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In this article, we discuss 10 best fundamental penny stocks to invest in. If you want to see more stocks in this selection, check out 5 Best Fundamental Penny Stocks To Invest In.
Penny stocks are volatile securities which are priced under $5. Their price tends to fluctuate wildly, and this attracts growth investors, as they are usually looking for very high returns quickly. These companies have small market capitalizations, limited or no profits, and little public domain information. There are numerous instances of penny stocks giving massive returns to investors. Multiple billion-dollar firms, including Ford Motor Company (NYSE:F), Apple Inc. (NASDAQ:AAPL), and Advanced Micro Devices, Inc. (NASDAQ:AMD) once traded as penny stocks, which attests to the potential of fundamentally strong penny stocks.
Investors are worried about the market volatility and are largely wary of committing big sums of money to their stock portfolios, given the macro backdrop that consists of an escalating war in Ukraine, rising interest rates, mounting COVID-19 cases in China, and the potential for supply chains to be disrupted yet again if the Asian superpower employs a lockdown once again. This is where penny stocks come in. Investors look for growth catalysts, research ongoing projects and their feasibility, and look out for funding options available to these firms so they execute on their plans. Traders who realize the value of the ongoing projects of these firms often buy penny stocks in droves for future gains.
Another reason why fundamental penny stocks are gaining popularity in the stock market is the get-rich-quick mindset of retail investors. They place bets on high volatility penny stocks that can potentially grow big in a few months. The stock market is seeing cash inflows by millennials and Gen Z, who have meaningfully higher risk tolerance and do not worry about retirement portfolios just yet, which is why they often lean towards penny stocks with strong fundamentals.
Our Methodology
We have selected the stocks that were priced under $5 as of October 12. We have shortlisted penny stocks that offer unique growth fundamentals, have positive analyst ratings, and have the capacity to drive resilient returns in the future. The hedge fund sentiment was assessed from Insider Monkey’s database of elite hedge funds, tracked as of the second quarter of 2022.
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Best Fundamental Penny Stocks To Invest In
10. Medicenna Therapeutics Corp. (NASDAQ:MDNA)
Number of Hedge Fund Holders: 3
Share Price as of October 12: $0.7999
Medicenna Therapeutics Corp. (NASDAQ:MDNA) is headquartered in Toronto, Canada, operating as an immunotherapy company specializing in the development and commercialization of Superkines and empowered Superkines for the treatment of cancer and other diseases.
On September 13, Medicenna Therapeutics Corp. (NASDAQ:MDNA) announced that it had entered into a clinical trial collaboration and supply agreement with Merck & Co., Inc. (NYSE:MRK). Medicenna Therapeutics Corp. (NASDAQ:MDNA)’s agonist, MDNA11, is being evaluated in the early to mid-stage trial as a monotherapy, and paired with Merck’s Keytruda, it can potentially be a treatment for cancerous tumors. As per the collaboration agreement, Medicenna Therapeutics Corp. (NASDAQ:MDNA) will sponsor the study and Merck will supply Keytruda. This is a positive catalyst for Medicenna Therapeutics Corp. (NASDAQ:MDNA), making it one of the best fundamental penny stocks to invest in.
Oppenheimer analyst Matthew Biegler on September 28 reiterated an Outperform rating on Medicenna Therapeutics Corp. (NASDAQ:MDNA) with an $8 price target after the company announced that the partial responder in MDNA11's dose escalation trial now has a confirmed response. The "now confirmed evidence of single-agent activity against this usually tough-to-treat tumor type is notable and not a fluke," the analyst told investors in a research note. The analyst said he is "puzzled by the tepid investor reaction" since the partial trial data was first reported back in August, and believes the quality of clinical data that MDNA11 has presented thus far "deserves more credit than it is currently getting."
According to Insider Monkey’s data, 3 hedge funds were bullish on Medicenna Therapeutics Corp. (NASDAQ:MDNA) at the end of June 2022, compared to 2 funds in the prior quarter. Orin Hirschman’s AIGH Investment Partners is the leading position holder in the company, with 2.27 million shares worth $2.6 million.
In addition to Ford Motor Company (NYSE:F), Apple Inc. (NASDAQ:AAPL), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Medicenna Therapeutics Corp. (NASDAQ:MDNA) is one of the notable stocks to monitor in the present macro backdrop.
9. Bionano Genomics, Inc. (NASDAQ:BNGO)
Number of Hedge Fund Holders: 6
Share Price as of October 12: $2.1050
Bionano Genomics, Inc. (NASDAQ:BNGO) is a California-based company that provides genome analysis software solutions. Its primary offering is Saphyr, a sample-to-result solution for structural variation analysis by optical genome mapping for understanding of genetic variation and function. Bionano Genomics on October 4 announced the publication of a study indicating the use of optical genome mapping to investigate a molecular subgroup of hepatocellular carcinoma, which is the most common type of liver cancer, in order to explore the complicated structural variations caused by replication stress. It is one of the best fundamental penny stocks to watch.
On September 26, Bionano Genomics, Inc. (NASDAQ:BNGO) and OptraHEALTH announced their collaboration to use HealthFAX's proprietary AI platform to improve genetic counseling services and care for patients receiving diagnostic services through the Bionano Laboratories. Bionano Genomics, Inc. (NASDAQ:BNGO) believes that providing CLIA-certified services will allow it to execute its growth strategy.
Oppenheimer analyst Francois Brisebois on July 18 assumed coverage of Bionano Genomics, Inc. (NASDAQ:BNGO) with an Outperform rating and a $12 price target due to a reallocation of the firm's analyst resources.
According to Insider Monkey’s data, 6 hedge funds were long Bionano Genomics, Inc. (NASDAQ:BNGO) at the end of Q2 2022, with collective stakes worth about $8 million, compared to 6 funds in the prior quarter worth $4 million. Jim Simons’ Renaissance Technologies is the leading stakeholder of the company, with 3.65 million shares valued at $5 million.
8. Vizsla Silver Corp. (NYSE:VZLA)
Number of Hedge Fund Holders: 4
Share Price as of October 12: $1.2085
Vizsla Silver Corp. (NYSE:VZLA) was incorporated in 2017 and is headquartered in Vancouver, Canada. The company engages in the acquisition, exploration, and development of precious and base metals. Vizsla Silver Corp. (NYSE:VZLA) primarily explores for gold, silver, and copper deposits. It is one of the best fundamental penny stocks to invest in.
On September 27, Stifel analyst Stephen Soock initiated coverage of Vizsla Silver Corp. (NYSE:VZLA) with a Buy rating and a C$3.50 price target. The resource at the Panuco project in Mexico is "world-class and growing rapidly," said the analyst, who sees the deposits driving mid-tier level production with a high margin over an 11-year mine life.
Among the hedge funds tracked by Insider Monkey, 4 funds reported owning stakes worth $11.4 million in Vizsla Silver Corp. (NYSE:VZLA) at the end of the second quarter of 2022, compared to 3 funds in the prior quarter worth $19.3 million.
7. Air Industries Group (NYSE:AIRI)
Number of Hedge Fund Holders: 2
Share Price as of October 12: $0.5102
Air Industries Group (NYSE:AIRI) is a New York-based company that designs, manufactures, and sells structural parts and assemblies for mission-critical aerospace and defense applications. It acts as a prime contractor for the U.S. Department of Defense. Air Industries Group (NYSE:AIRI) operates through two segments – Complex Machining and Turbine and Engine Component. Priced at $0.51 as of October 12, Air Industries Group (NYSE:AIRI) is one of the best fundamental penny stocks to buy.
On September 15, Air Industries Group (NYSE:AIRI) announced that it had secured two contracts collectively worth $5 million. Air Industries Group (NYSE:AIRI)’s Air Industries Machining division was awarded a $2.2 million five-year contract to manufacture flight-critical assemblies for the Blackhawk helicopter. Its other unit, Sterling Engineering, bagged a $2.8 million order from General Electric Company (NYSE:GE) for engine components to be used in the F404 jet engine.
Air Industries Group (NYSE:AIRI) disclosed on October 4 a reverse split of its issued and outstanding common stock with par value of $0.001 per share, at a ratio of one share of common stock for every ten shares of common stock, effective from October 18, 2022. As a result of this reverse split, the amount of outstanding common shares will be slashed from 32,324,670 to 3,232,467.
According to Insider Monkey’s Q2 data, Jim Simons’ Renaissance Technologies and Ken Griffin’s Citadel Investment Group held 21,500 and 10,935 shares in Air Industries Group (NYSE:AIRI) respectively. The shares were collectively worth $23,000.
6. Pitney Bowes Inc. (NYSE:PBI)
Number of Hedge Fund Holders: 23
Share Price as of October 12: $2.8100
Pitney Bowes Inc. (NYSE:PBI) is a Connecticut-based shipping and mailing company, offering technology, logistics, and financial services to businesses, retailers, and government clients in the United States, Canada, and internationally. The company operates through Global Ecommerce, Presort Services, and SendTech Solutions segments.
At the end of August, Pitney Bowes Inc. (NYSE:PBI) announced that it had partnered with autonomous middle mile logistics firm Gatik to provide autonomous trucks for e-commerce shipments in the Dallas market. The company will use Gatik's class 6 autonomous box trucks in its e-commerce logistics network in the Dallas market starting in the first quarter of 2023. Pitney Bowes Inc. (NYSE:PBI) is one of the best fundamental penny stocks to consider.
According to Insider Monkey’s database, Pitney Bowes Inc. (NYSE:PBI) was part of 23 hedge fund portfolios at the end of June 2022, up from 20 in the prior quarter. D E Shaw held the largest stake in the company, comprising 3.35 million shares worth over $12 million.
Like Ford Motor Company (NYSE:F), Apple Inc. (NASDAQ:AAPL), and Advanced Micro Devices, Inc. (NASDAQ:AMD), elite hedge funds are closely monitoring Pitney Bowes Inc. (NYSE:PBI).
Here is what Miller Value Partners has to say about Pitney Bowes Inc. (NYSE:PBI) in its Q3 2021 investor letter:
“Pitney Bowes (PBI) was also a recent laggard of nearly 20% during the quarter. The company has been building out an E-commerce business for the past 10 years that is approaching $2B in revenue and growing revenues longer-term at a double digit pace. With the E-commerce segment approaching scale, management has significant new initiatives underway to help improve the segment’s profitability to normalized levels (8-12% EBIT margins) over the next couple of years. Success in achieving normalized profitability for the segment would dramatically enhance Pitney Bowes earnings (>$1 in EPS) and annual free cash flow generation (>$250M). Last quarter we highlighted the digital service business within Pitney’s E-commerce segment and the significant embedded value that was suggested by the recent acquisition of a direct competitor Stamps.com at 8x revenue. However, another recent market transaction suggests the E-commerce business has even greater embedded value. At the end of the second quarter, Global-e (GLBE), a UK company that focuses on cross-border business came public at $25/share or approx. $4B market capitalization. The initial IPO price suggested 2021 Enterprise value to Revenue >20x. Since the IPO, GLBE has climbed to greater than $50/share. Within Pitney Bowes’s E-commerce segment there is a much larger cross border business representing approximately $500M in revenue. The current valuation of Global-e suggests Pitney’s cross border business is worth significantly more than the company’s current market cap. With the marketplace valuing many businesses in excess of 10x revenue, we believe that Pitney Bowes shares remain significantly mispriced at only .35x of revenue and >30% normalized earnings and free cash flow yield. In our opinion, the shares are becoming increasingly attractive as their E-commerce segment appears to be significantly undervalued and has the potential to unlock significant equity value over the next couple of years.”
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Disclosure: None. 10 Best Fundamental Penny Stocks To Invest In is originally published on Insider Monkey.
