Finding penny stocks to buy seems simple, but it isn’t as easy as you might think. The main focus is identifying potential catalysts and then making a watch list. One way that some traders begin is by looking for specific attributes. Analyst sentiment is one of these and can be used to find penny stocks to watch. Traders will do this by identifying companies with a Buy rating or equivalent. Here are a few steps you can take to put together a watch list based on analyst sentiment:
Research analyst ratings: Look for a database that provides ratings from a wide range of firms. While some sites focus on a few firms, others give a broader lay of the land, and that’s what you want. Getting the whole picture is a great way to gather information.
Look at ratings: Filter stocks by ratings and compare them to current events for the target company. While “buy” or equivalent ratings are generally relied upon heavily. This will give you a list of penny stocks that analysts have identified as having strong potential for growth.
Evaluate the company: Once you have a list of penny stocks to watch, evaluate the company’s financials, industry trends, and other relevant information to determine if the stock is a good fit for your investment strategy.
Consider the context: It’s worth mentioning that when it comes to penny stocks are considered high-risk, high-reward investments. So it’s important to pay attention to the context of the analyst ratings. For example, if a stock has been given a “buy” rating but is in a struggling industry or has poor financials, it may not be a good investment opportunity.
Keep an eye on the stock: Once you have identified a penny stock to watch, keep an eye on the stock’s performance and any news or developments. Things can change quickly when it comes to low-priced stocks, and all it takes is one headline to shift sentiment.
Penny Stocks Analyst Ratings: Pros & Cons
Wall Street analyst ratings are widely used in finance and investing. Financial analysts and research firms issue these ratings to give investors a snapshot of a company’s financial health. However, while analyst ratings can be a valuable tool for investors, they also have drawbacks.
Here are some of the pros of using analyst ratings for research:
Valuable insights: Analyst ratings are often based on research and analysis of a company’s financials, industry trends, and other data. As a result, they can provide investors with meaningful insights about a company’s prospects.
Wide coverage: Analyst ratings cover a wide range of companies, from small-cap stocks to large-cap blue-chips. This means that investors can get a broad perspective on different sectors and industries.
Short-term and long-term perspective: Analyst ratings can also provide investors with both short-term and long-term views. This can help to make more informed decisions about when or why to buy, sell, or hold a stock.
Consensus view: Analyst ratings can also give investors a sense of a stock’s overall consensus view. This may be useful in identifying potential opportunities or risks that may not be immediately obvious.
Here are some of the cons of using analyst ratings for research:
Conflicts of interest: One major drawback of analyst ratings is that conflicts of interest can influence them. For example, some analysts may be more likely to issue positive ratings for companies that are clients of their firms or have a business relationship with them.
Limited perspective: While analyst ratings can provide valuable insights, they are not always the best indicator of a company’s performance. They are based on a limited set of information and may not consider all of the factors that can impact a company’s performance.
Overreliance: Another problem with Wall Street analyst ratings is that investors may rely too heavily on them instead of doing their research and analysis. This can lead to poor investment decisions and missed opportunities.
Now that we’ve got a basis for analyst ratings let’s look at a few penny stocks to buy according to several firms.
Penny Stocks To Buy According To Analysts
Geron Corp. (GERN)
B. Riley: Buy, $5 Target
Shares of Geron have been on the retail trader’s radar following a series of news and industry catalysts. The late-stage biopharmaceutical company specializes in developing treatments for hematologic malignancies. At the beginning of the year, the company announced positive top-line results from its IMerge Phase 3 trials of imetelstat.
It’s the company’s candidate in targeting such hematologic malignancies and, in this case, showed a response in patients with lower-risk myelodysplastic syndromes. The trial met its primary endpoint for efficacy and showed “statistically significant and clinically meaningful” benefits versus placebo. It also released headlines showing that the company plans on hiring a senior leadership team specifically focused on the commercial launch of imetelstat in the U.S.
What do analysts think about GERN stock? If you look at the rating from B. Riley, you’ll see it has Geron set with a Buy rating and a $5 target. Based on recent closing prices of $3.40, that’s 47% higher at the moment.
Ardelyx Inc. (ARDX)
Citigroup: Buy, $7 Target
Like Geron, Ardelyx is one of the names on the list of penny stocks to watch more frequently in 2023. Right before the end of 2022, the company reported an FDA committee backed its kidney disease drug candidate and recommended its approval.
The panel voted 10:2 in favor of combining the drug with phosphate binders. Ardelyx’s Xphozah is a standalone therapy for controlling serum phosphorus in chronic kidney disease patients on dialysis. The FDA also granted Ardelyx an appeal for its treatment candidate, Xphozah, and a Complete Response letter for a New Drug Application.
How do analysts feel about ARDX stock? Citigroup recently took a more bullish tone on the penny stock. The firm has a Buy rating on the stock and boosted its $6 price target to $7. Based on the recent closing price of $3.25, the firm’s ARDX stock forecast price is 115% higher.
Aligos Therapeutics Inc. (ALGS)
Piper Sandler: Overweight, $7 Target
Aligos Therapeutics has seen a strong move in the stock market so far in 2023. The company kicked the year off with an update highlighting the pace of completing Phase 2-enabling activities for its nonalcoholic steatohepatitis drug, ALG-055009.
Matthew W. McClure, M.D., Chief Medical Officer at Aligos Therapeutics, explained in a January 5th update, “We anticipate completing the final cohort of the Phase 1 study (NCT05090111) in H1 2023 where the relative bioavailability of the Phase 2 drug formulation will be assessed. Other Phase 2-enabling activities, including the 13-week GLP toxicology studies, will be conducted in parallel and are anticipated to be complete by H2 2023.”
In light of this, several Wall Street analyst firms updated their ratings on the company. Most recently, Piper Sandler boosted its $3 target to $7 and maintains an Overweight rating. Based on a closing price of $1.81, the ALGS stock forecast price is 287% higher.
Apexigen Inc. (APGN)
Roth Capital: Buy, $15 Target
Finally, Apexigen has pulled an about-face since the start of the new year. The company hit fresh, 52-week lows on the first day of trading for 2023 but so far has bounced back more than 100%. If analysts are to be believed, they expect much more, which we’ll discuss later in this section.
Apexigen develops antibody-based therapeutics for cancer treatment and recently posted new Phase 2 data. This data evaluated its sotigalimab in treating tumors in patients with esophageal/gastro-esophageal junction (E/GEJ) cancer and a separate study in rectal cancer tumors. The data was recently presented at the ASCO Gastrointestinal Cancers Symposium earlier this month.
Recent news regarding a $2.8 million financing deal doesn’t seem to have impacted the market. The funding round is expected to close by the end of this month, with proceeds going toward the ongoing Phase 2 study of sotigalimab.
What is the APGN stock forecast? Roth Capital recently reinstated its coverage of the company. The firm gave a Buy rating and price target of $15. APGN stock closed at $1.99 on Tuesday, which puts Roth Capitals forecast 654% higher.