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7 Best Penny Stocks to Buy

Some penny stocks are worth the risk.

The prospect of stumbling upon a dirt-cheap penny stock that will ultimately make shareholders rich is an exciting idea. In reality, these types of rags-to-riches stories are few and far between. Unfortunately, most penny stocks that trade for less than $1 per share are trading that low for a good reason. Of the 102 U.S. stocks with more than 1 million in average daily trading volume and a share price below $1, only 9.8% of them have generated positive returns in the past year. While certainly high-risk investments, here are seven penny stocks that may be worth a closer look.

MedMen Enterprises (MMNFF)

MedMen Enterprises is a U.S. cannabis retailer that operates in several states, including California, Illinois, Nevada and Florida. There are plenty of analysts and investors out there that see cannabis as a potentially massive long-term growth market, and MedMen could theoretically have tremendous upside. However, Cantor Fitzgerald analyst Pablo Zuanic says MedMen investors must first make peace with the potential for significant shareholder dilution given the company's cash burn and extremely high debt levels. Zuanic has a "neutral" rating and price target of 40 cents, but even 40 cents represents nearly 70% upside from the stock's recent 24-cent share price.

Cineworld (CNNWF)

Cineworld is the second-largest movie theater operator in the world and owner of the Regal brand. The company owns roughly 9,500 screens and generates about 75% of its revenue from the U.S. The company's Regal theaters in the U.S. will begin reopening on July 10. Cineworld has a troubling $3.5 billion in debt, but it's saving $2.1 billion by scrapping a deal to acquire Canadian theater company Cineplex. At this point, Cineworld is certainly a risky bet, but if the movie business gets back on track, the stock's 89-cent price tag could come with significant upside.

Actinium Pharmaceuticals (ATNM)

Actinium Pharmaceuticals is a biotech company focused on developing Antibody Radiation-Conjugates, or ARCs, combining the targeting ability of antibodies with the cell-killing ability of radiation. Biotech companies typically burn through cash throughout drug development hoping for eventual approval from the U.S. Food and Drug Administration. Actinium's leading drug candidate is radio-immunotherapeutic cancer treatment Iomab-B. H.C. Wainwright analyst Joseph Pantginis says interim data on the drug is encouraging. In addition, a capital raise in April potentially eliminates the risk of additional shareholder dilution, and Pantginis says it could even provide enough cash to cover the early stages of commercialization. ATNM stock trades at just 36 cents, but H.C. Wainwright has a "buy" rating and $3 price target.

Inuvo (INUV)

Inuvo provides market analysis services. The company utilizes artificial intelligence to analyze marketing campaigns and sponsored content to create targeted advertising strategies. Inuvo's new cloud-based IntentCloud platform may eventually get investors' attention, given that the company recently said it allows customers to process market data 300% faster than traditional processing methods at as little as half the cost. In June, Inuvo announced its IntentKey AI technology can identify auto shoppers who are interested in a contact-free shopping experience. The future of marketing is AI technology, and Inuvio and its investors could be well-positioned to capitalize if the company's services gain traction.

Matinas BioPharma (MTNB)

Matinas BioPharma is a clinical stage biopharmaceutical stock. The company's leading asset is MAT9001, which targets the omega-3 market. SunTrust analyst Gregg Gilbert says the omega-3 market is well-positioned for growth given mounting evidence linking omega-3s to heart health. Gilbert says MAT9001 is still a few years away from approval, but it could ultimately land a sizable portion of the omega-3 market. In the meantime, clinical setbacks from potential competitors AstraZeneca (AZN) and Acasti Pharma (ACST) may help keep the window of opportunity open for Matinas. SunTrust has a "buy" rating and $3 price target for the 76-cent stock.

Denbury Resources (DNR)

Denbury Resources is an oil and gas exploration and production company focused on the U.S. Gulf Coast and Rocky Mountain regions. Oil prices have rebounded significantly off of unprecedented lows earlier this year. CFRA analyst Stewart Glickman says Denbury's elevated debt levels create significant risk for investors, and the oil market will continue to be pressured for the foreseeable future. In addition, he says Denbury's future liquidity is a "wild card." However, with the stock trading at just 28 cents, these risks seem to be priced in. CFRA has a "hold" rating and 40-cent price target for DNR stock.

Noble Corp. (NE)

Noble is another oil and gas stock that specializes in offshore drilling. Over the past five years, Noble shares are down 98%. But with the stock now trading for roughly 30 cents, market gamblers may see it as worth the risk. Glickman projects Noble's revenue will drop 29% this year but will grow 8% in 2021 thanks to the company's contracts with ExxonMobil (XOM) for offshore drilling in Guyana. Glickman says oil prices above $50 could drive additional demand for Noble as well. CFRA has a "hold" rating and a 30-cent price target for Noble's stock.

Seven penny stocks to buy:

-- MedMen Enterprises (MMNFF)

-- Cineworld (CNNWF)

-- Actinium Pharmaceuticals (ATNM)

-- Inuvo (INUV)

-- Matinas BioPharma (MTNB)

-- Denbury Resources (DNR)

-- Noble Corp. (NE)



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