10 Penny Stocks Poised To Explode

Published on October 25, 2022 at 7:14 am by Ramish Cheema in Hedge Funds, News

In this piece, we will take a look at the ten penny stocks poised to explode.

The ongoing bloodbath in the stock market that has been compounded by high inflation and monetary policy tightening has left investors fleeing to safe assets and the market shuddering in the aftermath. In this backdrop, it is believed that the broader market indexes have already incorporated the effects of future interest rate hikes as well, and investors are now left in the elusive search of a bottom – that magical place where the market finally starts to demonstrate the early stages of a bull run.

This opens the door for potential returns, as the share prices of almost every firm start to look attractive due to non fundamental and macroeconomic driven drops. One segment that often attracts attention, especially for the budget conscious investor, is the penny stock segment. The Securities and Exchange Commission (SEC) defines a penny stock that is less than $5, and the definition came after the Securities and Exchange Act was passed to regulate transactions between third parties in 1934.

Investing in penny stocks has its upsides and downsides. Due to their low price, they offer the potential for explosive returns, since even small dollar amounts in growth translate into huge percentage gains. However, on the flip side, these large gains can be only on paper, as the demand for a stock on the market determines the number of shares that can be sold. Similarly, even small share price drops can cause large losses if an investor concentrates all resources on a single stock. Additionally, while common thought outlines that large firms such as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) started out as penny stocks, this is a misconception since the low share prices estimated for these firms do not take stock splits into account.

However, the drawbacks do not mean that penny stocks require absolute shunning. The right stocks carry great potential for returns, after careful stock selection. And the low share price is not a bad thing either. For instance, a report from Bloomberg estimates that stocks priced lower than $2 had managed to deliver 12% year to date returns by the start of 2021.

Therefore, the penny stock segment of the market merits a deeper look, and our list today does just this. The top picks on the list are Allego N.V. (NYSE:ALLG), Canoo Inc. (NASDAQ:GOEV), and Aurora Innovation, Inc. (NASDAQ:AUR).

10 Penny Stocks Poised To Explode

Our Methodology

We simply took a look at Insider Monkey’s database of 895 hedge funds to pick the top ten penny stocks out of the thousands of firms that the funds have invested in. We have ranked these stocks based on the number of hedge funds having stakes in them as of the end of the second quarter.

10 Penny Stocks Poised To Explode

10. Bird Global, Inc. (NYSE:BRDS)

Number of Hedge Fund Holders: 16

Bird Global, Inc. (NYSE:BRDS) is a transportation services provider that allows users to share vehicles for short distances. Its portfolio includes electric scooters and electric bikes, which it offers through a website. The firm also sells vehicles to customers through retailers, distributors, and directly. It is headquartered in Miami, Florida, the United States.

Bird Global, Inc. (NYSE:BRDS)’s rides and revenues rebounded during its second fiscal quarter, as they grew by 39% and 34%, respectively. The firm’s first half of 2022 saw its business revenue from vehicle sharing grow at a compounded annual growth rate (CAGR) of 26% since 2019, as it recovered from the coronavirus pandemic’s disruptions. The firm’s revenue in the second quarter was $77 million.

Bird Global, Inc. (NYSE:BRDS) is also increasing its presence across the United States, and the firm announced in August 2022 that it has extended its mobility programs in five cities, including San Diego and Memphis. Bird Global, Inc. (NYSE:BRDS) also entered Bradenton and Knoxville in August. Insider Monkey’s Q2 2022 survey of 895 hedge funds outlined that 16 had invested in the firm.

Out of these, Bird Global, Inc. (NYSE:BRDS)’s largest investor is Ben Levine, Andrew Manuel, and Stefan Renold’s LMR Partners which owns 2 million shares that are worth $954,000.

Along with Canoo Inc. (NASDAQ:GOEV), Allego N.V. (NYSE:ALLG), and Aurora Innovation, Inc. (NASDAQ:AUR), Bird Global, Inc. (NYSE:BRDS) is a penny stock on the hedge fund radar.

9. BARK, Inc. (NYSE:BARK)

Number of Hedge Fund Holders: 16

BARK, Inc. (NYSE:BARK) designs and sells dog products such as toys, personal meal plans, supplements, treats, beds, bowls, collars, and harnesses. It is headquartered in New York, New York, the United States.

Despite the turbulence in the economic environment, BARK, Inc. (NYSE:BARK) grew its average orders by 7% annually and 3% sequentially in its latest quarter. The firm also has recurring revenue through subscriptions, and its latest quarter saw subscriptions fuel 6% of the revenue growth. At the same time, revenue from new customers grew by 10%, indicating that the firm is firing on all fronts.

BARK, Inc. (NYSE:BARK) also has a strong balance sheet, with $177 million in cash and only $76 million in debt. Jefferies set an $8 share price target for the firm in October 2022, sharing that early results from an ongoing business model transformation are promising. By the end of this year’s second quarter, 16 out of the 895 hedge funds polled by Insider Monkey had owned the company’s shares.

BARK, Inc. (NYSE:BARK)’s largest investor is Jim Simons’ Renaissance Technologies which owns 2.2 million shares that are worth $2.9 million.

8. Ardelyx, Inc. (NASDAQ:ARDX)

Number of Hedge Fund Holders: 16

Ardelyx, Inc. (NASDAQ:ARDX) is a biopharmaceutical company that designs and sells treatments for gastrointestinal, heart, and kidney diseases. These include irritable bowel syndrome, chronic kidney disease, and heart disease. The firm is based out of Waltham, Massachusetts.

Ardelyx, Inc. (NASDAQ:ARDX)’s Ibsrela drug is for patients with irritable bowel syndrome, a disease that effects more than 11 million people in the U.S. annually. This lends its market a total addressable value of $3 billion, and even capturing a fraction of this market can lead to millions of dollars in revenue for the firm. The firm is also targeting the kidney disease market with the active ingredient of the irritable bowel syndrome medicine, for a market of another 440,000 patients.

Ardelyx, Inc. (NASDAQ:ARDX) has also entered partnerships with firms in Canada, Japan, and China, and its product licenses brought the firm $44 million in revenue in its latest quarter. Insider Monkey scanned 895 hedge funds for their June quarter of 2022 investments and discovered that 16 had bought a stake in the firm.

Out of these, Ardelyx, Inc. (NASDAQ:ARDX)’s largest investor is Steve Cohen’s Point72 Asset Management which owns five million shares that are worth $2.9 million.

7. biote Corp. (NASDAQ:BTMD)

Number of Hedge Fund Holders: 16

biote Corp. (NASDAQ:BTMD) is a hormone optimization firm that allows its customers, which are its certified medical practitioners, to prescribe hormone therapies and vitamin supplements and optimize the hormonal balance of their patients. The firm is headquartered in Irvine, Texas, the United States.

biote Corp. (NASDAQ:BTMD) delivered stellar results in its second fiscal quarter, which saw the firm bring in $41 million in revenue, $13 million in operating income, and $49.7 million in net income. These marked for solid 19%, 21%, and a whopping 409% growths, respectively.

Truist set a $10 share price target (current share price is $4.4) for the company in September 2022 as it stated that biote Corp. (NASDAQ:BTMD) is a leader in the hormone optimization space and that it will continue to use its strong business model to generate operating income growth in the future. 16 out of the 895 hedge funds part of Insider Monkey’s Q2 2022 survey had held biote Corp. (NASDAQ:BTMD)’s shares.

6. Sientra, Inc. (NASDAQ:SIEN)

Number of Hedge Fund Holders: 17

Sientra, Inc. (NASDAQ:SIEN) is a medical aesthetics firm that is headquartered in Santa Barbara, California, the United States. The company offers a wide variety of products such as those used in breast augmentation and breast reconstruction. It also sells facial and nasal implants.

Sientra, Inc. (NASDAQ:SIEN) scored a big win in September 2022 when it announced that it had secured approval to sell its breast implant products in Saudi Arabia. The firm’s chief executive officer shared that he intends to use this as the first step for the firm’s expansion into the cash rich and highly lucrative Middle East market.

Sientra, Inc. (NASDAQ:SIEN) second fiscal quarter saw the firm grow revenue by 7% to $21.5 million, as it added close to 300 new accounts to its portfolio – setting a new record. During the same quarter, the firm’s gross margin stood at 59%, as it grew by 3 percentage points annually. Sientra, Inc. (NASDAQ:SIEN) also aims to post revenue ranging between $90 million to $95 million in the full year 2022, as compared to $80.7 million posted last year.

Insider Monkey’s Q2 2022 survey of 895 hedge funds outlined that 17 had bought Sientra, Inc. (NASDAQ:SIEN)’s shares.

Out of these, Richard Mashaal’s Rima Senvest Management is Sientra, Inc. (NASDAQ:SIEN)’s largest investor. It owns three million shares that are worth $2.6 million.

In addition to Allego N.V. (NYSE:ALLG), Canoo Inc. (NASDAQ:GOEV), and Aurora Innovation, Inc. (NASDAQ:AUR), Sientra, Inc. (NASDAQ:SIEN) is a penny stock that hedge funds are piling into.

5. Cipher Mining Inc. (NASDAQ:CIFR)

Number of Hedge Fund Holders: 17

Cipher Mining Inc. (NASDAQ:CIFR) is a bitcoin mining firm that is headquartered in New York, New York, the United States. The firm operates and owns bitcoin mining data centers.

Amidst the near deadly crash that has all but decimated the cryptocurrency market this year due to investors fleeing to safe assets, Cipher Mining Inc. (NASDAQ:CIFR)’s second quarter earnings report was all about keeping efficiency high and costs low. In a high energy price market, the firm has fixed contracts through which its costs of electricity are a little under $30 per megawatt hour (MWh). Management explained that this enables the firm to bring in $70 in profit per MWh with a $20,000 price for bitcoin and a 200 EH/s mining rate. Should it increase this rate to 225 EH/s and the price of bitcoin touches $25,000, then the profit grows to $81. Additionally, Cipher Mining Inc. (NASDAQ:CIFR) also plans to sell this electricity should the bitcoin price drop further.

Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 16 had invested in Cipher Mining Inc. (NASDAQ:CIFR).

4. Wheels Up Experience Inc. (NYSE:UP)

Number of Hedge Fund Holders: 19

Wheels Up Experience Inc. (NYSE:UP) is an American private aviation services provider. The firm provides a range of services that include membership programs, aircraft management, chartered flights, and aircraft acquisitions and sales. It is headquartered in New York, New York.

Wheels Up Experience Inc. (NYSE:UP) is one of the largest private aviation companies in America. Its portfolio consists of 200 aircraft, and the firm provides access to more than 1,200 third party aircraft as well to its customers. The firm’s second quarter saw its prepaid block package sales grow by a whopping 180% annually and live flight sales grow by another 19% annually.

Wheels Up Experience Inc. (NYSE:UP)’s second quarter revenue of $425 million also blew the analyst consensus estimate of $309 million out of the park. Out of the 895 hedge funds polled by Insider Monkey during this year’s second quarter, 19 had held a stake in the company.

Wheels Up Experience Inc. (NYSE:UP)’s largest investor is Ben Levine, Andrew Manuel, and Stefan Renold’s LMR Partners which owns 1.3 million shares that are worth $2.6 million.

3. Allego N.V. (NYSE:ALLG)

Number of Hedge Fund Holders: 19

Allego N.V. (NYSE:ALLG) is an electric vehicle charging company. The firm has more than 30,000 charging ports in Europe, and it offers its facilities to different electric vehicles such as cars, trucks, and buses. Allego N.V. (NYSE:ALLG) is headquartered in Arnhem, the Netherlands.

Allego N.V. (NYSE:ALLG) operates in 15 European countries, making it one of the largest electric vehicle charging services providers on the continent. The firm also operates a proprietary cloud computing platform that allows it to identify its top performing locations in terms of revenue and usage, which then lets it optimize its services for revenue maximization. Allego N.V. (NYSE:ALLG) brought in EUR 50 million in revenue during the first half of this year, for a strong 150% annual growth. This also saw the firm’s charging revenue grow by 120% and its service revenue jump by 180% annually.

As this year’s June quarter ended, 19 out of the 895 hedge funds part of Insider Monkey’s research had bought Allego N.V. (NYSE:ALLG)’s shares.

2. Canoo Inc. (NASDAQ:GOEV)

Number of Hedge Fund Holders: 20

Canoo Inc. (NASDAQ:GOEV) is an American electric vehicle company that designs both vehicles and a platform on which vehicles can be designed. Its vehicles include minivans and SUVs, and the platform is a customizable chassis. The firm is headquartered in Torrance, California, United States.

Canoo Inc. (NASDAQ:GOEV) has been consistently receiving orders in 2022. In October, the firm received an order for 9,300 vans from a van rental firm, which also left the option open to increase the order size to a whopping 18,000 vehicles. This order had come within days after another one saw the firm book an initial commitment of 3,000 vans with an option to increase the order to 5,450 vans with a van leasing company.

Stifel set a $4 share price target for the firm in September 2022 as it shared that Canoo Inc. (NASDAQ:GOEV) has one of the strongest business models among its peers and established players that lets it manage costs effectively. Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 20 had held a stake in the firm.

Out of these, Canoo Inc. (NASDAQ:GOEV)’s largest investor is Jim Simons’ Renaissance Technologies which owns one million shares that are worth $1.9 million.

1. Aurora Innovation, Inc. (NASDAQ:AUR)

Number of Hedge Fund Holders: 21

Aurora Innovation, Inc. (NASDAQ:AUR) is a firm that develops self driving technologies and is headquartered in Pittsburgh, Pennsylvania. Its software platform aims to provide a single solution for cars, trucks, and light commercial vehicles.

Aurora Innovation, Inc. (NASDAQ:AUR) outlined that it is making progress with its self driving platform during its second quarter earnings report. The firm stated that it expects the platform to have integrated all features by the first quarter of next year, and be ready for commercialization by the end of 2023. The company has also launched a pilot platform with FedEx that allows it to autonomously haul FedEx’s loads between Dallas and Houston, and Fort Worth and El Paso.

Bloomberg reported in August 2022 that the firm’s CEO is looking to sell his company to either Apple or Microsoft. DA Davidson reduced the company’s share price target to $8 from $14.25 in September 2022, stating that the firm has strong long term positioning in the market. By the end of this year’s second quarter, 21 out of the 895 hedge funds had invested in Aurora Innovation, Inc. (NASDAQ:AUR).

10 Penny Stocks Poised To Explode

Published on October 25, 2022 at 7:14 am by Ramish Cheema in Hedge Funds, News