Penny stocks are companies that generally trade under $5 per share or have very low trading volume. They are also companies many investors ignore. That’s because these stocks are often higher risk and have been beaten down for a reason. However, penny stocks also tend to have higher upside potential over time. That said, long-term investors looking for diamonds in the rough may be on the lookout for penny stock predictions from the highest-quality companies in this space.
The trouble is, finding quality penny stocks isn’t as easy as it looks. What can seem like a cheap company can turn out to be a value trap. Accordingly, even the best investors find it challenging to make a living trading in this space.
Of course, most investors would be best served by holding a portfolio of quality blue-chip stocks over a long period. Those looking to amplify returns may want to consider adding some small-cap exposure.
Here are three top penny stock predictions I think are worth considering in this beaten-down environment. These price predictions are all pulled from average analyst consensus targets on TipRanks.
Motus GI (MOTS)
Price Prediction: $10.50 (534% upside)
One of the penny stocks I’ve been keeping an eye on of late has been Motus GI (NASDAQ:MOTS). This maker of colonoscopy-related devices and technologies has recently seen intriguing price action, surging on several occasions on specific news pieces.
Two weeks ago, this stock surged 50% intraday on news that the company received a trademark from the U.S. Patent and Trademark Office. This patent covered a proprietary “cleaning method for prepless colonoscopy,” which the company hopes will drive long-term revenue and profit growth over time.
Patents can be a key piece of the puzzle for companies like Motus looking to carve out a niche in a competitive market. If the company can show efficacy in driving more colonoscopies via its minimal prep processes, more providers may be inclined to jump aboard. Thus, this company has a real shot of cornering the market in this rather uncomfortable space.
Intellectual property is generally viewed as an intangible asset and is challenging to value. Hence, the potential for mispricing with MOTS stock is high. Accordingly, those seeking a high upside bet (more than 500% upside, according to experts) may want to look at this penny stock.
Borr Drilling (BORR)
Price Prediction: $6.00 (63% upside)
With energy prices where they are right now, those looking at penny stock predictions may be scouring this sector first. In this space, Borr Drilling (NYSE:BORR) is a penny stock worth a look.
With oil hovering around $85 a barrel at the time of writing, this is one sector that has been relatively immune to the negative macro pressures that have forced most stocks lower. Of course, oil prices could always drop. The war in Ukraine could end, and China could revert from its zero-Covid policy. However, for the time being, those headwinds appear fully entrenched.
Thus, for those thinking oil could hit new multi-year highs on the horizon, seeking out companies like Borr Drilling with leveraged exposure to another rally may be a great bet. This company’s focus on offshore drilling is something that’s much-needed globally. Accordingly, this stock could rally much higher as more investors flock to this sector.
The average analyst consensus price target on BORR stock currently provides a 63% upside. I think the upside could be greater should oil prices continue to surge into the triple-digit range again.
Arlo Technologies (ARLO)
Price Prediction: $16.00 (270% upside)
Arlo Technologies (NYSE:ARLO) is a unique company I think is worthy of a look for those seeking penny stock predictions right now. That’s because this company is a unique small-cap cloud infrastructure company focused on the mobile and smart connected devices markets.
These high-growth areas of the market were in vogue last year. However, this recent downturn has punished nearly any high-tech stock. Arlo has undoubtedly not been exempt from this price action.
Like the other companies on this list, Arlo provides leveraged exposure to a potential future rally. Whether caused by a Fed pivot or some other bullish catalyst, investors bracing for a rally may want to consider stocks with impressive growth upside. As per Arlo’s Q2 results, there might be something to this stock.
Moreover, the company generated revenue of $119 million, representing 20.7% year-over-year growth. For a company trading at a market capitalization of only $385 million, that’s some real value. Any company in a high-growth segment like this trading at two times sales is one worth considering.
The company’s potential 270% upside is certainly compelling for long-term growth investors looking at small-cap stocks right now. While perhaps among the riskiest stocks on this list, Arlo is a company I think is worth watching from here.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris MacDonald 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.