In this article, we discuss 10 penny stocks with upcoming growth catalysts.
Penny stocks typically represent small companies that are either just getting started or are struggling to grow their business. These stocks often display a high level of volatility and risk, and are usually priced under $5, but these companies also tend to have monumental growth plans and strong forthcoming catalysts that can support major share price appreciation. Penny stocks are usually preferred by retail and amateur investors, who are looking to indulge in inexpensive trades that offer the potential for increasing their wealth many times over.
Although there is always a risk of fraud and losses when trading in penny stocks, there is also the potential for exorbitant gains if the companies go on to be listed on large exchanges. During the peak of the COVID-19 pandemic, the trading platform Robinhood Markets, Inc. (NASDAQ:HOOD) normalized retail investing amid nationwide lockdowns, and individuals who had no means of leisure activities used the platform to trade in penny stocks, which were attractive to amateur traders owing to their ridiculously cheap prices and the chance of high returns that they offered regardless of the stock’s underlying fundamentals.
Penny Stocks in 2022
After trying their luck with meme stocks and cryptocurrencies, retail investors flocked to penny stocks in 2021. However, on February 23, 2022, Finra, the regulator of brokerage firms and exchange markets, stated that penny stocks were trading 70% lower than the all-time high they reached last February. As the stock market becomes more volatile in the wake of the Fed raising rates, inflationary pressure, and the Russia-Ukraine war, both retail and institutional investors gravitate towards larger companies, given the stability of their performance and strong fundamentals which will help them survive turbulent economic conditions.
Jason Paltrowitz, the executive vice president at OTC Markets Group, told Financial Times that there is a definitive “leveling off” in trading activity from those investors who “just had extra money sitting around”. However, in 2022, over-the-counter trading levels remain above pre-pandemic activity, and he expects this “new normal” level to persist into the future.
In addition to buying shares of Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V), investors should remain on the lookout for penny stocks with strong growth catalysts, as these companies sometimes tend to explode and benefit shareholders when they least expect it.
Our Methodology
We selected these penny stocks based on the growth catalysts associated with the companies, which are priced under $5 as of March 14. For further context for investors, we have mentioned the business fundamentals for the companies and their upcoming endeavors which could potentially increase future earnings and revenue.
Note: All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
Penny Stocks with Upcoming Growth Catalysts
10. MariMed Inc. (OTC:MRMD)
Number of Hedge Fund Holders: N/A
Share Price as of March 14: $0.7254
MariMed Inc. (OTC:MRMD) was incorporated in 2011 and is headquartered in Norwood, Massachusetts. MariMed Inc. cultivates and markets medicinal and recreational cannabis products in the United States and internationally. MariMed Inc.’s cannabis products are sold under three brands: Nature’s Heritage, Kalm Fusion, and Florance.
With its eyes on growth initiatives heading into 2022, MariMed Inc. purchased two cannabis businesses in January, Kind Therapeutics U.S.A. and Green Growth Group. These businesses are licensed to distribute cannabis products in Maryland and Illinois, furthering MariMed Inc.’s distribution network.
The company disclosed on March 8 plans to acquire a provisional dispensary license from Green House Naturals LLC, which will be situated in Beverly, near the Boston metropolitan area. This will be the second cannabis retail operation in Massachusetts by MariMed Inc., and it will be open for business in the second half of 2022. MariMed Inc. also plans to develop a third cannabis dispensary in 2022.
MariMed Inc. is a good bet for traders who are looking to invest in the cannabis market, and this penny stock can diversify portfolios which normally consist of names like Microsoft Corporation, Amazon.com, Inc., and Visa Inc..
9. MDM Permian, Inc. (OTC:MDMP)
Number of Hedge Fund Holders: N/A
Share Price as of March 14: $0.149
MDM Permian, Inc. (OTC:MDMP) is a Texas-based company engaged in oil and gas drilling across the Midland Basin of West Texas. Priced at $0.149, MDM Permian, Inc. made it to our list of penny stocks with upcoming growth catalysts, given its plans to drill a well in the Irion County of Texas.
The drilling by MDM Permian, Inc. is expected to commence in the last week of April, according to March 8 reports. The target zone displays high permeability and oil saturation. Over the life of the well, 100,000 barrels of oil can likely be extracted, which is a lucrative prospect for MDM Permian, Inc.. The potential upside for earnings in 2022 is significant given the expectations for this project.
8. Goodbody Health Inc. (OTC:GDBYF)
Number of Hedge Fund Holders: N/A
Share Price as of March 14: $0.0425
Goodbody Health Inc. (OTC:GDBYF) is a wellness company that has combined diagnostic testing technology with modern equipment to deliver laboratory-style testing to patients. The company gained recognition when it set up COVID-19 testing clinics for travelers.
On March 10, Goodbody Health Inc. announced that its unaudited revenue for FY2021 came in around C$29 million ($22.81 million), which is 8-times more than its 2020 revenue. While COVID-19 testing rates are dropping in 2022, the company reported that it is still performing well in Q1 and expects to close the year profitably, owing to the blood testing technology and other medical services provided through the Goodbody Health Inc. clinic network. The company is also setting up new clinics to make up for the lower PCR testing revenue, which will carry out cardiovascular and diabetes testing.
7. Jones Soda Co. (OTC:JSDA)
Number of Hedge Fund Holders: N/A
Share Price as of March 14: $0.64
Jones Soda Co. (OTC:JSDA) is a beverage company that was founded in 1986 and is headquartered in Seattle, Washington. Jones Soda Co.’s portfolio of drinks includes non-carbonated beverages, cane sugar cola, and sugar-free sodas. Its customers are primarily located in the United States and Canada.
Jones Soda Co. reported on February 15 that it has completed the previously announced acquisition of all the issued and outstanding common shares of Pinestar Gold. This is an important step towards Jones Soda Co.’s planned expansion into the cannabis sector. The company will dive into the cannabis-infused beverages and edibles business lines with the acquisition of Pinestar. The acquisition will also allow Jones Soda Co. to be listed on the Canadian Securities Exchange, pursuant to a few conditions.
On April 1, Jones Soda Co. will launch a range of cannabis-infused sodas, gummies, and syrups in California under the Mary Jones brand. This is a major step for Jones Soda Co., since California is home to a legal cannabis market worth approximately $4 billion.
Institutional investors disclosed their positions in Jones Soda Co. as the end of the fourth quarter of 2021 last month. According to Insider Monkey’s data, Private Capital Advisors, Inc. owned 83,000 shares of the company, worth $61,000, while Emerald Advisers Inc reported holding 74,124 shares valued at $54,000.
6. Livewire Ergogenics Inc. (OTC:LVVV)
Number of Hedge Fund Holders: N/A
Share Price as of March 14: $0.0062
Livewire Ergogenics Inc. (OTC:LVVV) is a company that acquires and manages special purpose real estate properties to cultivate cannabis products for medical and recreational use in California. Priced at $0.0062, Livewire Ergogenics Inc. is a notable penny stock with upcoming growth catalysts.
The company reported on March 1 that it has completed the previously announced acquisition of Makana Ola Farms based in Humboldt, California. This acquisition will add a strong cultivation facility to Livewire Ergogenics Inc.’s portfolio of assets, where eco-friendly and sustainable cannabis products can be grown. The cannabis products handcrafted at Makana Ola Farms will be widely marketed by Livewire Ergogenics Inc. and distributed to customers via its affiliate companies.
Investors who cannot afford to acquire positions in Microsoft Corporation, Amazon.com, Inc., and Visa Inc. can begin their trading journeys with penny stocks like Livewire Ergogenics Inc..
5. Osceola Gold, Inc. (OTC:OSCI)
Number of Hedge Fund Holders: N/A
Share Price as of March 14: $0.16
Osceola Gold, Inc. (OTC:OSCI) is a precious metals mining company that is primarily focused on the exploration of gold. The company is based in Weirton, West Virginia. The company’s stock has gained close to 443% over the last 12 months.
Osceola Gold, Inc. announced on February 22 that in order to maximize its operations and achieve its production goals for 2022, the company has partnered with Sajeinidus Agromine S.A. on behalf of 40 Brightwater LLC, a New York-based company, to receive funding of $50 million. The new mining project is expected to start in the first week of April 2022. The project will certainly benefit the firm given that gold prices are soaring.
4. Red Cat Holdings, Inc. (NASDAQ:RCAT)
Number of Hedge Fund Holders: 2
Share Price as of March 14: $2.50
Red Cat Holdings, Inc. (NASDAQ:RCAT) was incorporated in 1984 and is based in Humacao, Puerto Rico, providing First Person View (FPV) video goggles and equipment to the drone industry.
On March 14, Red Cat Holdings, Inc. stock gained 2% in premarket trading after the company announced that its subsidiary, Teal Drones, was awarded a contract by the Department of Defense’s Defense Innovation Unit and the U.S. Army to develop a compact next-generation aerial system that can be used for surveillance and other duties. The aerial system will be focused on building advanced autonomous capabilities rather than having a pilot or controller at the helm.
Insider Monkey’s Q4 database shows that Sabby Capital and Citadel Investment Group were the lone funds to own stakes in Red Cat Holdings, Inc., with positions worth $2.94 million, compared to 4 funds in the prior quarter, holding stakes in the company worth close to $5 million.
3. CynergisTek, Inc. (NYSE:CTEK)
Number of Hedge Fund Holders: 3
Share Price as of March 14: $1.31
CynergisTek, Inc. (NYSE:CTEK) is a Texas-based cybersecurity company that serves the healthcare, education, financial services, government, internet and media, and manufacturing industries with its products and services.
On March 3, CynergisTek, Inc. announced that it had renewed a six-figure vendor security management contract for three more years with a leading network of healthcare providers from the Mid-Atlantic region. CynergisTek, Inc. will provide third-party risk management services to this client, and this service deal with the healthcare network was initially agreed upon in 2013.
A total of 3 hedge funds were bullish on CynergisTek, Inc. in the fourth quarter of 2021, with collective stakes valued at $273,000. According to Insider Monkey’s data, Renaissance Technologies, Two Sigma Advisors, and Millennium Management held long positions in the stock.
Here is what Long Cast Advisers had to say about CynergisTek, Inc. in its Q4 2020 investor letter:
“CTEK remains the big drain on returns. What I wrote last quarter, about the frustration and the opportunity, remains relevant. My patience in the company was recently enhanced via conversations with industry participants as well as by December’s announced entry into the CMMC market. This is a new regulated market that requires DoD subcontractors to use third party certification assessments (C3PAO) to audit their cybersecurity practices, previously done by self-audit. While I expect the market to be competitive (and eventually saturated), they are currently one of only 22 approved to perform these assessments. I’m “hanging my hat” not on CMMC since the approval process is a low bar, but on the strong brand in the important healthcare cybersecurity niche. At less than 1x sales, I think the stock is cheap. At some point I think it will return to growth and our patience will be rewarded.”
2. Minerva Neurosciences, Inc. (NASDAQ:NERV)
Number of Hedge Fund Holders: 5
Share Price as of March 14: $0.658
Minerva Neurosciences, Inc. (NASDAQ:NERV) is a clinical stage biopharmaceutical company headquartered in Waltham, Massachusetts. The company is focused on the treatment of central nervous system diseases.
On February 28, Minerva Neurosciences, Inc. announced the publication of its Roluperidone Phase 3 study results, which suggested that negative symptoms in patients with schizophrenia can potentially be treated, in addition to improving the everyday functions of patients. The clinical study demonstrated that Roluperidone is superior to placebo when it comes to treating schizophrenia.
H.C. Wainwright analyst Douglas Tsao lowered his price target on Minerva Neurosciences, Inc. to $5 from $10 on March 4 and reiterated his ‘Buy’ rating on the shares. There is upside to the shares as the company discusses evidence for Roluperidone in treating the negative symptoms of schizophrenia and its plans to file a new drug application in the first half of 2022, the analyst informed investors in a bullish case for the stock.
A total of 5 hedge funds were long Minerva Neurosciences, Inc. in Q4 2021, compared to 9 funds in the earlier quarter. Steven Boyd’s Armistice Capital is the leading shareholder of the company among that group with more than 1 million shares worth $820,000.
1. Exela Technologies, Inc. (NASDAQ:XELA)
Number of Hedge Fund Holders: 11
Share Price as of March 14: $0.5296
Exela Technologies, Inc. (NASDAQ:XELA) is a Texas-based company that specializes in providing transaction processing services, enterprise information management, document management, and digital business process solutions to customers worldwide.
On March 14, Exela Technologies, Inc. stock gained 5% after the company launched ExelaPay and acquired Corduro, a provider of scalable payment processing and business management solutions. This acquisition will equip Exela Technologies, Inc. with the technology to enable payment acquiring and processing services across its XBP network.
Among the hedge funds tracked by Insider Monkey at the end of December 2021, 11 funds were bullish on Exela Technologies, Inc., up from 7 funds in the quarter earlier. Anand Parekh’s Alyeska Investment Group is the leading shareholder of the company out of those 11 funds, with 2.6 million shares worth $2.36 million.
You can also take a look at 10 Best Small Cap Stocks To Buy for 2022 and 10 Undervalued Dividend Kings To Buy In 2022.
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This article is originally published at Insider Monkey.