Many investors can’t figure out how to invest in penny stocks because they don’t know what to look for. Some penny stocks are companies in beginning phases that have yet to scale up operations. These companies’ financials are still in the process of improving. Other penny stocks may continue to trade at penny stock prices until there is a breakthrough –such is common in the biotech industry– that grows the company’s market share and stock price accordingly. 

Regardless, these share prices present a unique opportunity for investors for massive returns with such low share prices. Conversely, such low share prices make these stocks subject to market manipulation, making penny stocks volatile investments. You can find good penny stock picks by looking for improving financials, or analyzing public sentiment around a company’s developments.

Previous penny stock successes include Amazon (NYSE:AMZN), AMD (NYSE:AMD) and Tesla (NASDAQ:TSLA). If you are wondering how to invest in penny stocks, here are three penny stocks that I’ve identified as penny stock opportunities.

Nerdy (NRDY)

Nerdy (NYSE:NRDY) is an online learning platform utilizing novel technology applications, such as Artificial Intelligence for Human Interaction (AI for HI), to improve customer experiences. Yahoo! Finance reports 9 analysts predicting a 1-year price range on NRDY between $3.75 and $6, with a mean of $4.64.

Nerdy has shown excellent financial promise for Q1 of 2024. The company has beaten both revenue and EPS earnings for Q1 of 2024. While profitability has been a weakness for Nerdy, a growing net profit margin and free cash flow indicates a positive future. By growing net income 60.61% year-over-year (YOY), management had a crucial role in improving profitability.

The company’s flagship business of Varsity Tutors has positioned itself well for growth by establishing service partnerships with school districts in Illinois, Texas and Michigan. These programs are all funded by grants or offered at no costs to these districts, allowing for Nerdy to serve these communities while strategically growing its customer base. To prospective investors wondering how to invest in penny stocks, look no further than Nerdy.

Taysha Gene Therapies (TSHA)

Taysha Gene Therapies (NASDAQ:THSA) focuses on clinical-stage research specifically for central nervous system (CNS) diseases.  Yahoo! Finance reports 10 analysts predicting a 1-year price range on TSHA between $5 and $9, with a mean of $6.75.

As with most penny stock biotechnology companies, TSHA has not presented robust financials for Q1 of 2024. Operating expenses were $27.74 million, marking a 30.45% YOY increase. But this percentage is not unfounded. These expenditures have gone toward “Good Manufacturing Practice” activities, allowing TSHA to commercialize TSHA-102 –a treatment for a CNS disease called Rett syndrome– that has currently garnered Food and Drug Administration (FDA) approval.

With the global Rett Syndrome market expected to grow at a 13.8% CAGR to $800 million by 2032, a lack of a cure or highly effective therapies position Taysha Gene Therapies to gain majority of the market share.

Geron (GERN)

Geron (NASDAQ:GERN) specializes in developing and commercializing cancer therapies. Yahoo! Finance reports seven analysts predicting a 1-year price range on TSHA between $4.50 and $10, with a mean of $6.07.

GERN financials have improved as of Q1 of 2024. The company’s revenue is up 1,347% YOY and net profit margin is up 89.96% YOY. While GERN has shown substantial improvement with financials, these metrics are less impressive when you put these numbers in context. Net income for Q1 of 2024 was -$55.39 million, and the company is not yet profitable. However, I don’t recommend GERN because of its financial performance.

Geron gained FDA approval for RYTELO, which helps treat adult patients with myelodysplastic syndrome (MDS), a form of onset leukemia. This FDA approval makes RYTELO the “first-in-class” treatment inhibiting telomerase growth, an enzyme that allows cancer cells to multiply. The potential for this type of treatment is widespread across different cancers, creating a lot of hype around this stock right now. 

Geron also has seven other treatments in development. Some include the further inhibition of telomerase although in other clinical applications. With multiple cutting edge developments that can potentially create massive upside, Geron is a highly recommended penny stock.

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, Matthew Rodrigues did not hold (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.