Penny stocks are generally defined as stocks that trade for less than $5 per share. Low-priced stocks appeal to investors who can wait for these stock prices to appreciate. I say patience because that growth could take years. And many penny stocks are low-priced for a reason. That is, they generally aren’t profitable. Many may even be in the pre-revenue stage. That’s why it’s significant to identify strong buy stocks under $5.
For large-cap blue chip stocks, one Strong Buy rating won’t move the stock a lot. That’s because dozens of analysts typically cover these stocks. On the other hand, penny stocks don’t generally get wide coverage from analysts. So, when you see one with a Strong Buy rating, it may deserve further study.
That’s the case with these three stocks. These stocks don’t receive heavy analyst coverage. But each has received at least one Strong Buy rating—or its equivalent—since January 2024. To help with your due diligence, you can read a base case for these strong buy stocks under $5.
Iteris (ITI)
Iteris (NASDAQ:ITI) develops intelligent transportation systems. The opportunity comes from a need for the United States to update its aging infrastructure. Beyond replacing physical infrastructure, Iteris wants to “deliver on the promise of smarter infrastructure for a cloud-connected world.”
Its lead product, its Clear Mobility Platform, benefits from strong demand. In the first two quarters of its 2024 fiscal year, Iteris has posted a 17% year-over-year increase in revenue. And about 25% of the company’s revenue comes from annual recurring revenue (ARR).
As part of the company’s Vision 2027 initiative, Iteris is projecting revenue gains of approximately 76% in the next four years, with EBITDA margins climbing from 16% to 19%.
Four analysts have issued price targets for ITI stock in the last three months. Three analysts give the stock a Strong Buy rating, and the consensus price target is $6, which is 21% higher than its price as of January 30, 2024.
Dynagas LNG Partners (DLNG)
As its name suggests, Dynagas LNG Partners (NYSE:DLNG) is one of the leading names in liquefied natural gas (LNG) transportation. The company’s fleet of six carriers can transport approximately 914,100 cubic meters of LNG worldwide.
Through the first three quarters of the company’s 2023 fiscal year, revenue is up 22%. That’s largely because demand for LNG remains high, particularly in Europe.
Rio Grande LNG is one of the company’s counterparties in the United States. The Biden administration’s January 26, 2024, decision to delay consideration of new natural gas export terminals will draw headlines. Still, it shouldn’t do much to prevent demand for Dynagas’s services. The United States is the world’s largest gas exporter.
Plus, the company’s business model is based on multi-year contracts. Its most recent earnings report reported that its fleet is 100% booked through 2027, which amounts to $1.16 billion in that time.
Dynagas has only one analyst who has given it a rating in the last three months. But that rating is a Strong Buy with a price target of $4, which is 47% higher than the current price.
Puma Biotechnology (PBYI)
Puma Biotechnology (NASDAQ:PBYI) is another one of the strong buy stocks under $5 to keep your eye on. The company’s area of specialty is to find cancer treatments. It currently has one commercially available treatment for two breast cancer indications. That will allow the company to generate revenue in excess of $200 million in this fiscal year and has made the company profitable.
But what should interest investors more is the company’s pipeline, which includes dozens of candidates the company is sponsoring or licensing. The lead candidate in that pipeline, alisertib, is getting ready to begin mid-stage studies for lung and breast cancer indications. That announcement is a big reason the stock is up 15% in the last 30 days, which has pushed PBYI stock into positive territory for the last 12 months.
Three analysts have issued a rating for Puma Biotechnology, and they couldn’t be more mixed. There’s one Strong Buy, one Hold and one Strong Sell. But the latest rating was the Strong Buy, and with the recent price action in the stock, PBYI stock is one to watch.
On the date of publication, Chris Markoch 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.
