Let’s talk about how to be successful on the stock market. No matter how the economy is doing as a whole, you can make money. Whether stocks go up or down, you can make money from the changes. The important thing is to know when to buy and when to sell. Every stock has the chance to be both risky and profitable, and good investors know how to balance the two.
Penny stocks have a risk/reward profile that is more interesting and could be more profitable than most other types of stocks. These stocks, which usually cost less than $5 per share, are easy to get into and often have triple-digit upside potential.
For some people, though, the risk is too big to ignore. If you look under the hood of these low-priced stocks, you might find real problems like weak fundamentals or strong headwinds that are about to hit. So, how can investors find the penny stocks that are about to make them rich? By getting help from experts.
Using the TipRanks database, we found two penny stocks that have enough support from analysts to get a “Strong Buy” rating from the group as a whole. Not to mention that each has the potential to go up by more than one unit. Let’s look more closely.
We’ll start with Aravive, a biopharmaceutical company that is in the clinical stage and has one major drug candidate, batiraxcept, that is being tested in multiple, simultaneous human clinical trials against many different types of cancer.
The company’s goal is to improve the treatment of diseases that have spread to other parts of the body by combining its new compound, batiraxcept, with other approved cancer treatments.
Batiraxcept is called “an ultra-high affinity decoy protein that binds to GAS6, the only ligand that activates AXL.” This stops metastasis and tumor growth and makes anti-cancer drugs work again. Fast Track designation from the US FDA and Orphan Drug designation from the European Commission have both been given to the drug candidate for treating platinum-resistant ovarian cancer (PROC).
Batiraxcept is currently being tested in two Phase 1b/2 clinical trials, one to treat pancreatic adenocarcinoma and the other to treat clear cell renal carcinoma. In both trials, the drug candidate is being tested as part of a combination therapy. Results are expected in the middle of 2023.
Investors are most interested in this company, though, because of the ongoing Phase 3 study of batiraxcept-plus-paclitaxel as a treatment for PROC. Last year, people started to sign up for this trial, and the top-line data should be out in the middle of this year.
The goal of the study is to include up to 350 people who have high-grade serous ovarian cancer that is resistant to platinum and who have already tried between 1 and 4 other types of treatment. The company is on track to finish its BLA submission for batiraxcept as a treatment for PROC in the fourth quarter of this year (4Q23).
Several analysts think that at $1.80 per share, with multiple shots on goal, it’s time to pull the trigger. Joseph Pantginis, an analyst at H.C. Wainwright, is one of them. He has high hopes for Aravive.
He writes
“We recommend keeping an eye on Aravive as it continues to move batiraxcept through its oncology-focused clinical pipeline.”
We think now is a good time for investors to take a closer look at Aravive, especially the upcoming top-line data from the registrational Phase 3 study AXLerate-OC of batiraxcept for the treatment of platinum-resistant ovarian cancer (PROC).”
The analyst said-
“In PROC, Aravive has the potential to be the best in its class because of the unique way that batiraxcept works with current SOC chemotherapy regimens and improves patients’ quality of life”
In line with this positive outlook, Pantginis gives ARAV stock a Buy rating. His price target of $7 means that the stock could go up by 285% in the next year. (Click here to see Pantginis’s track record.)
That’s an optimistic view, but the Street is usually even more optimistic about this stock. All 5 of the most recent analyst reviews are positive, giving the stock a Strong Buy rating, and the average price target of $11.75 suggests that the stock could go up by a sky-high 545% in the next year. (Check out the TipRanks stock forecast for ARAV)
Spruce Biosciences is a biopharmaceutical company that is working on treatments for rare endocrinological disorders with large unmet medical needs. These are disorders of the endocrine system that don’t have effective treatments right now. Spruce’s top drug candidate is tildacerfont, which is being studied as a treatment for congenital adrenal hyperplasia (CAH) in both adults and children and polycystic ovary syndrome (PCOS).
Spruce owns all of the rights to the drug candidate Tildacerfont, which is currently in a number of clinical trials. The drug is being tested on adults with classic congenital adrenal hyperplasia in the CAHmelia-203 and CAHmelia-204 studies. Both of these late-stage trials will reach important points soon. The -203 study is looking at people who are taking glucocorticoids and have high levels of androstenedione (A4). So far, 50% of the 72 people who are supposed to join have done so. The company plans to share its top-line results in the second half of this year.
On the second advanced trial, CAHmelia-204, the company has just reached 25% of the planned number of 90 patients. The study is looking at people who take high doses of glucocorticoids, at or above 30 mg/d hydrocortisone equivalent, but whose levels of A4 are normal or close to normal. Spruce plans to share its top-line results in 2H24.
In addition to these studies, Spruce is also running a clinical study called CAHptain, which is a Phase 2 trial series in children with classic CAH. This study will follow three groups of 11–17-year-old teens and 2–10-year-old kids in order. Topline data from the teen part of the study (cohorts 1 and 2) are expected to be released in 2H23.
Spruce is running the P.O.W.E.R. Phase 2 trial on the PCOS program. This is a study to test how safe and effective 200 mg of tildacerfont once a day is. The main results of this trial are expected to be made public in 1H23.
No company works in a vacuum, and Spruce has to deal with competition from other biopharma researchers in its research niche. The drug candidate crinecerfont from competitor NBIX is being tested on both adults and children, and the company plans to report the registrational data in 2H23. Even with the competition, RBC analyst Gregory Renza has decided that Spruce is the best choice.
Renza opined-
“We continue to like the risk/reward at current levels going into CAHmelia 203 topline and believe the recent landscape development improves SPRB’s positioning. With NBIX pushed out with a now set pivotal topline of crinecerfont to 2H23, we believe the gap from data from the two CAHmelia studies have improved SPRB’s positioning. We look to CAHmelia 203 topline data in 2H2023 to assess tildacerfont’s profile, as well as to compare with crinecerfont to further gauge product differentiation”
To this end, Renza gives SPRB an Outperform (i.e. Buy) rating with an $8 price target that suggests room for ~248% share appreciation over the coming year. (To watch Renza’s track record, click here)
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