12 Penny Stocks With Biggest Upside

Published on December 20, 2022 at 9:11 am by Usman Kabir in Hedge Funds, News

In this article, we discuss the 12 penny stocks with the biggest upside. If you want to read about some more penny stocks with the biggest upside, go directly to 5 Penny Stocks With Biggest Upside.

Even though the United States economy has been rattled by recession fears in the past few months, there are reasons to be optimistic about the near-term future of the market. Recent data suggests that employment growth remains strong, and many measures of economic activity are growing, even if more slowly than last year. Oil and food prices have been falling at the wholesale level. The major concern remains inflation and lowering energy prices are helping offset some of the impact it is having on the economy.

Further, the monetary policy tightening has raised the cost of capital for companies and has slowed down earnings growth momentum. However, businesses are now beginning to bounce back. The benchmark S&P 500 racked up a second consecutive month of gains in November, as investors became ever more positive that the Federal Reserve would deliver a smaller rate hike in December. The index gained 5.4% in the month, including a 3.1% rally in the final session, after a sustained period of losses.

Prominent stocks like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB) are all benefiting as a result, even though they are not out of the woods just yet. Investors eager to get back to investing in stocks would be much better served by exploring options in the penny stock universe, a sector of the market that offers explosive growth potential at cheap prices. In an uncertain market, these bets carry lower levels of risk.

Our Methodology

The companies that have upcoming growth catalysts and were priced under $5 per share, as of December 20, were selected for the list. Special importance was assigned to outlining the basic business fundamentals and analyst ratings for each firm to provide readers with some context so they can make more informed investment choices. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Photo by Sharon McCutcheon on Unsplash

Penny Stocks With Biggest Upside

12. XWELL, Inc. (NASDAQ:XWEL)

Number of Hedge Fund Holders: N/A

Share Price as of December 20: $0.40

XWELL, Inc. (NASDAQ:XWEL) is a health and wellness services company that provides spa services at airports. On November 2, Xwell Inc announced the opening of Treat at Salt Lake City International Airport with a ribbon-cutting ceremony. Treat is an upscale health and wellness center for people on the go. As the pandemic recedes and international travel resumes on a large scale, the health and wellness centers of the company are expected to witness increased foot traffic, especially from China. The firm posted over $10 million in revenue in Q3.

11. American Resources Corporation (NASDAQ:AREC)

Number of Hedge Fund Holders: 4

Share Price as of December 20: $1.18

American Resources Corporation (NASDAQ:AREC) engages in the extraction, processing, transportation, distribution, and sale of metallurgical coal to the steel industries. The stock has been soaring since the company announced that the board of directors had approved a stock buyback program worth $10 million. Under the program, the firm is authorized to repurchase shares through the open market, in privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws. The share repurchase authorization will expire in September 2023.

At the end of the third quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $2.7 million in American Resources Corporation (NASDAQ:AREC), compared to 2 in the preceding quarter worth $681,000.

10. Sunworks, Inc. (NASDAQ:SUNW)

Number of Hedge Fund Holders: 5

Share Price as of December 20: $1.92

Sunworks, Inc. (NASDAQ:SUNW) provides photovoltaic and battery-based power and storage systems for the agricultural, commercial, industrial, public works, and residential markets in the United States. On October 23, Sunworks revealed that it is advancing its commitment to sustainable practices with the launch of a nationwide, long-term recycling program in contract with Zeep Technology, an asset disposal firm. The agreement between the company emerged after Sunworks recycled 293 decommissioned panels in 2021 and recognized the need to formalize the program.

At the end of the third quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $2.5 million in Sunworks, Inc. (NASDAQ:SUNW), compared to 3 the preceding quarter worth $1.8 million.

9. HOOKIPA Pharma Inc. (NASDAQ:HOOK)

Number of Hedge Fund Holders: 8

Share Price as of December 20: $0.78

HOOKIPA Pharma Inc. (NASDAQ:HOOK) is a clinical-stage biopharmaceutical company that develops immunotherapeutics targeting infectious diseases and cancers based on its proprietary arenavirus platform. The stock has climbed since late October after Roche, a pharmaceutical company, signed a license agreement with HOOKIPA to develop immunotherapy HB-700 for KRAS-mutated cancers and a second undisclosed novel arenaviral immunotherapy. Under the agreement, HOOKIPA will receive $25 million upfront.

At the end of the third quarter of 2022, 8 hedge funds in the database of Insider Monkey held stakes worth $23.5 million in HOOKIPA Pharma Inc. (NASDAQ:HOOK), compared to 9 in the previous quarter worth $29.4 million.

8. Meta Materials Inc. (NASDAQ:MMAT)

Number of Hedge Fund Holders: 9

Share Price as of December 20: $1.30

Meta Materials Inc. (NASDAQ:MMAT) invents, designs, develops, and manufactures various functional materials and nanocomposites. The company recently approved the oil and gas spinoff of the firm, named Next Bridge Hydrocarbons, that has an estimated market capitalization of more than $1 billion. On December 7, FINRA approved the exchange of the company’s Series A preferred shares for common shares of the spinoff company. As the spinoff raises money, it is expected to pay back $20 million in loans to the parent firm.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Meta Materials Inc. (NASDAQ:MMAT) with 3.2 million shares worth more than $2 million.

In its Q4 2021 investor letter, Singular Research, an asset management firm, highlighted a few stocks and Meta Materials Inc. (NASDAQ:MMAT) was one of them. Here is what the fund said:

“To combat rising inflation, the Fed and Jerome Powell announced they would double the pace of purchasing Treasuries and mortgage-backed securities, and that they are expecting three rate hikes in 2022. As a result of these comments, markets were jittery, making December the most volatile month in 2021. Oil prices rose 14 percent and 10-year yields ended the month moderately higher. Looking ahead, inflation warning signs persist, and many are left to wonder just how much 2022 interest rate hikes have already been priced into markets. Meta Materials Inc. (NASDAQ:MMAT) was also a poor performer as the firm is the defendant in several class-action lawsuits for issuing materially misleading business information to the public.”

7. Skillz Inc. (NYSE:SKLZ)

Number of Hedge Fund Holders: 10

Share Price as of December 20: $0.63

Skillz Inc. (NYSE:SKLZ) operates a mobile games platform that connects players in fair, fun, and meaningful competition. On October 12, Citi analyst Jason Bazinet maintained a Neutral rating on Skillz Inc. (NYSE:SKLZ) stock and lowered the price target to 95c from $1.50, noting that the only change in the target price reflects updated probabilities related to the company’s ability to generate free cash flow.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Wild Cat Capital Management is a leading shareholder in Skillz Inc. (NYSE:SKLZ) with 21.6 million shares worth more than $22 million.

6. Uranium Energy Corp. (NYSE:UEC)

Number of Hedge Fund Holders: 11

Share Price as of December 20: $3.17

Uranium Energy Corp. (NYSE:UEC) engages in the exploration, pre-extraction, extraction, and processing of uranium and titanium concentrates in the United States, Canada, and Paraguay. Uranium Energy shares have climbed, along with other uranium mining companies like Denison and Cameco, after recent reports that Germany will extend the life of all three of its nuclear power plants until mid-April 2023 in the face of an unprecedented energy crisis.

On October 19, H.C. Wainwright analyst Heiko Ihle maintained a Buy rating on Uranium Energy Corp. (NYSE:UEC) stock and raised the price target to $8.25 from $7.25.

At the end of the third quarter of 2022, 11 hedge funds in the database of Insider Monkey held stakes worth $24.5 million in Uranium Energy Corp. (NYSE:UEC), compared to 8 in the previous quarter worth $32.2 million.

In contrast to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB), Uranium Energy Corp. (NYSE:UEC) is one of the cheaper stocks with the biggest upside potential.

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