In this article, we discuss the 11 popular penny stocks on Robinhood.
Even though the United States economy has battled recession fears in the past few months, there are many reasons to be optimistic about the future of the market as inflation falls, interest rates stabilize, and investors look towards growth stocks again. The benchmark S&P 500 has returned more than 24% to investors so far this year. The NASDAQ Composite is up more than 44%. Prominent growth stocks like Tesla, Inc. (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG) are all rallying.
This heightened excitement around equities has attracted the attention of retail investors as well. Retail investors, who use digital stock trading platforms like Robinhood Markets, Inc. (NASDAQ:HOOD), have generally favored investments in growth companies that are trading for pennies on the dollar but have tremendous growth potential. Sectors such as cannabis, crypto, and biotech are all hot due to interest from Robinhoood investors. According to data maintained by FINRA, the average daily transactions in OTC Markets were over 300,000 in 2022.
OTC Markets are popular for trades in penny stocks. The rise in trades in penny stocks can be understood in context of these average daily trades. In 2019, before the rise of retail investors at the stock market, the average daily transactions in OTC Markets were just around 180,000. The trade in penny stocks is also important for firms outside the US, since more than three quarters of firms on the OTC are based outside the country. Domestic penny stocks like Barnes & Noble Education, Inc. (NYSE:BNED) have recently started gaining traction on Robinhood as well.
Barnes & Noble Education, Inc. is a leading solutions provider for the education industry. On December 6, the company posted earnings for the second fiscal quarter, reporting a revenue of more than $610 million, up marginally over the revenue in the same period last year. The firm revealed that retail gross comparable store sales rose more than 3% during the second fiscal quarter. The consolidated GAAP net income from continuing operations increased 2.8% to $24.9 Million, per the firm.
Mike Huseby, the CEO of Barnes & Noble Education, Inc., during the second quarter earnings call, outlined some of the steps that his company has taken to achieve commendable growth numbers. He underlined that the company had implemented significant cost reduction and operational efficiency initiatives to improve profitability. He also lauded the impact of a subscription-like model that the firm was offering in a business-to-business scenario, noting that it had helped grow revenue visibility.
“Looking ahead, we’ve identified additional opportunities to improve efficiencies further and reduce operating expenses to continue improving our profitability and cash flow. Importantly, the actions we have taken and continue to take position us to deliver more consistent, sustainable and profitable growth in the years ahead. Shifting to our second quarter performance. Total revenue was $610.4 million, increased by $1.7 million or 0.3% compared to the prior year period. The second quarter sales increase is primarily due to the growth of our First Day programs, which increased 39% to $199 million, partially offset by declines in the à la carte courseware sales, including lower sales from a smaller store footprint as we focused on the profitability of our stores.
Second quarter adjusted EBITDA from continuing operations of $50.3 million [increased] by $11.1 million or 28.3%, primarily driven by a $13 million decrease in S&A expenses compared to the prior year. Before turning the call over to Jonathan to discuss our Retail segment results, I’ll provide a brief comment on the strategic alternatives process. Our Board of Directors continues its ongoing review of a broad range of strategic alternatives available to the company, including, but not limited to, potential capital raises, asset divestitures, sales of business and pursuit of standalone growth plans. We’re committed to executing on the best path forward for the company and our stakeholders to maximize value and best position our business for the future.”
Our Methodology
These were selected using the Robinhood Investor Index as well as research using third party tools to identify the most popular penny stocks on trading application Robinhood Markets, Inc.. The analyst ratings of these stocks are also discussed to provide additional context. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the third quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
An overhead view of a bustling stock exchange, with brokers and traders exchanging stocks.
Popular Penny Stocks on Robinhood
11. Jaguar Health, Inc. (NASDAQ:JAGX)
Number of Hedge Fund Holders: N/A
Jaguar Health, Inc. (NASDAQ:JAGX) is a commercial stage pharmaceuticals company that focuses on developing prescription medicines for people and animals with gastrointestinal distress, specifically chronic and debilitating diarrhea. In early December, Jaguar Health, Inc. announced that the FDA had renewed conditional approval of Canalevia-CA1, a drug being developed by the firm for the treatment of diarrhea associated with chemotherapy in dogs.
Unlike pricier options like Tesla, Inc., Amazon.com, Inc., and Alphabet Inc., Jaguar Health, Inc. is one of the most popular penny stocks on Robinhood.
10. ClearOne, Inc. (NASDAQ:CLRO)
Number of Hedge Fund Holders: 1
ClearOne, Inc. (NASDAQ:CLRO) designs, develops, and sells conferencing, collaboration, and network streaming solutions for voice and visual communications. On November 9, ClearOne, Inc. posted earnings for the third quarter of 2023, reporting a revenue of more than $4.8 million.
At the end of the third quarter of 2023, 1 hedge fund in the database of Insider Monkey held stakes worth $578 in ClearOne, Inc., compared to 3 in the previous quarter worth $116,000.
9. Cybin Inc. (NYSE:CYBN)
Number of Hedge Fund Holders: 1
Cybin Inc. (NYSE:CYBN) is a clinical-stage biopharmaceutical company that focuses on developing psychedelic-based therapeutics. On November 20, investment advisory Alliance Global Partners initiated coverage of Cybin Inc. stock with a Buy rating and a price target of $6.
At the end of the third quarter of 2023, 1 hedge fund in the database of Insider Monkey held stakes worth $10 million in Cybin Inc.. In the previous quarter, no hedge funds tracked by Insider Monkey held stakes in the firm.
8. Ideanomics, Inc. (NASDAQ:IDEX)
Number of Hedge Fund Holders: 1
Ideanomics, Inc. (NASDAQ:IDEX) develops zero emission mobility solutions for the off-highway and on-highway commercial vehicle markets. On November 21, Ideanomics, Inc. posted earnings for the third quarter of 2023, reporting a revenue of more than $0.6 million.
At the end of the third quarter of 2023, 1 hedge fund in the database of Insider Monkey held stakes worth $28,000 in Ideanomics, Inc.. In the previous quarter, no hedge funds tracked by Insider Monkey held stakes in the firm.
7. Netcapital Inc. (NASDAQ:NCPL)
Number of Hedge Fund Holders: 2
Netcapital Inc. (NASDAQ:NCPL) operates as a fintech firm. On December 14, Netcapital Inc. posted earnings for the second fiscal quarter, reporting earnings per share of $0.04 and a revenue of $2 million, up over 12% compared to the revenue over the same period last year.
At the end of the third quarter of 2023, 2 hedge funds in the database of Insider Monkey held stakes worth $143,000 in Netcapital Inc., compared to 2 in the previous quarter worth $427,000.
6. GEE Group Inc. (NYSE:JOB)
Number of Hedge Fund Holders: 3
GEE Group Inc. (NYSE:JOB) provides permanent and temporary professional and industrial staffing and placement services. On December 19, GEE Group Inc. posted earnings for the fourth fiscal quarter, reporting earnings per share of $0.01 and a revenue of more than $34 million.
At the end of the third quarter of 2023, 3 hedge funds in the database of Insider Monkey held stakes worth $281,000 in GEE Group Inc., the same as in the previous quarter worth $148,000.
Unlike pricier options like Tesla, Inc., Amazon.com, Inc., and Alphabet Inc., GEE Group Inc. is one of the most popular penny stocks on Robinhood.
In its Q3 2023 investor letter, Alluvial Capital Management, an asset management firm, highlighted a few stocks and GEE Group Inc. was one of them. Here is what the fund said:
“I sold all our shares of GEE Group Inc. this quarter. In my last letter, I mentioned how GEE Group’s place in our portfolio was dependent on management’s commitment to using the company’s balance sheet cash for the benefit of shareholders. Well, another quarter came and went with zero evidence that management’s promises and assurances were anything but empty words. Despite earlier proclamations of “good things” to come, the company formally dismissed the idea of returning cash to shareholders and again failed to deliver on long-promised profitable acquisitions. I am happy to put our capital to better use elsewhere, and to use our experience with GEE Group as a reminder that a lack of urgency and integrity on the part of company management can negate almost any degree of good economics or valuation.”
5. Inuvo, Inc. (NYSE:INUV)
Number of Hedge Fund Holders: 3
Inuvo, Inc. (NYSE:INUV) is an information technology company that offers a host of internet-related services. On November 10, investment advisory Alliance Global Partners maintained a Buy rating on Inuvo, Inc. stock and raised the price target to 85c from 50c.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Inuvo, Inc. with 33,399 shares worth more than $7,000.
4. Almaden Minerals Ltd. (NYSE:AAU)
Number of Hedge Fund Holders: 3
Almaden Minerals Ltd. (NYSE:AAU) is a Canadian firm that explores, develops and markets minerals. In late October, Almaden Minerals Ltd. announced that it was reorganizing the structure and would spin off early-stage exploration projects, royalty interests and certain other non-core assets.
At the end of the third quarter of 2023, 3 hedge funds in the database of Insider Monkey held stakes worth $48,000 in Almaden Minerals Ltd., compared to 4 in the preceding quarter worth $72,000.
3. S&W Seed Company (NASDAQ:SANW)
Number of Hedge Fund Holders: 3
S&W Seed Company is an agricultural company that engages in breeding, growing, processing, and selling alfalfa and sorghum seeds. On November 9, S&W Seed Company posted earnings for the first fiscal quarter, reporting a revenue of more than $16 million.
At the end of the third quarter of 2023, 3 hedge funds in the database of Insider Monkey held stakes worth $4.9 million in S&W Seed Company, compared to 5 in the previous quarter worth $5.2 million.
2. Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP)
Number of Hedge Fund Holders: 4
Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP) is a biopharmaceutical company that focuses on developing, discovering, commercializing, and licensing therapeutics to treat and prevent human disease and alleviate suffering. On December 22, investment advisory Alliance Global Partners maintained a Buy rating on Tonix Pharmaceuticals Holding Corp. stock and lowered the price target to $6 from $8.
At the end of the third quarter of 2023, 4 hedge funds in the database of Insider Monkey held stakes worth $1.4 million in Tonix Pharmaceuticals Holding Corp., up from 1 in the preceding quarter worth $334.
1. Barnes & Noble Education, Inc. (NYSE:BNED)
Number of Hedge Fund Holders: 10
Barnes & Noble Education, Inc. is a company that sells and rents new and used print textbooks, digital textbooks, and publisher hosted digital courseware through physical and virtual bookstores. On December 6, Barnes & Noble Education, Inc. posted earnings for the second fiscal quarter, reporting earnings per share of $0.47, beating market estimates by $0.04.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Royce & Associates is a leading shareholder in Barnes & Noble Education, Inc. with 1.7 million shares worth more than $1.9 million.
In its Q2 2023 investor letter, Greenhaven Road Capital, an asset management firm, highlighted a few stocks and Barnes & Noble Education, Inc. was one of them. Here is what the fund said:
“Barnes & Noble Education, Inc. runs bookstores in partnership with colleges. They are going through a business transformation to a model they call First Day Complete – a partnership with the colleges where all course books are billed through the school for a flat fee per student. For schools that have transitioned, BNED revenue increases by 90% and gross profits grow by 130%. This fall, the number of First Day Complete schools will grow by more than 50% but the total will still be less than 25% of the overall schools.
In the last letter, I wrote that, “as best as I can tell, the number of people modeling the company’s economics if they are successful with the First Day Complete transition is tiny.” To my knowledge, it was three people consisting of an activist who then joined the Board, and two investors I found on Twitter using pseudonyms. In an effort to both grow the number of people trying to model this nanocap and to check my assumptions, I tweeted that I was starting a Barnes & Noble Education modeling group. It has been surprisingly productive. The number of people who have actually modeled the company has multiplied.
I remain convinced that there is a legitimate path to well over $100M per year in EBITDA for this sub-$70M market cap company. This coming year will be a challenge since not enough schools have transitioned to First Day Complete and there is debt to be refinanced, but I see a path to an 8-10X return from here if the debt gets restructured, allowing the equity holders to realize the benefits of First Day Complete. Each passing day we are a day closer to the First Day Complete transition and a properly capitalized business.”
You can also take a peek at 13 Most Promising Low-Cost Stocks According to Analysts and 11 Best Shipping Stocks That Pay Dividends.
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This article is originally published at Insider Monkey.
