This article focuses on penny stocks with “buy” ratings from analysts. Analysts have access to information about companies that retail investors cannot obtain. Consequently, analysts’ opinions on stocks are noteworthy.
Analysts’ ratings aren’t always accurate. But they can be helpful in volatile times when investors are looking for stocks that are safe to buy for the long haul.
Penny stocks do carry some risk. One way to reduce that risk is to buy the shares of companies with good outlooks. Additionally, you should not invest more in penny stocks than you can afford to lose.
In this article, I’ll explain the bullish case for seven penny stocks with” buy” ratings from analysts, and I’ll also outline their risk factors.
|GHSI||Guardion Health Scinces||17 cents|
|SHIP||Seanergy Maritime||51.7 cents|
|GHSI||Guardion Health Sciences||17.2 cents|
|HOFV||Hall of Fame Resort and Entertainment||60 cents|
Solo Brands (DTC)
First on this list of penny stocks with “buy” ratings is Solo Brands (NYSE:DTC). The company’s direct-to-consumer (D2C) platform features many popular branded products that appeal to outdoor enthusiasts. such as Solo Stove, Oru, Chubbies, and ISLE,
The market for outdoor gear and equipment is expected to grow rapidly between now and 2027. According to the research firm 360 Research Reports, the sector’s revenue is expected to climb to $75.3 million in 2027 from $49.25 million in 2020. That equates to a compound annual growth rate (CAGR) of 5.8%.
What can go wrong for DTC? Any recession would negatively affect D2C companies, including Solo Brands. Investors could be concerned that consumers’ discretionary spending will go down just as the company is trying to expand into different markets.
On the other hand, outdoor activities such as camping are generally viewed as relatively affordable. So Solo Brands’ financial results may remain strong, particularly since the company is marketing itself to upper-income consumers.
Senseonics ( SENS)
I had Senseonics (NYSEAMERICAN:SENS) on a list of undervalued penny stocks earlier this year. Since then, the company has received FDA approval for a 6-month version of its implantable continuous glucose monitoring (CGM) system, Eversense.
The FDA’s nod gives Eversense a discernible competitive advantage over other CGM systems. And Senseonics may have another, important catalyst because more insurers are starting to cover the device. Moreover, the company is testing a one-year version of its CGM system in clinical trials.
What can go wrong for the company? Senseonics has to increase production. That costs money, and the company is not profitable. In the 12 months that ended in September, SENS has generated just $18.8 million of revenue. That’s a sliver of the glucose monitoring market which was valued at over $11 billion in 2021.
I agree with Dana Blakenhorn, another InvestorPlace columnist, who suggested that with Eversense now getting approved by insurance companies, the company may have become a more attractive takeover target. That’s a nice scenario to hope for, but hope is not a strategy. In the meantime, analysts, on average, view Senseonics as a moderate buy.
Guardion Health Sciences (GHSI)
Guardion Health Sciences (NASDAQ:GHSI) is another stock that made my list of undervalued stocks this summer. It hasn’t moved much since then, but analysts seem to like the stock, so its outlook remains bullish.
Guardion manufactures and distributes foods that are supposed to ease the negative effects of macular degeneration, the leading cause of vision loss in the United States. As the nation ages, the company may have a customer base of nearly 22 million by 2050, up from just 11 million in 2021.
The company has a huge addressable market and is generating steady revenue, while its balance sheet looks to be in good shape . And Guardion has an agreement in place with OmegaQuant Laboratories to help bring other products to market.
Now the bad news. The company is not yet profitable and won’t be for some time. And with the stock trading below $1 for almost a year, a reverse stock split is a real possibility.
Seanergy Maritime Holdings Corp. (SHIP)
Seanergy Maritime Holdings (NASDAQ:SHIP) may not be a household name, but it’s about as essential as you can get. Seanergy is a bulk shipping company that increased the size of its fleet during the pandemic. The bulk shipping market is expected to grow at a CAGR of 4% between now and 2030.
The risk facing Seanergy Maritime is that the global economy may get worse, lowering the demand for shipping. But risk is already reflected in the SHIP stock price which has plummeted sharply in 2022.
But t if you believe that the country is already in a recession, then SHIP stock may be worth buying, as shipping will likely be among the first sectors to come back as the economy recovers.
I’ve been very bearish in the past on XWELL(NYSE:XWEL) stock, which was previously known as XpresSpa. Prior to the pandemic, the company was known for spa-related services at airports. Soon after the pandemic began, it attempted to make a difficult pivot, as it was looking to provide Covid-19 tests.
The company had to do something different during the pandemic. But other investors and myself were worried about the company’s ability to generate sufficient revenue in a competitive market.
With air travel nearing pre-pandemic levels, however, XpreSpa Group is pivoting again. And the new approach will blend the company’s past emphasis on spa-like services with a broader strategy that promotes wellness for women.
An immediate concern is that the stock may be delisted by Nasdaq for the second time in two years because its shares are once again below $1. With XWEL stock trading just over 40 cents a share, it may have to carry a reverse stock split in play. That makes it a wild card for investors. But if the company continues to trade, it may be a speculative buy as consumers are still spending a great deal of money on travel.
Microvast (NASDAQ:MVST) is competing in the race to build the ideal battery that will support our world’s pivot to electric vehicles (EVs). The company provides customized battery solutions and key components that are needed for lithium-ion batteries, which are considered the gold standard for EVs.
Adding to the bullish narrative, the company is going to receive part of the $2.8 billion that the Biden administration is issuing in its attempt to move the production of EV parts to the U.S. Microvast says that it will use the money to build a separator facility.
Microvast’s main exporting facility is currently in Shanghai, which, like a number of other cities in China, is experiencing political upheaval and lockdowns. So far, though, those issues don’t appear to be having much impact on the company’s revenue. And MVST does have contracts worth $2.5 billion on the books between now and 2030.
Hall of Fame Resort & Entertainment (HOFV)
The last stock on this list of penny stocks with buy ratings is Hall of Fame Resort & Entertainment (NASDAQ:HOFV). The company delivers football-themed content related to the Pro Football Hall of Fame in Canton, Ohio.
On the positive side. Hall of Fame Resort & Entertainment is generating revenue. In fact, in its most recent reported quarter, the company’s top line had jumped 149% year-over-year to $8.7 million. By 2026, the company expects to report $150 million of annual revenue.
And it recently received conditional approval from the state of Ohio to run a sports gambling business.
But HOFV’s board has already approved a reverse stock split because it has to get its share price above $1 to comply with the Nasdaq’s rules. The split can happen anytime between now and May 5, 2023. That’s likely to weigh on the stock.
On the date of publication, Chris Markoch had a LONG position in HOFV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.