Warning: while this discussion obviously centers on penny stocks to buy, this subsegment of the market carries astounding risks. While it’s difficult to verify, one source has the failure rate of these speculative, low-market capitalization entities as over 90%. As I said, it’s tough to confirm this assertion. However, it’s probably not far from the truth.
Whatever the case, you want to be extremely cautious with penny stocks. At the same time, it would be unfair to declare that this subsegment offers zero chance of upside. That’s simply a false statement. However, deciphering which enterprises will make it and which won’t honestly come down to fortuitous guesswork. Still, I’m going to throw some ideas out there. Above all, do your due diligence and practice responsible gambling.
Ovid Therapeutics (OVID)
An advanced biotechnology firm, Ovid Therapeutics (NASDAQ:OVID) leverages its science-driven and patient-focused approach to develop medicines that address epilepsies and seizure-related disorders. Aside from the taxing human cost, Ovid financially enjoys a relatively large total addressable market.
According to Allied Market Research, the global epilepsy drugs market reached a valuation of $7 billion in 2022. Further, experts project that the segment will expand at a compound annual growth rate (CAGR) of 3.5% from 2023 to 2032. At the culmination of the forecast period, the therapeutics industry could hit $9.8 billion.
Even better, Nova One Advisor reports that the global epilepsy therapeutics market size could actually be worth $15.1 billion by 2030. That would make OVID one of the more compelling penny stocks to buy.
Finally, Wall Street analysts peg OVID as a consensus strong buy. This assessment breaks down into three buys, one hold, and zero sell ratings. Moreover, the experts’ average price target lands at $5.75, implying nearly 59% upside potential.
A mission-driven financial technology (fintech) platform, OppFi (NYSE:OPFI) focuses on the needs of the unbanked and underbanked community. According to the Federal Reserve Insurance Corporation (FDIC), about 4.5% of U.S. households were unbanked in 2021. This figure represents about 5.9 million households. Combining the underbanked community, the metric would expand to about 63 million.
Obviously, it’s a major problem and I appreciate that OppFi is stepping up to the plate to address the matter. Also, OPFI ranks among the penny stocks with a true humanitarian objective. To be honest, so many entities in this speculative space feature “questionable” business models, let’s be diplomatic here. However, with this fintech platform, you can really get behind the business.
Further, both the market and analysts have spoken. Since the start of the year, OPFI gained nearly 19% of its equity value. Among the Street’s experts, analysts from Northland Securities and JMP Securities pegged shares a buy. Significantly, the average price target clocks in at $4, implying nearly 67% upside potential.
Moving onto the most speculative idea for penny stocks to buy on this list, Travelzoo (NASDAQ:TZOO) could be an enticing idea. Fundamentally, the catalyst of revenge travel that invigorated vacation-seeking sentiment continues to be robust this year. By logical deduction, TravelZoo – which publishes deals from more than 2,000 travel, entertainment, and local businesses – should benefit.
Sure enough, that’s the case here for TZOO. Since the beginning of this year, shares gained almost 44% of equity value. However, where it gets tricky is the near-term momentum. In the trailing month, TZOO slipped nearly 22%. Also, it didn’t help that while Travelzoo’s profit in the second quarter increased over the same period last year, the company ended up missing the Street’s estimates.
Nevertheless, it’s also worth pointing out that analysts appear enthusiastic about TZOO, pegging shares a moderate buy. Further, the average price target stands at $11.50, implying nearly 72% upside potential.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.