10 Penny Stocks That Can Grow Big in 2023

In this article, we will take a look at the 10 penny stocks that can grow big in 2023.

Numerous speculative asset classes, including cryptocurrency and penny stocks, have suffered at the hands of economic uncertainty this year. Although some penny stocks might have outperformed the market, the broader view taken by the market regarding penny stocks has been bearish. The Russell 2000 Index, which comprises the 2,000 smallest companies in the Russell 3000 Index, saw a decline of 19.5% since the start of the year and has lost as much as 26% multiple times this year. The Russell 3000 Index comprises small-cap companies only. This reflected a reversal of the trend of 2021 when penny stocks were in the limelight and the talk of the town. During 2021, the Russell 2000 Index saw a rise of 13.7%. However, we anticipate a turn of fortunes in the penny stock universe in 2023. This is because the level of economic uncertainty can be expected to ease as experts believe that inflation has peaked in the US. In 2023, once the economy cools down and inflation rates stabilize, the US Federal Reserve can be expected to take expansionary actions that can result in a rally for penny stocks.

It must be noted that investing in penny stocks comes with a significant level of uncertainty. The stock price movement of penny stocks can be unpredictable, especially when investors start to take an interest in a penny stock for speculative purposes only. However, some small-cap companies operating in the leading sectors, such as biotechnology, artificial intelligence (AI), and electric vehicles (EVs), have the potential to expand rapidly in 2023. Taking a stake in these companies can allow investors to benefit from solid returns in a short period of time. Some of the best penny stocks attracting hedge fund investment currently include WeWork Inc. (NYSE:WE), Clover Health Investments, Corp. (NASDAQ:CLOV), and Riot Blockchain, Inc. (NASDAQ:RIOT).

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Our Methodology

The penny stocks included in this list are trading under $5 and have a market capitalization between $300 million to $2 billion as of December 12. We have shortlisted these stocks based on the growth potential offered by each one of them. These small-cap companies are expected to grow to become mid-cap companies based on the growth catalysts. Furthermore, we have also taken a look at analyst ratings. We have avoided penny stocks with a market capitalization of less than $300 million as these companies may not be the best investment options currently due to rampant inflation and rising benchmark interest rates. We have used Insider Monkey’s database of 920 hedge funds as of Q3 2022 to rank the best penny stocks.

10 Penny Stocks That Can Grow Big in 2023

10. Geron Corporation (NASDAQ:GERN)

Number of Hedge Fund Holders: 16

Geron Corporation (NASDAQ:GERN) is a Menlo Park, California-based late-stage clinical biotech company focused on developing and commercializing a first-in-class telomerase inhibitor known as imetelstat. The therapeutic is being developed to treat certain types of cancer.

Geron Corporation (NASDAQ:GERN) is anticipating positive results of phase three trials for one of its therapeutics in January. The market also appears to agree that the company will be successful in its efforts to obtain clearance for Imetelstat. Considering that the management expects the drug’s peak sales of $1.2 billion in Lower Risk Myelodysplastic Syndrome (LRMDS) alone, Geron Corporation’s (NASDAQ:GERN) market capitalization is expected to rise after new data is published in early 2023. Analysts believe a favorable outcome could result in significant growth for the company as it intends to submit a New Drug Administration (NDA) with the US Food and Drug Administration (FDA) and a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) during 2023.

Robert Driscoll at Wedbush initiated coverage on Geron Corporation (NASDAQ:GERN) stock with an Outperform rating and a target price of $5 in a research note issued on October 28. The analyst also expects a positive outcome of the Phase 3 drug trials that could pave the way for a commercial launch in 2024, providing a further boost to the stock price. Experts are bullish on the long-term outlook of Geron Corporation (NASDAQ:GERN) as one of the best penny stocks in the market.

9. Ardelyx, Inc. (NASDAQ:ARDX)

Number of Hedge Fund Holders: 19

Ardelyx, Inc. (NASDAQ:ARDX) is a Waltham, Massachusetts-based biotech company founded in 2007. The company has the distinction of developing and commercializing the first-in-class therapeutic for the treatment of irritable bowel syndrome. Furthermore, the company has therapeutics for the treatment of hyperphosphatemia, hyperkalemia, and metabolic acidosis in the pipeline.

In a report issued to investors on November 17, Christopher Raymond at Piper Sandler upgraded Ardelyx, Inc. (NASDAQ:ARDX) stock from a Neutral to an Overweight rating and increased the target price from $3 to $8. The target price reflects a potential upside of more than 346% from the closing price as of December 12. Raymond welcomed the surprising ruling by the FDA advisory in favor of tenapanor for its role in addressing dependent chronic kidney disease. The analyst is anticipating Ardelyx, Inc. (NASDAQ:ARDX) to receive approval to treat renal diseases and launch tenapanor in 2023 with a strong uptake.

In accordance with the company’s contract with HealthCare Royalty Partners (HCR), Ardelyx, Inc. (NASDAQ:ARDX) also received a $10 million advance payment in June. The company anticipates receiving another $5 million after its Japanese partner, Kyowa Kirin Corporation (KKC), receives regulatory permission for another drug application next year. In Q3 2022, Ardelyx, Inc. (NASDAQ:ARDX) reported revenue of $4.99 million, reflecting a YoY increase of 325%. The company’s strong fundamentals merit its inclusion in our list of the best penny stocks to invest in.

8. Sorrento Therapeutics, Inc. (NASDAQ:SRNE)

Number of Hedge Fund Holders: 10

Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is a San Diego, California-based biotech company focused on developing therapeutics to combat cancer, intractable pain, and COVID-19.

Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is the third biotech company on our list of the best penny stocks. The company is considered to have the greatest growth outlook as it focuses on developing and commercializing therapeutics in high-value areas. On November 2, Brandon Folkes at Cantor Fitzgerald initiated coverage on Sorrento Therapeutics, Inc. (NASDAQ:SRNE) stock with a target price of $5 along with an Overweight rating. The analyst thinks that the company has the potential to come up with best-in-class therapeutics in the field of infectious diseases, oncology, and pain. Folkes thinks that the current depressed valuation of the penny stock is due to the breadth of its pipeline. However, the pipeline provides an attractive risk and return profile for the company that is skewed toward offering high returns over the next year.

As of Q3 2022, Sorrento Therapeutics, Inc. (NASDAQ:SRNE) was held by 10 hedge funds.

7. 23andMe Holding Co. (NASDAQ:ME)

Number of Hedge Fund Holders: 11

23andMe Holding Co. (NASDAQ:ME) is a San Francisco, California-based company founded in 2006 that is a provider of detailed DNA genetic testing for ancestry, traits, and health-related purposes.

On November 28, Gaurav Goparaju at Berenberg commenced coverage on 23andMe Holding Co. (NASDAQ:ME) stock with a target price of $7 and a Buy rating. The analyst thinks that the company is in a strong position to develop a completely personalized and integrated next-generation healthcare and therapeutics platform by leveraging the power of customer genetics data. This could establish the company as a transformational player that can redefine the individualized healthcare ecosystem by bringing innovation in the field of genetics. 23andMe Holding Co.’s (NASDAQ:ME) strong growth prospects make it one of the best penny stocks to invest in.

According to data compiled by Insider Monkey, Jim Simons’ Euclidean Capital is the biggest hedge fund investor in 23andMe Holding Co. (NASDAQ:ME) as of Q3, with a stake of over 10.24 million shares, equivalent to 3.5% of the outstanding shares of the company.

6. Nikola Corporation (NASDAQ:NKLA)

Number of Hedge Fund Holders: 11

Nikola Corporation (NASDAQ:NKLA) is a Phoenix, Arizona-based producer of commercial and heavy-duty battery and fuel cell-powered electric vehicles (EVs) founded in 2014. The company has launched numerous concept vehicles from 2016 onwards and completed the acquisition of battery-pack producer Romeo Power in October 2022.

During these uncertain economic times, Nikola Corporation (NASDAQ:NKLA) is streamlining its operations to emerge as a leaner organization. Furthermore, the company has revealed that the loan application for its Phoenix Hydrogen Hub LLC project has reached the second round of review at the Department of Energy (DOE) Loan Program Office. The hub aims to create essential renewable energy solutions and contribute to a carbon-free transportation industry.

In November, Nikola Corporation (NASDAQ:NKLA) also established a partnership with Campbell, California-based ChargePoint holdings. The deal is aimed at expanding the EV charging infrastructure across the US. Based on these developments, Jeffrey Osborne at Cowen gave Nikola Corporation (NASDAQ:NKLA) stock an Outperform rating with a target price of $10 in a note issued to investors on November 4.

In addition to Nikola Corporation (NASDAQ:NKLA), companies like WeWork Inc. (NYSE:WE), Clover Health Investments, Corp. (NASDAQ:CLOV), and Riot Blockchain, Inc. (NASDAQ:RIOT) are also considered as some of the best penny stocks due to their strong growth prospects.

5. Riot Blockchain, Inc. (NASDAQ:RIOT)

Number of Hedge Fund Holders: 11

Riot Blockchain, Inc. (NASDAQ:RIOT) is a Castle Rock, Colorado-based bitcoin mining company founded in 2000.

Riot Blockchain, Inc. (NASDAQ:RIOT) is one of the best penny stocks as it provides exposure to the speculative world of cryptocurrencies, which has the potential to yield sudden returns. Bitcoin is the biggest cryptocurrency in this universe. The company mined 521 bitcoins in November 2022 and has ownership over 6,897 bitcoins mined through its facilities.

On November 23, Mike Colonnese at H.C Wainwright gave Riot Blockchain, Inc. (NASDAQ:RIOT) a Buy rating with a price target of $10. The analyst highlighted the corporation as one of the world’s biggest, publicly listed, and vertically integrated bitcoin miners. Colonnese is anticipating the company’s share in bitcoin mining to grow to 4% by the end of 2023 as it is continuously growing its mining capacity. He thinks that Riot Blockchain, Inc. (NASDAQ:RIOT) is in the best position to weather the downturn in the cryptocurrency world and come back as a bigger and stronger player.

Of the 920 hedge funds in Insider Monkey’s database, Riot Blockchain, Inc. (NASDAQ:RIOT) was held by 11 funds as of Q3 2022.

4. Clover Health Investments, Corp. (NASDAQ:CLOV)

Number of Hedge Fund Holders: 17

Clover Health Investments, Corp. (NASDAQ:CLOV) is a Franklin, Tennessee-based provider of Medicare Advantage insurance plans. The company uses the data and technology from its proprietary Clover Assistant platform to assist medical practitioners in making medical decisions.

On November 8, Richard Close at Canaccord assigned Clover Health Investments, Corp. (NASDAQ:CLOV) stock a Buy rating with a target price of $4. The analyst highlighted that the company surpassed the Q3 2022 results compared to his estimates and also increased the revenue guidance for 2022. Mr. Close appreciated the management’s aggressive efforts to achieve profitability in a shorter timeline. Clover Health Investments, Corp. (NASDAQ:CLOV) intends to meet its targets by moderating the company’s growth in Medicare Advantage and non-insurance-related offerings.

Renaissance Technologies raised its stake in Clover Health Investments, Corp. (NASDAQ:CLOV) by 145% during Q3 2022.

3. Rocket Lab USA, Inc. (NASDAQ:RKLB)

Number of Hedge Fund Holders: 15

Rocket Lab USA, Inc. (NASDAQ:RKLB) is a Long Beach, California-based space company that is a known maker of launch vehicles and spacecraft. The company has the honor of deploying 151 satellites and has conducted 31 launches.

Following the Q3 2022 results, Edison Yu at Deutsche Bank assigned Rocket Lab USA, Inc. (NASDAQ:RKLB) stock a target price of $12, along with a Buy rating on November 14. The analyst noted that the company’s quarterly results were robust across all aspects. Yu added that Rocket Lab USA, Inc. (NASDAQ:RKLB) is gaining momentum as it is inducting new customers every day. This will aid the corporation in increasing its market share in a rapidly growing space infrastructure and launch services industry. Rocket Lab USA, Inc. (NASDAQ:RKLB) is also anticipated to experience margin expansion due to the cost reduction activity undertaken for the Electron project. Analysts consider the company one of the best penny stocks due to its strong growth catalysts.

As of Q3 2022, Rocket Lab USA, Inc. (NASDAQ:RKLB) was held by 15 hedge funds.

2. Matterport, Inc. (NASDAQ:MTTR)

Number of Hedge Fund Holders: 7

Matterport, Inc. (NASDAQ:MTTR) is a Sunnyvale, California-based creator of a 3D media platform that is used to make 3D and virtual reality models. The company, founded in 2011, claims that its platform reduces development time by 50%, resulting in 20 times cost savings. Matterport, Inc. (NASDAQ:MTTR) has thousands of businesses across over 150 countries as its customer.

In a report published on November 11, Brent Bracelin at Piper Sandler increased the price target on Matterport, Inc. (NASDAQ:MTTR) from $5 to $6 and reiterated an Overweight rating. The analyst noted that the company posted strong Q3 2022 results due to growth in subscriptions. Matterport, Inc. (NASDAQ:MTTR) revealed that the backlog for its 3D camera, Pro2, was cleared and the Pro3 platform was also positively received by the market. The acquisition of VHT Studios has also improved the outlook of Matterport, Inc. (NASDAQ:MTTR), making it one of the best penny stocks in the market.

As of Q3 2022, Matterport, Inc. (NASDAQ:MTTR) was held by 7 hedge funds.

1. WeWork Inc. (NYSE:WE)

Number of Hedge Fund Holders: 20

WeWork Inc. (NYSE:WE) is a New York-based provider of coworking spaces.

WeWork Inc. (NYSE:WE) leases out complete office buildings to well-known corporations as well as small entities and freelancers. The company offers its locations for a shorter period as compared to conventional landlords. During the present challenging macroeconomic environment, WeWork Inc. (NYSE:WE)  is reducing costs by shutting down underperforming locations to streamline its portfolio. The company was able to lower its expenses during Q3 2022 and observed its top line grow by 20% YoY.

In an update provided to investors on November 4, Thomas Catherwood at BTIG commenced coverage on WeWork Inc. (NYSE:WE) stock with a target price of $7.50 and a Buy rating. The analyst is forecasting a strong period for flexible working spaces in the short and medium term, which will be beneficial for WeWork Inc. (NYSE:WE), making it one of the best penny stocks with the potential to grow big in 2023.

You can also take a peek at the Best AI Penny Stocks Under $1 and the 10 Best Halal Dividend Stocks To Buy.

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Disclosure: None. 10 Penny Stocks That Can Grow Big in 2023 is originally published on Insider Monkey.