Three best penny stocks to buy now include a health care company with the potential to end the carbon footprint of 50 million medical canisters, an autonomous vehicle startup that has breakthrough opportunities in commercial, military and robotics applications and a biopharmaceutical company with treatments designed for the information age.
Penny stocks are companies that trade at less than $5 per share. Stocks of this type often garner a negative reputation due to their risky nature. The negativity is usually warranted. Most penny stocks are traded over-the-counter and possess little upside. However, a few penny stocks can be found on major stock exchanges. Although riskier than more established investments, these companies possess enormous potential.
Buying the right penny stock means more than simply purchasing a share and earning a return. It means investing in the future. Penny stocks involve ambitious startups with founders willing to dream big and sometimes have plans to change the world. Former penny stocks, such as Apple (NASDAQ:AAPL), Monster Beverage (NASDAQ:MNST), Advanced Micro Devices (NASDAQ:AMD) and Novavax (NASDAQ:NVAX), have influenced our lives while generating returns typically only available to venture capitalists.
Penny stocks can serve as potential “home run hitters” for any well-diversified portfolio. They feature investments capable of big rates of return in a few short years. Penny stocks are especially great investments for retail investors seeking the highest possible upside on their investment.
Penny stocks are more difficult to evaluate than more established companies as their valuations are largely speculative and based on future earnings. Spikes in share price are especially common among penny stocks, creating additional difficulty for investors. However, to streamline an investment decision, we identified the top three best penny stocks to buy now.
3 Best Penny Stocks to Buy Now: #3
Kala Pharmaceuticals Inc (NASDAQ:KALA)
Kala Pharmaceuticals Inc (NASDAQ:KALA), founded in 2009, is an American biopharmaceutical company specializing in the research and production of optic medicines. The company, headquartered in Watertown, Massachusetts, currently has a market capitalization (market cap) of $107 million and possesses two drugs on the market: EYSUVIS and INVELTYS.
Over the past few decades, the information age and the ever-growing digitization of our lives have brought many benefits. Increased global communication and human connectivity have spurred international trade and diplomacy. Significant advancements in technology have allowed humans to tackle economic and biological issues once deemed unsolvable. However, increased digitization also has its downsides. Our eyes bear much of that burden.
The average American adult consumes more than seven hours of screen time each day and will spend a total of 44 years of his life in front of a digital device. The overuse of screens in developed countries around the world comes with costs. Indeed, 70% of adults report eye strain from consuming digital media, while physicians have encountered dramatic spikes in optic disease cases. Even severe vision disorders, such as diabetic retinopathy and angle glaucoma have seen double-digit-percentage increases in recent decades.
The therapeutic vision market has encountered a significant rise in demand as mild and moderate vision impairments such as nearsightedness and dryness of eyes become increasingly widespread. Vision loss and vision disorders account for $139.0 billion in lost economic output annually. As a result, the total therapeutic market for vision-related diseases and illnesses is worth $35.2 billion and is projected to reach $47.8 billion by 2026 to produce a compound annual growth rate (CAGR) of 6.1%.
Kala Pharmaceuticals’ upside is derived from its focus on treating common vision impairments, which have created a major market. INVELTYS is designed to mitigate inflammation following ocular surgery, especially with cataract patients. Over 24.2 million individuals suffer from cataracts in the United States alone, with the number expected to more than double by 2050. EYSUVIS is the first Food and Drug Administration (FDA) approved treatment designed to combat short-term eye dryness. The market for dry eye treatments stands at $5.0 billion alone and is expected to reach $7.0 billion by 2026, generating a compound annual growth rate (CAGR) of 5.6%.
For a treatment to go to market, the pharmaceutical takes an average of 12 years and costs more than $1 billion to gain Food and Drug Administration (FDA) approval from start to finish. Despite being just over a decade old, Kala Pharmaceuticals has already brought two treatments to market, proving itself to be a winner. INVELTYS gained federal approval from the FDA in 2018, while EYSUVIS entered commercial production in late 2020.
Kala Pharmaceuticals is expected to significantly capitalize on its early success in the coming years. The company had stockpiled $154 million in cash at the end of 2020 to help facilitate a quick and efficient market entry for EYSUVIS. As a result, Kalal Pharmaceuticals is forecast to increase its revenue by 103.7% in 2021 and 126.6% in 2022 and achieve profitability by 2023.
KALA has taken a beating over the last year in the stock market. The company’s share price has dropped by 78.2% over the past 12 months. KALA’s price movement over the previous 12 months is charted below alongside a 50-day moving average.
Chart provided by Stock Rover.
However, it increasingly appears the stock’s recent woes have been a result of overzealous bear investors rather than market events, as revenue has increased by 119.1% over the trailing 12 months. Kala Pharmaceutical’s future earnings projections have also remained steady over the same period.
Kala also possesses a (share) price-to-book (P/B) ratio of 1.8, below the biotechnology industry average of 2.1. A company’s relative P/B ratio is critical in the medical world as a drug manufacturer’s value is mainly derived from cash flows generated from its patented drugs. As a result, KALA is trading at a steep discount relative to its actual value.
A discounted cash flow (DCF) analysis, using Stock Rover, values the stock at $7.75, 372.6% higher than its latest closing price of $1.64, earning KALA a “BUY” recommendation from Stock Rover and a place among our three best penny stocks to buy now.
3 Best Penny Stocks to Buy Now: #2
Foresight Autonomous Holdings ADR (NASDAQ:FRSX)
Foresight Autonomous Holdings ADR (NASDAQ:FRSX) is an automotive technology startup headquartered in Ness Ziona, Israel. The company, founded in 2015 through a merger between Asia Development Ltd. and Magna, designs and develops line-of-sight vision systems to improve vehicle and robotics safety. Foresight Autonomous possesses operations in Europe, the United States, Japan and China and a market cap of $132 million.
In recent years, the emergence of self-driving vehicles, most notably with Tesla (NASDAQ:TSLA), has driven consumer and manufacturer interest in autonomous cars into a frenzy. The commercialization of self-driving vehicles could reduce accidents by 90%, while allowing the average individual to experience the luxury of a personal chauffeur. As a result, the autonomous vehicle market is already worth $23.3 billion despite current models not being fully self-driving. The self-driving vehicle industry is projected to reach $64.9 billion by 2026, a CAGR of 22.7%, with commercialization expected to occur by the end of the 2020s.
The success of autonomous vehicles relies on the rapid development of technology necessary for accurate spatial awareness and independent decision-making while driving. Foresight Autonomous is at the leading edge of the sensing hardware and decision-making software necessary for commercializing self-driving vehicles.
Foresight Autonomous offers both in-line-of-sight and beyond-line-of-sight vision systems. The company’s products utilize separated stereo cameras and Quadsight technology to capture data about current road conditions and surrounding objects. The captured data is fed to Foresight’s 3D point cloud to make automatic calibrations to the vehicles’ driving. The end result is a system that has the flexibility and potential to be implemented in robotics, heavy machinery and military vehicles alongside traditional commercial and passenger automobiles.
Since Foresight Autonomous started operations in 2015 following the merger between Asia Development Ltd. and Magna, it is still in the early commercialization stages of its products. The company is set to begin generating significant revenue in 2022 and is forecast to see a 616.4% sales growth next year. Foresight Autonomous has no debt on its balance while possessing $49 million in cash, meaning the company has immense flexibility when it begins mass commercialization of its products in 2022.
As evidence of the feasibility of its products, Foresight Autonomous successfully completed a proof of concept (POC) project with an undisclosed major European automobile manufacturer in early December 2021. The project ultimately generated Foresight $120,000 in revenue. The bigger news, however, was that the POC opened the door to future joint development projects and commercialization deals. Foresight Autonomous also began a POC project with a Chinese vehicle manufacturer in August 2021.
Penny stocks are risky due to the unproven nature of their services and products. Many penny stock companies only possess drawings or a minimally viable product of their planned offerings. Foresight Autonomous, however, is one of the few on the verge of mass commercialization of its projects. FRSX’s potential has caused its share price to climb by 36.1% in the trailing 12 months, displayed below alongside a 50-day moving average. With FRSX trading on the Nasdaq, everyday Americans have the opportunity to capitalize on a breakthrough investment typically only available to venture capitalists.
Chart provided by Stock Rover.
A discounted cash flow (DCF) analysis, using Stock Rover, values the stock at $3.50, 78.6% higher than its latest closing price of $1.96, earning FRSX a “STRONG BUY” recommendation from Stock Rover and a place among our three best penny stocks to buy now.
3 Best Penny Stocks to Buy Now: #1
Predictive Oncology Inc (NASDAQ:POAI)
Predictive Oncology Inc. (NASDAQ:POAI), founded in 2002, is a jack-of-all-trades medical startup with the ability to revolutionize multiple fields of medicine from diagnosis to research to treatment. The Eagan, Minnesota-based company has a market cap of $62 million spread across four business segments: Helomics, TumorGenesis, Soluble Biotech and Skyline Medical.
Predictive Oncology’s current primary source of revenue is its FDA-approved Streamway waste fluid management under its Skyline Medical business segment. Streamway possesses many advantages over traditional medical waste management systems, including its space-efficient wall-mounted design. Space has become an increasingly essential and scrutinized component of hospitals as planners race to adapt to changing technology and increased demand.
Streamway’s patented direct-to-drain system allows medical fluids to be efficiently disposed of without relying on traditional evacuated bottles and canisters. Fifty million potentially infectious bottles and canisters are sent to American landfills annually, making Streamway an attractive option for hospitals in an increasingly eco-friendly-focused nation. The direct-to-drain system possesses benefits beyond ending hospitals’ reliance on evacuated bottles and canisters.
One of the primary challenges for hospital staff is balancing speed with thoroughness when cleaning patient suites, with many treatment facilities resorting to “trash and dash” to reduce turnover times between operations. By eliminating waste canisters and bottles, Streamway not only reduces costs but also saves time by shortening its self-cleaning cycle to only five minutes between patients. Treatment times are also reduced as doctors are no longer required to pause procedures to change canisters.
The global medical fluid management industry is currently worth $8.5 billion and is expected to reach $16.1 billion by 2025, a CAGR of 13.6%. Skyline Medical and Streamway have the ability to disrupt the entire $8.5 billion industry and carve out a significant piece of market share. However, Predictive Oncology’s true potential resides in its three cancer and disease treatment business segments.
The global oncology industry, valued at $177.4 billion, is forecast to grow at a CAGR of 12.1%, reaching $313.7 billion by 2026. Predictive Oncology’s unique potential is derived from its integration of the cancer treatment process and the processes’ applicability to nearly all forms of cancer.
Helomics, a proprietary technology platform, uses artificial intelligence (AI) and its database of over 150,000 categorized tumors to diagnose and provide custom treatments for cancer patients. Helomics’ database is the largest of its kind in the world. TumorGenesis, meanwhile, provides research mediums capable of growing cancer cells in a lab while still retaining the original patient’s DNA/RNA and proteomic signatures, allowing doctors and scientists to create more accurate predictive models. Both Helomics and TumorGenesis have gained FDA approval. Finally, Soluble Biotech develops delivery formulations for vaccines and other therapeutics at a fraction of the cost of competitors.
Predictive Oncology’s integrated approach lets hospitals and doctors quickly and easily receive crucial medical information, from diagnosis to therapeutics, from one source rather than relying upon multiple companies and labs, streamlining the cancer treatment process.
Like many penny stocks, Predictive Oncology is focused on growth rather than profits, as demonstrated by the company’s recent acquisition of zPREDICTA. The purchase is intended to boost Helomics’ AI capabilities even further.
Predictive Oncology has produced no earnings since it began operations. However, medical companies often see little to no initial profit due to lengthy product development times. Instead, health care startups are evaluated on their ability to gain FDA approval for their procedures and treatments as they represent future earnings. FDA approval usually takes years and costs millions of dollars, creating a significant barrier to entry, allowing health care companies to profit from their inventions without worry from competitors.
Predictive Oncology currently has three out of four business segments under FDA approval, granting it a considerable competitive advantage and potential market share. Although, as a startup, it will take years for Predictive Oncology to reach its full potential, the company’s projected growth rates illustrate just how much room POAI has to grow.
Predictive Oncology is expected to see a 173.2% increase in revenue in 2021, including 750.3% in Q4 2021 alone, and a 343.0% sales growth rate in 2022. The company’s strong projection figures have boosted its stock by 31.4% over the past year. POAI’s movement over the trailing 12 months is shown below alongside a 50-day moving average.
Chart provided by Stock Rover.
Like all penny stocks, POAI is a risky venture compared to investing in more established companies like GlaxoSmithKline (NYSE:GSK) or Pfizer (NYSE:PFE). However, unlike most penny stocks, Predictive Oncology possesses multiple FDA approval procedures, cementing its industry-changing potential.
A discounted cash flow (DCF) analysis, using Stock Rover, values the stock at $5.00, 434.0% higher than its latest closing price of $0.94, earning POAI a “STRONG BUY” recommendation from Stock Rover and a place among our three best penny stocks to buy now.