How to Use Analyst Sentiment to Find Penny Stocks
Finding penny stocks to buy can be a challenging task. But using analyst sentiment can be a helpful tool. By identifying companies with a Buy rating or equivalent, traders can create a watch list of penny stocks with potential. Here are some steps to follow:
Research Analyst Ratings: Look for a database that provides ratings from various firms. This will give you a broader understanding of the landscape and provide more valuable information.
Look at Ratings: Filter stocks by ratings and compare them to current events for the target company. This will give you a list of penny stocks with analysts expecting 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. This will help to determine if the stock is a good fit for your investment strategy.
Consider the Context: Remember that penny stocks are high-risk, high-reward investments. Pay attention to the context of the analyst ratings.
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; all it takes is one headline to shift sentiment.
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
G1 Therapeutics Inc. (GTHX)
EF Hutton: Buy, $19 Target
You might be wondering why G1 Therapeutics is on a list of penny stocks to buy, according to analysts. After all, the biotech company’s shares imploded earlier this month, bringing it into the official penny stock range for the first time in a while. Last year GTHX stock approached highs of nearly $17.50, rallying from as low as $3.84 in June. Topline results from a Phase 3 trial of its trilaciclib in patients with colorectal cancer triggered the recent sell-off to fresh 52-week lows.
Responding to the data, Jack Bailey, G1 Therapeutics’ Chief Executive Officer, said, “All of us at G1 are disappointed in this surprising outcome for patients with CRC, but we remain committed to the potential of trilaciclib to impact the lives of many cancer patients in other indications…We are increasingly encouraged by the real-world performance of trilaciclib in patients with extensive stage small cell lung cancer and look forward to upcoming readouts in our other ongoing trials.”
With a pivot away from studying this disease’s treatment and focusing on other indications like lung cancer, there’s been some optimism coming back into the stock market. This week shares of GTHX stock bounced back to highs of over $3.90.
GTHX Stock Forecast
What do analysts think about GTHX stock? EF Hutton maintains a Buy on the penny stock. Despite lowering its target, the firm still has a price forecast of $19, roughly 397% higher than current levels.
Bark Inc. (BARK)
Lake Street: Buy, $4 Target
We discussed Bark Inc. earlier this week in the article 5 Penny Stocks To Buy According To Insider Bets Up To $5.3 Million. Bark is the pet marketing company behind products like BarkBox. This is a subscription service specifically for man’s best friend. However, the financials have caused investors to bark and bite in the market in the form of selling pressure. The company’s stock continued to slump after reporting the latest fiscal Q3 2023 earnings. Bark’s EPS was in line with estimates, and the company narrowly beat sales figures.
Regardless of its recent fundamental performance, insiders have begun buying BARK stock in 2023. The first to the dance floor was Zahir Ibrahim. The Bark CFO purchased 100,000 shares at an average price of $1.55 this week.
BARK Stock Forecast
Analysts at Lake Street seem optimistic about Bark’s prospects at the moment. The first has a Buy rating on BARK stock and a forecast target price of $4, roughly 150% above current levels.
Emcore Corp. (EMKR)
Northland Securities: Outperform, $2.50 Target
This week, Emcore experienced its highest single-day trading volume after reporting a proposed public offering. The company provides mixed-signal products that serve the aerospace, defense, communications, and sensing markets. Its components offer broad applications, including navigation, defense optoelectronics, optical sensing, and even specialty chips for telecom and data centers.
While the initial move was to the downside, the market seems to be more focused on the cash infusion of $17 million from the offering, which is expected to close on Friday. The financing came just a week after EMCORE reported its first-quarter results. Jeff Rittichier, President, and Chief Executive Officer of EMCORE. “As we stated over the last couple of quarters, our recently acquired operations in Budd Lake, NJ, and Tinley Park, IL, make EMCORE the world’s largest independent1 Inertial Navigation business, and our highest priorities are simplifying operations, driving growth, and improving cash flow. Consistent with these objectives, EMCORE is in discussions with several interested parties to divest our non-strategic product lines.”
EMKR Stock Forecast
Northland Securities analysts upgraded EMKR stock this month to Outperform from Market Perform. The firm also set a price target 130% higher than current prices at $3.
Iris Energy (IREN)
HC Wainwright: Buy, $8 Target
Iris is another one of the companies we’ve discussed this week. In the article Penny Stocks To Buy After CPI Report? 3 To Watch Today, IREN stock was mentioned alongside other companies that turned heads in February. If you’ve followed the saga of Bitcoin over the last few years, you know that energy costs and the strain on the grid have been a sticking point for some investors. Green and clean energy alternatives are taking center stage as the latest iteration of Bitcoin mining companies comes to the forefront. This has helped put some attention on the penny stock recently.
Iris specializes in Bitcoin mining data centers that it powers using 100% renewable energy. In a February 13th update, management discussed increasing from 2.0 EH/s to 5.5 EH/s. New miners will be installed in the company’s data centers over the coming months to achieve this target. The company also released its latest round of earnings this week, and despite missing estimates, management remains optimistic.
Daniel Roberts, Co-Founder and Co-Chief Executive Officer of Iris Energy, said in light of the challenges, “we expanded our data center capacity in British Columbia by more than 5x to 160MW across three sites. We are also pleased to have announced that we have entered into an agreement to utilize our remaining Bitmain prepayments to acquire new miners without any additional cash outlay, and, in doing so, will increase our self-mining capacity from 2.0 EH/s1 to 5.5 EH/s. Looking forward, we believe we are well positioned to capitalize as markets continue to improve.”
IREN Stock Forecast
Regardless of volatility in the cryptocurrency market, analysts seem bullish based on their ratings. For instance, HC Wainwright analysts set an $8 target alongside a Buy rating recently. That target is over 80% higher than current prices in the stock market today. Something to keep in mind, however, is a recent prospectus to sell up to 25M shares of IREN stock. According to the filing:
“We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of our Ordinary shares by the Holder. However, we may receive up to $100.0 million in aggregate gross proceeds from the Holder under the Purchase Agreement in connection with sales of our Ordinary shares to the Holder pursuant to the Purchase Agreement after the date of this prospectus.“
Could this bring some dilution risk to the market after the recent run-up? I’ll let you decide.
Pros and Cons of Using Analyst Ratings for Penny Stock Research
Wall Street analyst ratings can provide valuable insights into a company’s financial health, but they also have drawbacks. Here are the pros and cons of using analyst ratings for penny stock research:
- Valuable insights based on research and analysis
- Wide coverage of different sectors and industries
- Short-term and long-term perspectives
- The consensus view of a stock’s overall sentiment
- Conflicts of interest that may influence ratings
- Limited perspective based on a limited set of information
- Overreliance on ratings instead of conducting personal research and analysis
By keeping these pros and cons in mind, traders can use analyst sentiment to find promising penny stocks while being aware of the limitations and risks involved.