The thought of making money with penny stocks is always the favored goal, right? It’s simple, just buy then sell for a profit. But as easy as that sounds, there’s a lot more that goes into the actual strategy of day trading. Weighing risk against potential reward is paramount for any trader. When it comes to stocks under $5, that risk increases a lot more. However, with last year’s boom in new retail accounts on platforms like Robinhood, penny stocks appear to be the main feature in 2021; at least for now.
Some of the hottest and most active stocks in the market this week have been the cheaper ones. I’m not just talking about stocks under $5 but stocks under $1 – actual “penny” stocks. These have seen an immense boost thanks to the droves or retail traders looking for quick flips and big breakouts. Whether its EV, crypto, biotech, etc. if stocks are cheap, there’s a good chance that traders are watching.
What’s also investing to note is that analysts have also become bullish on these penny stocks. Some of these firms are smaller on the Street but others are among the more popular. Today we’re going to take a look at 5 penny stocks under $2 that analysts see big potential in. As with all scenarios of risk versus reward, it’s up to you to decide if they’re really the best penny stocks to buy right now.
- Second Sight Medical Products Inc. (NASDAQ: EYES)
- Palatin Technologies (NYSE: PTN)
- SiNtx Technologies Inc. (NASDAQ: SINT)
- Aileron Therapeutics Inc. (NASDAQ: ALRN)
- Assertio Holdings Inc. (NASDAQ: ASRT)
Analyst: H.C. Wainwright
Price Target: $2.50
One of the penny stocks that hasn’t been a stranger big moves in the market is Second Sight Medical. We saw the stock breakout huge back in December in a rally that took it from $1 to highs of $4.25. Obviously, shares have pulled back from those highs, consolidating back to around $1.50 starting this year.
Something that has becoming a key focus for traders is the cmpay’s pending merger with Pixium Vision. Through the merger a new subsidiary will be created and focus on cortical stimulation using the Orion platform.
“The new organization provides for a new subsidiary, to focus exclusively on cortical vision and the Orion platform, which has the potential to treat nearly all forms of blindness. The new organization should accelerate the Orion program,” said Matt Pfeffer, Chief Executive Officer of Second Sight.
How do analysts feel about Second Sight? Right now H.C. Wainwright has the most recent rating on the stock. Though it was from early last year, the firm rates the company a Buy and has a $2.50 price target, roughly 41% higher than the current trading price.Palatin Technologies
Analyst: H.C. Wainwright
Price Target: $2
Palatin is another one of the penny stocks under $1 that has recently experienced stronger momentum. Toward the end of December, PTN shares skyrocketed to highs of nearly 90 cents. The move came as the company received positive results from the Phase 2 study of its drug PL9643.
This drug is in use in the treatment of dry eye disease or DED. Carl Spana, CEO of Palatin stated that “this was our first study evaluating a melanocortin agonist in an ocular disease and we are pleased that the key goals of this study were met, which was providing significant clinical evidence of efficacy, safety, and tolerability in a meaningful patient population.”
Not much has been released since then. However, in a statement, management explained that “Based on these positive trial results, Palatin plans to initiate a Phase 2/3 trial in the United States in mid calendar year 2021,” with study results anticipated to be presented at the Association for Research in Vision and Ophthalmology (ARVO) 2021 Annual Meeting. that meeting is in March of this year.
Analysts from H.C. Wainwright put a Buy rating on the stock last year. The firm’s $2 price target also put a 150% price forecast on the stock based on these current levels. When H.C. placed the target on the stock PTN was sitting around 50 cents.SiNtx Technologies Inc.
Analyst: Maxim Group
Price Target: $4.50
Sticking with the healthcare focus, SiNtx Technologies has been moving higher this year. This was a nice reversal off of its 200-Day Moving Average toward the end of 2020. So far SINT stock has bounced back as much as 30%. With continued attention on companies with exposure to virus treatments, COVID-19 has become a driver for the stock. You’ll see that there haven’t been many headlines since its last earnings report. But sector momentum remains a factor in my opinion.
SINTX focuses on deploying its silicon nitride ceramic in medical settings. Last year the company found that SINTX’s product was effective against COVID-19. The company signed a joint development agreement with Iwatani Corporation of America. The two will incorporate SINTX AP2 silicon nitride powder into polymer materials. Specifically, these products will be for things like cellphone cases, tablet cases, and other device cases that are frequently touched.
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As far as analysts are concerned, many are bullish on SINTX stock. This includes Maxim Group which has a Buy on SiNtx. The firm also has a price target 136% higher than the current market prices, sitting at $4.50 as of the last rating update.Aileron Therapeutics Inc.
Analyst: Canaccord Genuity
Price Target: $5
Canaccord Genuity likes Aileron Therapeutics right now. The firm has a Buy rating on the stock along with a price target of $5. Canaccord updated this in November and as of this week, the target is 164% higher than Aileron’s current trading levels.
Something that the company has focused on ALRN-6924. This is Aileron’s chemo-protective agent that is currently in clinical testing. As many already know, chemotherapy is currently the main treatment for many types of cancers, and that isn’t going anywhere soon. However, Aileron is working on producing chemotherapy results with fewer side effects, and without the risk of damaging healthy cells. With a fresh round of capital early in the year ($35.9M) the company expects to be capitalized enough to begin Phase 1b chemoprotection trials of its treatment for patients with non-small cell lung cancer.
“With the completed offering, we are well-positioned to continue advancing toward our vision to bring chemoprotection to all patients with p53-mutant cancer regardless of cancer type or chemotherapy,” said Manuel Aivado, M.D., Ph.D., President and Chief Executive Officer of Aileron.Assertio Holdings Inc.
Analyst: Brookline Capital
Price Target: $3.50
Finally, Assertio Holdings remains one of the top penny stocks to watch. Shares have mounted a strong comeback from late-December lows of 34 cents. Since the start of the year, ASRT shares have climbed to highs of over $0.70 as of this week. What has helped give things a boost recently, in my opinion, is continued progress on Assertio’s restructuring plans.
“To adapt to the current market environment and maximize shareholder value, we are refocusing and substantially reducing our operating footprint, which is expected to result in significant cost savings,” explained Arthur Higgins, Chairman of Assertio, in a recent PR. Assertio’s plan is expected to decrease the total annual cost base by roughly $45.0 million. Additionally, the majority of its restructuring milestones are anticipated to be reached by the end of this quarter.
While there has been a bit of institutional interest from the likes of CRG Partners, for instance, analysts have also stayed bullish on the stock. If you look back at who’s covering Assertio, none of the analysts have adjusted their prior ratings or targets. Brookline Capital, for instance, placed a Buy rating on the penny stock last year along with a $3.50 target. At the time the penny stock was trading around $1, which put that target 250% higher than the prices at that time.
The firm hasn’t adjusted its target, which now sits 386% higher than current trading levels for ASRT. Will that come to fruition in 2021? From a technical perspective, one of the key points of resistance on its chart has been the 200 Day Moving Average. Considering that ASRT is testing this level once again, it will be interesting to see if it can finally break above and hold at those levels.