Known for their extraordinary risk-reward profile, penny stocks too often entice investors with their low prices and the potential for significant returns, only to fail to live up to those expectations. The world of penny stocks is also characterized by “pump and dump” and other types of fraud, fueled by the fact that most penny stock companies do not have an extensive financial reporting history or an established brand and presence.
All of this is to say that investors should be wary of any penny stock, especially one that seems too good to be true, as it could be part of a scam worth hundreds of millions of dollars. On the other hand, investors who are willing to take on a higher degree of risk and are willing to scrutinize potential investment properties may find huge deals.
While there is no guarantee that a stock investment will pay off, below are three companies trading under $5 per share that stand out from the crowd.
Vuzix: new major contract, retail product launch
Vuzix company. NASDAQ: VUSI develops and produces smart glasses and related augmented reality products. While many people tend to think of these products as aimed at general consumers, Vuzix focuses specifically on applications in the defense and medical fields.
Vuziks today
(As of 11:15 am ET)
- 52 week range
- US$0.83
▼
US$2.63
- Target price
- $2.00
In late November 2024, Vuzix announced a major contract with an unnamed US aerospace and defense company to supply customized waveguides for use in head-up displays. That same week, the company reported the availability of its Z100 smart glasses for the everyday wearable market and earnings results for the third quarter of 2024. In the most recent quarter, the company successfully reduced quarterly operating expenses by 28% and also secured a useful equity investment of $10 million, with another $10 million to come. Together, these factors are helping to support operations as Vuzix continues to scale its products and win more contracts.
Given this flurry of positive news in late November, it is not surprising that Vuzix reported a five-day return of nearly 88% as of November 26, 2024, roughly matching the 52-week high reached in December 2023.
GeoVax Labs: promising test results, wide range of development
GeoVax Labs Inc. NASDAQ: GOVX is a clinical-stage biotechnology firm developing vaccines against COVID-19, HIV and other infectious diseases, as well as treatments for certain types of solid cancer. Many small biotech companies without a robust pipeline of already commercially available products are attracting investors’ attention by reporting promising trial data, and GeoVax is no exception.
GeoVax Labs today
(As of 11/27/2024 ET)
- 52 week range
- US$1.09
▼
$11.18
- Target price
- $14.20
In GeoVax’s case, investors took note that its GEO-CM04S1, a dual-antigen COVID vaccine candidate, showed positive results in a phase 2 trial in chronic lymphocytic leukemia (CLL), a common form of leukemia in adults. In addition, the company also has a vaccine candidate against smallpox and smallpox in development. He was also recently awarded the nearly $400 million BARDA Project NextGen Award for his support of a large comparative study.
Given the strong potential of several products in its development pipeline, GeoVax received a Buy rating from seven Wall Street analysts, who also assigned it a consensus price target of $14.20, more than 400% above its current price level.
Cardiac Therapy: Late Stage Trial of a Potential Therapeutic Drug
Cardiac therapy today
Cardiac therapy
(As of 11/27/2024 ET)
- 52 week range
- $0.79
▼
$3.12
- Target price
- $8.75
Cardiol Therapeutics Inc. NASDAQ: CRDL is another emerging biotech developing promising products. In this case, one drug candidate to watch is CardiolRx, which showed good results in a phase 2 study for the treatment of recurrent pericarditis. The company is preparing for late-stage clinical trials, which will be an important step before the drug enters the market.
Cardiol was also recently added to the PRISM Marketview Emerging Biotech Index, further bolstering the company’s profile. CRDL is up about 72% for the year ending Nov. 26, 2024, although it has lost nearly half its value since June.
Sustainability is the key to success
For the penny stocks mentioned above (and any other companies that don’t have a stable, established revenue stream), the key is to fund going concern, keep costs low, and find a path to profitability. Before investing in any penny stock, investors should scrutinize a potential target for clear signs that it is making progress in each of these areas.
Before you consider Cardiol Therapeutics, you should hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat has identified five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market takes hold… and Cardiol Therapeutics wasn’t on the list.
While Cardiol Therapeutics currently has a Buy rating among analysts, the top-rated analysts rate these five stocks as Outperform Buys.
View five stocks here
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