The stock market is an incredibly complex and volatile environment. It can be challenging for even the most seasoned investors to navigate, and it doesn’t matter if you’re trading penny stocks or higher-priced stocks.
As such, many traders rely on the insights and ratings provided by stock market analysts to help them gain more insight they might not be privy to. In this article, we will explore some of the reasons why analyst ratings matter, with a particular focus on penny stocks to watch after recent updates from Wall Street firms.
- Analysts have access to information that individual traders may not have
One of the primary reasons why traders rely on analyst ratings is that analysts have access to information that individual traders may not. Analysts are typically well-connected within the industry. They often have access to insiders and other sources of data that can help them make informed predictions about a specific company. This information can be particularly valuable when trading penny stocks, which are often less well-known and have fewer publicly available data points.
- Analysts can provide valuable insights into market trends
Another reason why traders rely on analysts is that they can provide valuable information about market trends. Analysts are often experts in their respective fields. They spend a considerable amount of time analyzing market trends and identifying patterns that could impact the performance of individual stocks. By leveraging this expertise, traders can gain a better understanding of the broader market.
- Analysts can help traders identify undervalued stocks
One of the primary benefits of trading penny stocks and stocks under $5 is that they can offer significant upside potential. However, identifying undervalued stocks in this category can be challenging. They are often overlooked by mainstream investors. Analysts can help traders identify these potentially undervalued stocks by providing insights into a company’s fundamentals and other factors that could impact its prospects.
Penny Stocks To Watch
Oatly Group (OTLY)
The alternative dairy company has recently jumped higher and retested its 200-day moving average following news this month. Oatly reported its latest quarterly and full-year 2022 results. The guidance for this year’s revenue growth also raised eyebrows. The company is expecting between 23% and 28%.
CEO Toni Petersson also noted, “Our supply chain is back on firmer footing, we have clear line of sight to reaching profitability, and we have the liquidity needed to fully fund our growth investments and reach financial self-sufficiency. Therefore, we believe we are well-positioned to start playing offense in 2023.”
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Pulling ahead to this week and more headlines have prompted momentum in the penny stock. Oatly partnered with McDonald’s (NYSE: MCD) to bring its Barista Edition product to all McDonald’s McCafe locations in Austria.
“We have noticed an increased demand for oat-based dairy alternatives among our guests and responded to that. With addition of Oatly Barista, we can now cater a delicious alternative to the growing number of our guests who prefer oat-based drinks at our McCafé, and at the same time we offer our guests a maximum taste experience,” says Tanja Wallner, Marketing Professional McCafé & Breakfast at McDonald’s Austria.
But the coffee beverages aren’t the only thing getting frothy for OTLY stock. Analysts have also started placing bets. The latest from RBC Capital shows the firm with an Outperform rating and $7 target. Based on recent levels of around $2.60, that’s nearly 170% higher.
Lifecore Biomedical (LFCR)
While the year hasn’t been great for Lifecore, recent headlines amplified that significantly this month. The company announced its intent to explore strategic alternatives. James G. Hall, President, and Chief Executive Officer of Lifecore explained, “The management team and the Board intend to explore viable options that will maximize value for our stockholders. Regardless of the process or outcome, Lifecore will remain committed to serving our customers, supporting our employees and growing our business. We operate in a dynamic industry that is underpinned by growing demand for specialized CDMO services, which Lifecore is well positioned to capitalize on today, and in the years ahead, with its more than 40 years of expertise developing complex products.”
The news comes after the company sold its Curation Foods’ avocado products business in February.
Since dropping, LFCR stock has actually made a strong rebound from its $1.52 lows. If analysts are to be believed, the outlook may not be as dark as the latest downtrend might suggest. Analysts at Barrington Research adjusted their outlook on the company this week. They lowered their price target to $8 and maintain an Outperform rating on the stock. Based on the latest levels of around $3.30, that target sits roughly 140% higher.
Hut 8 Mining Corp. (HUT)
The price of Bitcoin has been red hot lately. It has also helped drive bullish momentum for other cryptocurrencies, including Ethereum, Dogecoin, and even Polygon. As a result, companies with exposure to things including cryptocurrency mining, blockchain technology development, and anything in between have gained attention in the stock market this month.
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Hut 8 is one of these companies, and since BTC prices started surging, HUT stock has followed suit. The digital mining company’s shares have climbed from lows of $1.21 on March 10th to highs of over $2 this week. Other than sympathy momentum from the crypto market, traders are closely watching the progress of Hut’s potential merger.
Hut 8 provided more details on a business combination with US Bitcoin Corp. Plans to effect an all-stock merger of equals. One of the hurdles (somewhat) was the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 concerning the Company’s proposed business combination. That has since expired, which satisfies one of the closing conditions of the transaction.
Based on recent analyst coverage, hopes seem high for HUT stock. Canaccord Genuity maintains a Buy rating on the stock. Despite lowering its target to $5, based on recent levels, that target still sits more than 150% higher.
List Of Penny Stocks To Buy [According To Analysts]
- Oatly Group (NASDAQ: OTLY)
- Lifecore Biomedical (NASDAQ: LFCR)
- Hut 8 Mining Corp. (NASDAQ: HUT)
