated coverage on EVFM stock this summer giving it a Buy rating and a price target of $3.50. Based on a price of roughly $0.98, the firm’s target is over 250% higher.