The bubble has burst. Penny stocks are falling like autumn leaves. The Reddit crowd and the day-trading community have learned a few difficult but needed lessons.
First, it’s difficult to make money in the stock market. Successful investors and traders work very hard on their strategies. They don’t just guess what to do based on what they read in a chat room. Successful investing over the long term isn’t entertainment. It should be like doing your taxes. If you want to lose money, the casino may be a better option. At least they offer free drinks.
Second, for companies to survive and for their stocks and shareholders to prosper in the long run, at some point the company actually needs to turn a profit. Many of these penny stocks soared to astronomical valuations solely because they were penny stocks. There were no fundamental reasons or news stories that could have justified these moves.
Many stocks in this risky area of the market look like they could continue to fall. They don’t seem to be trading anywhere near support.
The following seven penny stocks may have a better chance of survival than most. And if the analysts on Wall Street are right, they could all stage significant rallies.
- Agile Therapeutics (NASDAQ:AGRX)
- Aqua Metals (NASDAQ:AQMS)
- Catabasis Pharmaceuticals (NASDAQ:CATB)
- Checkpoint Therapeutics (NASDAQ:CKPT)
- Hepion Pharmaceuticals (NASDAQ:HEPA)
- InflaRx (NASDAQ:IFRX)
- Limelight Networks (NASDAQ:LLNW)
Penny Stocks With Room to Run: Agile Therapeutics (AGRX)
Agile Therapeutics is a women’s healthcare company that makes and commercializes women’s prescription contraceptive products. It was incorporated in 1997 and is based in Princeton, New Jersey.
As you can see on the above chart, shares of AGRX got caught up in the penny stock bubble. Between early and mid-February, shares soared from $2.80 to $3.60. There is no logical reason for this rally other than the fact that Agile trades as a penny stock.
Since then, they have given it all back and then some. It’s currently trading around $2 per share. But there’s a chance that patient shareholders who are in it for the long run may be rewarded.
Six research firms follow the company. The consensus rating is a strong buy. The average target price is $8.25 a share. That’s 315% higher than the current share price.
Aqua Metals (AQMS)
Aqua Metals is a recycling company that makes and sells hard lead, lead compounds and plastics. The company was incorporated in 2014 and is based in McCarran, Nevada.
Shares of AQMS staged a huge rally between December and February, for a number of reasons including paying off debt and an agreement with BASF. As you can see on the chart, shares increased their price by about 700%. The day traders and Reddit crowd took hold of it. It ripped from levels around a dollar and ended up trading above $7.
Like many other penny stocks, it has given back many of its gains. Shares are now trading around the $4 level.
Four Wall Street firms follow this firm. They each have buy ratings on the stock and the average target price is $7.50 per share. If AQMS was to trade there, it would be a gain of almost 90%.
Catabasis Pharmaceuticals (CATB)
Catabasis Pharmaceuticals is a biopharmaceutical company that develops and sells therapeutics in the United States to treat hereditary angioedema. The company was incorporated in 2008. Its headquarters are in Boston, Massachusetts.
As you can see on the above chart, like many other biotech stocks Catabasis is extremely volatile. In early February, the day traders got hold of it. In a matter of days, it ripped from $2.50 to $4. But after a period of being in a wide trading range, now it has given back almost all of its gains. Shares are currently trading around the $2.63 level.
According to Yahoo, five firms follow (and three have a buy rating on) Catabasis. The average target price is $5 per share. That is almost twice as high as the current price.
Checkpoint Therapeutics (CKPT)
Checkpoint Therapeutics is a clinical-stage immuno-oncology biopharmaceutical company whose primary focus is patients with solid tumor cancers. The company was incorporated in 2014 and makes its headquarters are in New York City.
This stock also got pumped up in the day-trading frenzy. Between early January and the middle of February, the share price climbed from $2.40 to $4.20. There was no big news that triggered this movement. It seems to have just been caught up in the frenzy.
As you can see on the above chart, it has given back most of these gains. It is currently trading around the $3 level.
Cantor Fitzgerald recently released research on this stock. They think shares are extremely undervalued, calling it a “buy” with a $16 price target. That is over 400% higher than the current price.
Hepion Pharmaceuticals (HEPA)
Hepion Pharmaceuticals is a biopharmaceutical company with a particular focus on chronic liver diseases. It was incorporated in 2013 and is based in Edison, New Jersey.
As you can see on the chart, short-term traders may have profited off of its volatility. But long-term shareholders of this company haven’t had too much to celebrate over the past six months. After crossing the $4.50 level in early August, the shares went into a steep decline. In December they fell to $1.50. They the day traders took it up to the $3 level. Now they are trading around $1.75.
The two research providers that follow Hepion all feel it is significantly undervalued. They each have buy ratings on it. The average target price is $7 a share. That is about three times higher than the current price.
InflaRx is a clinical-stage biopharmaceutical company doing research into treatments for various autoimmune and other inflammatory diseases. It was founded in 2007 and is headquartered in Jena, Germany. It operates mostly in Germany and the United States.
Last June, shares of this company reached the $9 level. Since then, after periods of extreme volatility, they have settled down and are currently trading around $4.
But if the Wall Street firms that follow this company are correct, patient long-term shareholders will be rewarded. They believe that the shares are undervalued and will have better times ahead. The three firms that follow it have an average target price of $9.93 a share. Not surprisingly, the consensus rating is a buy.
Limelight Networks (LLNW)
Limelight Networks is, essentially, a cable company. It operates in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 2001 and is based in Scottsdale, Arizona.
As you can see on the above chart, shareholders of this company have been on a roller coaster ride over the past year. After reaching $8 a share in July, they have lost a significant amount of their value. They are currently trading around the $3.50 level.
Five of the Wall Street research firms follow this company. Four of the five predict that the shares will rally from here and the consensus ratio is a buy. The average target price is $4.11 per share. That’s more than 16% higher than the current price.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
At the time of this publication, Mark Putrino did not have any positions (either directly or indirectly) in any of the aforementioned securities.