2 “strong buy” penny stocks that could generate massive returns
The long-term upward trend in the markets is clear; The S&P 500 is up 51% over the past 12 months, even taking into account a few recent slip-ups. This is a good time for investors to look for low-cost segments of the market with high return potential. Or in other words, to follow the old advice and buy cheap to sell high. Jefferies’ equity strategist Steven DeSanctis pointed out in a recent small-cap market-themed note that this segment is attracting the attention of investors. “We see interest in the size segment and hear that institutional investors are genuinely interested in adding assets to the size segment. This makes sense to us because small caps as a percentage of total exposure to US equity markets are still well below 90 – year history , where investors wanted large caps, big growth, and the FAANG name. We estimate over $ 38 billion has invested in small caps in the past five months, the largest inflow since data collection began in 2006, which equates to 4.6%. We also estimate that approximately 45% of all flows go into passive investing, which affects performance, “wrote DeSanctis. And that brings us to penny stocks, those low-cost stocks priced below $ 5 per share – a high stakes opportunity with upward moves often approaching hundreds of percent and a low enough cost of entry to mitigate the risk involved. These stocks are cheap for a reason, but for those who break out, the rewards are enormous. With that in mind, we used TipRanks’ database to identify only those penny stocks that received optimistic support from the analyst community. We found two that have enough analyst support to earn a consensus rating of “Strong Buy”. Not to mention that everyone has huge upside potential. ADMA Biologics (ADMA) We’re starting with ADMA Biologics, an end-to-end biopharmaceutical company that develops and commercializes blood plasma-derived products that can be used to treat infectious diseases – and most importantly, place them first in the prevention of such diseases. ADMA saw the expansion of two products for the treatment of primary humoral immunodeficiency (PI) in 2020. These products, Asceniv and Bivigam, are both derived from human blood plasma and deliver immunoglobulin to the patient by intravenous injection. In every company, success is measured in cash. ADMA achieved this, reporting a 44% year-over-year increase in total sales for 2020, with sales reaching $ 42.2 million. This was due to increased sales of the company’s key IVEN (Intra-Venous Immunoglobulin) products. Going forward, ADMA recognizes the underlying fact of its products – that they are made from human blood products and therefore rely on voluntary donations. The company currently has 7 plasma collection points with COVID safeguards and plans to open two more this year. Long-term expansion plans include the opening of 10 additional centers by 2024. Right now, for $ 1.55 apiece, the pros on the street believe the ADMA stock price will provide investors with an attractive entry point. Among the cops is Maxim’s 5-star analyst Jason McCarthy, who sees a clear path for the company to follow. “Management is executing its strategy and after a positive but COVID-19-affected year, ADMA is facing an outbreak in 2021. Several initiatives should drive revenue and margin acceleration. In particular, ASCENIV’s new J-code and several manufacturing initiatives, including the new filling machine and capacity expansion of BIVIGAM to ~ 4,400L, should drive sales and margin acceleration in 2H21, “said McCarthy. The analyst added,” There is an evaluation Separation between the company’s plasma collection systems + sales potential and market capitalization in our opinion. Grifols recently acquired 25 US plasma centers for ~ $ 370 million and valued each center at ~ $ 15 million. ADMA has 7 centers in various stages of development / approval and plans to expand to 10 fully functional centers by 2024. The company already has an execution rate of approximately $ 55M with revenue accelerating and potentially reaching ~ $ 250M by 2024 Management is executing and we believe the intrinsic value of plasma equipment and approved products should already exceed the company’s market capitalization. “In line with these expectations, McCarthy is looking to buy ADMA and its target price of $ 6 shows confidence in robust 266% growth potential for the year ahead. (To see McCarthy’s track record, click here.) Analyst consensus suggests that McCarthy isn’t an outlier in this stock. ADMA has 4 recent valuations on record and all of them are buy to get consensus The average price target of $ 7.67 is even more bullish than McCarthy’s, suggesting an upside of 393% for a year. (See ADMA stock analysis on TipRanks) Catalyst Biosciences (CBIO) The next stock we’ll look at Catalyst Biosciences works in the biopharmaceutical industry, researching unmet needs for rare disorders of the complement and coagulation system. The company has a protease engineering platform and its hemostasis development program includes two clinical T. late-stage racks. The complement pipeline is still in preclinical development and includes four separate drug candidates. Catalyst reached an important milestone back in December last year when the FDA granted the Fast Track Designation for the company’s most advanced pipeline product, Marzeptacog alfa (activated) or MarzAA. Fast-track labeling gives Catalyst more opportunities to work hand-in-hand with the FDA in developing the MarzAA and could include priority review if it hits its endpoints in studies. MarzAA is a next-generation technical coagulation factor VIIa for the treatment of episodic bleeding in hemophilia patients. A phase 3 study is currently taking part in which 60 test subjects are to be enrolled. The company expects to send its final report to the Data and Safety Monitoring Board in mid-2022. CBIO’s strong pipeline has received high praise from Piper Sandler analyst Tyler Van Buren. “In our view, the catalytic performance of the company’s protease platform continues to be underestimated due to a lack of familiarity. First of all, we look forward to data from the MarzAA Phase III trial that could support approval in 2023. The Phase I / II trial Glanzmann’s thrombasthenia (over 1,600 patients) and other indications are also being addressed. For Catalyst’s complement targeting proteases, we expect an observational CFI-deficient study to begin shortly that will bolus patients for phase enrollment I should provide for CB 4332 next year. There is also significant upside potential from the expansion of CB 4332 to other indications and from the rest of the complement franchise, the CB2782-PEG, a novel anti-C3 protease for dry AMD, and other C4b breakdown products, “wrote Van Buren. Given the active development program, the analyst summarized: “The bottom line is … we recommend investors accumulate stocks ahead of the upcoming study and clinical readings later in the year.” These bullish comments support the analyst’s overweight (ie buy) rating for the share. His target price of $ 15 implies an uptrend of 229% for the next 12 months. (To see Van Buren’s track record, click here.) What does the rest of the street think of CBIO’s prospects? It turns out that other analysts agree with Van Buren. The stock received 4 buys versus no holds or sells in the past three months, making the consensus rating a strong buy. CBIO shares are currently trading at $ 4.69, and the average price target of $ 18.50 increases the upside to 296%. (See CBIO stock analysis on TipRanks.) To find great ideas for trading penny stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all of the insights into TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.