12 Best High Risk Penny Stocks to Buy Now
In this article, we will take a look at the 12 best high risk penny stocks to buy now. To see more such companies, go directly to 5 Best High Risk Penny Stocks to Buy Now.
Investors are jubilant over Nvidia crushing analyst estimates in its latest quarterly report. Analysts are increasing their price targets and expectations for Nvidia and overall the markets seem quite euphoric. While some circles have warned that tech valuations have shot up to dangerous levels and a correction might be in order, the market seems to not care in the short term. Angelo Zino, an equity analyst at CFRA, recently said while talking to Yahoo Finance that Nvidia will be the "most important company to civilization" over the next decade because every company will be relying on Nvidia directly or indirectly. Dan Ives from Wedbush Securities also said in a tweet that tech companies are set to see “unprecedented spending wave not seen since 1995.” He added that Nvidia is on the “front lines” of all of this.
“This is NOT hype, it's jaw dropping spending happening NOW,” Ives added.
But for an average investor with higher risk appetite it’d be attractive to find smaller companies which are yet to reach their true potential. Which companies are working on long-term growth catalysts? Which stocks could become Nvidia or Meta of the future?
Smaller companies need time to reach their true potential, and that’s why experts emphasize the importance of staying invested. A 2019 report by Shepherd Financial Partners entitled “Risk vs Volatility in the Markets” shares some data emphasizing the importance of time horizons during investing:
“…Since 1930, returns were positive 98% of the time when equities were held for 10 years. When you look at 15-year holding periods for equities, returns were positive 100% of the time going back to 1930. As your time horizon shortens, the likelihood of experiencing negative returns in the equity markets gets higher. Therefore, as your time horizon shortens, we will seek to build a diversified portfolio that contains assets with less price volatility, thereby reducing the risk of being forced to liquidate at a loss when you need to distribute.”
Our Methodology
For this article we first used a stock screener to identify penny stocks with beta value of more than 1 and average analyst ratings of Buy or better. From this long list of stocks we selected 12 penny stocks with the highest number of hedge fund investors. We gauged hedge fund sentiment using Insider Monkey’s database of 910 hedge funds.
In stock market beta is a metric that represents market risk or volatility of a stock. Stocks with beta value less than 1 are deemed less volatile, while those with beta values higher than 1 are considered as more volatile with respect to the broader market or more risky. But it’s important to note that penny stocks in general are risky. Our purpose in this article was to find volatile, risky stocks which hedge funds are piling into.
Best High Risk Penny Stocks to Buy Now
12. MannKind Corporation (NASDAQ:MNKD)
Number of Hedge Fund Holders: 19
Over the past one year MannKind Corporation (NASDAQ:MNKD) shares have gained about 18%. A total of 19 hedge funds in the database of Insider Monkey had stakes in MannKind Corporation (NASDAQ:MNKD). The biggest stakeholder of MannKind Corporation (NASDAQ:MNKD) during this period was Kurt Von Emster’s VenBio Select Advisor which owns a $37 million stake in the company.
Earlier in August MannKind Corporation (NASDAQ:MNKD) posted Q2 results, beating estimates for both earnings and revenue.
11. MultiPlan Corporation (NYSE:MPLN)
Number of Hedge Fund Holders: 19
MultiPlan Corporation (NYSE:MPLN) ranks 11th in our list of the best high risk penny stocks to buy according to hedge funds. MultiPlan Corporation (NYSE:MPLN) makes data analytics and tech solutions for the healthcare industry. A total of 19 hedge funds tracked by Insider Monkey were long MultiPlan Corporation (NYSE:MPLN) as of the end of the second quarter of 2023. Earlier this month MultiPlan Corporation (NYSE:MPLN) posted Q2 results. GAAP EPS in the quarter came in at -$0.06, meeting estimates.
During MultiPlan Corporation (NYSE:MPLN)’s Q2 earnings call, the company’s CEO Dale White said:
"Looking forward, we continue to believe the second quarter will be the low point for the year for revenues and adjusted EBITDA, and we continue to expect results for the second half of 2023 to be higher than the first half.
Given these considerations, we are narrowing the range of our fiscal year 2023 guidance with a slight increase at the midpoint before the contribution from BST, driven largely by our year-to-date results and reflecting our continued expectation for modest growth in the second half of the year. Jim will share the details with you momentarily. As I mentioned, we have been busy executing on our transformation since late 2022. As shown on Page 8, during the second quarter, we advanced several critical initiatives within our growth plan. These included establishing our new Data & Decision Science service line with the acquisition of BST, and adding a B2B healthcare payment service through our new partnership with ECHO Health. These actions along with further progress we have made toward the launch of several new products to enhance our core business and position us for growth in 2024 and beyond.
As many of you heard at our recent Investor Day, we could not be more excited about the acquisition of BST and the formation of our new Data & Decision Science service line. We believe this is an absolute game changer for MultiPlan."
Diamond Hill Capital made the following comment about MultiPlan Corporation (NYSE:MPLN) in its Q3 2022 investor letter:
“On an individual holdings’ basis, top contributors to return in Q3 included short positions in MultiPlan Corporation (NYSE:MPLN), WD-40 Company and United Parcel Service (UPS). MultiPlan is a healthcare services business providing out-of-network cost management solutions to healthcare payors. In our view, MultiPlan was a compelling short opportunity due to a combination of a high valuation and several fundamental risk factors, including a high degree of customer concentration, rising regulatory risk and high leverage limiting its ability to seek strategic alternatives. In Q3, its share price reacted negatively after disclosing that one of its largest customers was renewing its contract on terms less favorable for MultiPlan — which was in line with our thesis. With the share price subsequently trading below our estimate of intrinsic value, we chose to cover the short position.”
10. SunOpta Inc. (NASDAQ:STKL)
Number of Hedge Fund Holders: 19
Insider Monkey’s database of 910 hedge funds shows that 19 funds reported owning stakes in food and mineral company SunOpta Inc. (NASDAQ:STKL) as of the end of the June quarter. Earlier in August SunOpta Inc. (NASDAQ:STKL) posted Q2 results according to which its revenue was lower than expected. Its full-year 2023 revenue guidance also missed expectations.
The biggest hedge fund stakeholder of SunOpta Inc. (NASDAQ:STKL) is Howard Marks’s Oaktree Capital Management which owns a $139 million stake.
Diamond Hill made the following comment about SunOpta Inc. (NASDAQ:STKL) in its Q3 2022 investor letter:
“On an individual holdings basis, top contributors to return included WESCO International, Mr. Cooper Group and SunOpta Inc. (NASDAQ:STKL). SunOpta is a leading global company focused on natural food, ingredient sourcing, organic food and specialty foods. Revenue growth has been driven by strong demand for its plant-based products, and the company’s pricing power has mitigated the impact of inflation.”
9. C4 Therapeutics, Inc. (NASDAQ:CCCC)
Number of Hedge Fund Holders: 19
C4 Therapeutics, Inc. (NASDAQ:CCCC) is working on treatments to degrade disease-causing proteins for the treatment of cancer, neurodegenerative conditions, and other diseases. Earlier in August C4 Therapeutics, Inc. (NASDAQ:CCCC) posted Q2 results which showed an 80% decline in sales during the period.
A total of 19 hedge funds in Insider Monkey’s database of 910 hedge funds were long C4 Therapeutics, Inc. (NASDAQ:CCCC) as of the end of the second quarter.
8. Grupo Televisa, S.A.B. (NYSE:TV)
Number of Hedge Fund Holders: 18
Mexican mass media company Grupo Televisa, S.A.B. (NYSE:TV) ranks 8th in our list of the best high risk penny stock stocks to buy. As of the end of the second quarter of 2023, 18 hedge funds in Insider Monkey’s database of funds reported owning stakes in Grupo Televisa, S.A.B. (NYSE:TV). Grupo Televisa, S.A.B. (NYSE:TV)’s management talked about future business expectations in the company’s Q2 earnings call:
Despite the macro challenges with relative soft GDP growth and still relatively high inflation rates globally, Bernardo and I are optimistic about the medium-term operating and financial growth prospects for our different businesses. At Televisa-Univision, we continue to grow revenue across all business lines and geographies, materially outperforming our peers driven by our leading Spanish language streaming platform, ViX, that has been growing both sequentially and year-on-year and our core media business that keeps growing at a healthy pace. ViX’s strong operating and financial performance led us to feel even more confident that our streaming business will be profitable in the second half of 2024.
This would be a major achievement as we estimate our streaming platform to be profitable only 2 years after launch, while most of our peers expect to turn profitable in 4 to 5 years. In Cable, our operating and financial performance is far from reaching its full potential. But we’re confident that under Valim’s leadership, we will be able to reduce churn, gradually delivered solid RGU net adds again and accelerate revenue growth. In addition, we are fully committed to implementing structural reforms to increase profitability, optimize CapEx and enhance free cash flow generation. Finally, at Sky, we continue to believe that transformational measures implemented during the second half of 2022 and the new telco services that we have been launching in 2023 under the Sky brand will allow us to gradually achieve sequential operating and financial improvement over the coming quarters.
Oakmark Global Fund made the following comment about Grupo Televisa, S.A.B. (NYSE:TV) in its Q1 2023 investor letter:
“With the exceptions of Credit Suisse and Grupo Televisa, S.A.B. (NYSE:TV), the remaining sales were simply a function of price and value converging favorably. David Herro discussed the sale of Credit Suisse in his letter. Grupo Televisa had perennially disappointed us fundamentally, and we determined there were better alternatives where we had more confidence in a good outcome.”
7. GoPro, Inc. (NASDAQ:GPRO)
Number of Hedge Fund Holders: 20
GoPro, Inc. (NASDAQ:GPRO) ranks 7th in our list of the best high risk penny stocks to buy according to hedge funds. Once a Wall Street darning, GoPro, Inc. (NASDAQ:GPRO) shares have gone nowhere over the past few years as action camera market loses steam and many new entrants dominate the market. However, GoPro, Inc. (NASDAQ:GPRO) is working to increase efficiency. Its latest quarterly results were strong.
Overall, 20 hedge funds in Insider Monkey’s database of funds held stakes in GoPro, Inc. (NASDAQ:GPRO).
6. Assertio Holdings, Inc. (NASDAQ:ASRT)
Number of Hedge Fund Holders: 20
Assertio Holdings, Inc. (NASDAQ:ASRT) is a pharmaceutical company. Assertio Holdings, Inc. (NASDAQ:ASRT) is owned by 20 hedge funds in Insider Monkey’s database of hedge funds. The biggest stakeholder of Assertio Holdings, Inc. (NASDAQ:ASRT) is Mark Coe’s Intrinsic Edge Capital which owns a $6.5 million stake in the company.
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Disclosure: None. 12 Best High Risk Penny Stocks to Buy Now is originally published on Insider Monkey.
