Last year was a big year for the stock market. Broader exchanges reached record levels with some of the most bullish optimism in recent history. Thanks to reopening efforts, new vaccines, and a strengthening economy, investors shrugged off inflation and rate-hike fears in exchange for stocks at all-time highs.
That has dramatically changed in 2022. But even with the latest sell-off, the stock pickers of the market have hunted for discounts. Yes, this includes some of the underperformers of 2021 now trading as penny stocks under $5 right now. The biggest question is whether or not the higher risk is worth the potential reward.
Today we look at a handful of penny stocks to buy right now, according to top Wall Street analysts. They’ve taken a deeper dive into the fundamentals and came up with a bullish outlook. Let’s see what they’ve uncovered and if their analysis is worth the time to do your own deep dive.
Desktop Metal Inc. (NYSE: DM)
The first name on this list of penny stocks is a 3D printing company, Desktop Metal. It provides an array of solutions, including prototyping and mass production, and has gained acclaim from top industry groups. The World Economic Forum selected it as one of the world’s 40 most promising Technology Pioneers. It was also named to MIT Technology Review’s list of 50 Smartest Companies and won Fast Company’s 2021 Innovation by Design Award in materials.
The last few months have seen Desktop introduce several new mediums, including DM HH Stainless Steel for additive manufacturing on its Production System Platform. The company also qualified commercially pure copper for additive manufacturing on the Platform. Customers can leverage the company’s technology to produce high-performance SS and copper components at scale.
For the most part, Desktop Metal has struggled to mount a comeback since falling from highs last year. The penny stock has traded within a range of $3.25 and $4.25 for the last week. Expectations of a resurgence in manufacturing have been muted as economic uncertainty, proposed rate hikes, and global inflation loom.
Despite the downside, some analysts think there’s still plenty of upside with DM stock. Benchmark analysts place a $16 price target alongside a Buy rating. Should their expectations get met, Benchmark’s targeting an upside of over 330% from current levels. Other firms are a bit less bullish on the stock, including Lake Street Capital which recently boosted its Hold rating to a Buy but only has a $5 target set right now.
Amyris Inc. (NASDAQ: AMRS)
Shares of biotech penny stock Amyris are also a favorite of analysts right now. The company’s recent focus on vaccine development has placed a stethoscope on the company’s heartbeat. Late last year, Amyris and ImmunityBio, Inc. (NASDAQ: IBRX) inked a JV partnership for a COVID-19 RNA vaccine. John Melo, President and Chief Executive Officer of Amyris, explained this combination as one that “can be the real difference-maker for COVID-19.”
The JV was formally consummated earlier this year with plans to deliver a second-generation vaccine this year. Analysts appear to have mimicked a similar outlook as CEO Melo. Roth Capital’s recent coverage puts a $15 target on AMRS stock with a Buy rating to back it up. Though this was adjusted down from $22, it still represents a significant upside expected from the firm. Current trading levels have AMRS shares situated around the $4.50-$5 range, which would equate to Roth targeting an upside of over 200% right now. Other analysts, including Cowen and HC Wainwright, have placed higher targets on the stock over the last few months. For instance, Cowen targets $19, with HC looking higher at $30.
In addition to this JV between Amyris and ImmunityBio, the company also gained attention following news of a pending acquisition. This week, it announced terms to acquire the assets of MenoLabs, LLC. Unlike the JV, this deal focuses on a women-founded company to treat menopause symptoms, drive research for women’s health, and improve society’s understanding of menopause. The company said, “The acquisition of MenoLabs will serve as a catalyst to accelerate growth and establish a leadership position in the fast-growing menopause market.”
Danimer Scientific (NYSE: DNMR)
A beaten-down plastics penny stock, Danimer Scientific, is surprisingly bouncing this week. That comes following last week’s continued downtrend to fresh 52-week lows. The company was flourishing early in 2021, even reaching over $60 in light of new deals.
These included opportunities to introduce new biodegradable plastics such as biodegradable straws (which ultimately became a sticking point for the market). Like most SPACs (Danimer combined with Live Oak Acquisition Corp.), the months to follow the acquisition have been tough for retail traders. But will 2022 mark a tipping point for this downtrodden class of public companies?
In looking at analysts following Danimer, they might say yes to that. Both Jefferies and Cowen have Buy and Outperform ratings on the company. Price targets are also within a range of $21-$30. After raising several hundred million dollars and recently appointing a new CFO, it will be interesting to see if Danimer can right the ship this year.
Outlook Therapeutics Inc. (NASDAQ: OTLK)
Rounding out this list of penny stocks is Outlook Therapeutics. It isn’t as beaten down as some of the other names in the article. However, it has traded much lower over the last few months than where it began in 2021. However, this week, things have grown a bit more bullish even in the face of a stock market sell-off.
The biopharmaceutical company is developing an ophthalmic formulation of bevacizumab used in retinal indications, including its ONS-5010. A recent combination of the treatment paired with LYTENAVA is undergoing Phase 3 trials. The latest data presented in December showed the potential impact the combination can have on wet age-related macular degeneration.
“The results observed for ONS-5010 in the NORSE TWO trial are potentially of great significance for retinal specialists and their patients suffering from wet AMD…I look forward to having an additional approved treatment option for patients that is on-label and specifically formulated and packaged to meet the stringent demands for ophthalmic use.”
Dr. Francesco Bandello, FEBO, Professor and Chairman of the Department of Ophthalmology, University Vita-Salute, Ospedale San Raffaele, Milan
Analysts also appear to be optimistic about the company’s prospects. Both HC Wainwright and Ladenburg have Buys on the stock along with $6 price targets. The latest target from Ascendiant Capital, however, remains the highest. Along with a Buy on OTLK stock, the firm placed a $7 forecast, roughly 400% higher than current levels.
Penny Stocks To Buy
Some final thoughts on penny stocks: do your research. Analyst ratings are great to have. But there’s no substitute for real-time research. In the case of these penny stocks, many are still early in their development, and speculation can play a much more significant role. Given that, it is never a bad idea to look beyond the “hype” and into specifics. Things like trials, pending mergers, etc., are essential to note.
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