Investors are attracted to penny stocks for their potential to provide exponential gains. It is very common to find such companies trading for fractions of their target price. It is also worth noting that penny stocks are highly risky and it goes without saying that losses aren’t uncommon. In other words, don’t treat these stocks the same as their more stable counterparts, and only invest what you can afford to lose.
That said, the penny stocks listed here are interesting and fall, for the most part, outside of the biotech/pharma sector. That means the majority (4 out of 7 shares) don’t depend on scientific breakthroughs or other long shot technologies for their upside. So, they may be less risky overall.
Let’s dive in.
Verastem (NASDAQ:VSTM) is one of the three biopharmaceutical companies listed here. In fact, the first three companies listed are biotech sector firms, so skip ahead if that sector doesn’t particularly interest you.
This company is engaged in the development of cancer therapeutics. Verastem is developing small-molecule drugs that work to inhibit RAS pathways. RAS pathways have known to signal the proliferation of cancer cells. Thus, any treatment that can inhibit thier activity promises to halt the spread of cancer.
Basically, Verastem is an underdog competing against much deeper-pocketed pharmaceutical giants including Novartis (NYSE:NVS), Genentech, Pfizer (NYSE:PFE), AstraZeneca (NASDAQ:AZN), and others who are racing to develop similar drugs. But the company is also collaborating with well-known firms like Amgen (NASDAQ:AMGN) in the same race.
The company’s revenue in 2022 came from the sale of licenses and related assets, not cancer therapeutics. This is a money-losing enterprise, though Verastem does have enough liquidity to continue for at least another year. It’s quite a standard roll of the dice, as far as biopharma penny stocks go.
Esperion Therapeutics (ESPR)
Esperion Therapeutics (NASDAQ:ESPR) is another biopharmaceutical stock, but unlike many in this class, it already has sales. The company sells a drug called NEXLETOL which treats familial hypercholesterolemia, or hereditary high cholesterol. The drug lowers LDL-C which has been implicated in major adverse cardiac events.
Basically, the company is trying to prove that NEXLETOL can reduce LDL-C levels, while also reducing endpoint risks associated with high levels of LDL-C. Fortunately, that’s exactly what the evidence is showing – NEXLETOL reduces LDL-C while significantly reducing the incidence of major adverse cardiac events.
That said, Esperion Therapeutics hasn’t quite hit the jackpot yet. Product sales increased to nearly $56 million in 2022, up from $40.04 million a year earlier. However, collaboration revenues nearly halved, and overall revenues fell slightly from 2021 to 2022.
The company still reports large losses, so while it has an effective therapeutic, the issue may be simply improving the efficacy of its sales teams.
Shattuck Labs (STTK)
Shattuck Labs (NASDAQ:STTK) is the last biopharmaceutical penny stock on this list. Nevertheless, it is worth considering, with a target price more than 6-times its current price, under $3 per share.
The company is attempting to commercialize cancer therapeutics under a new class of medicine based on bi-functional fusion proteins. Its current clinical pipeline includes two drugs in the stage 1 phase of development. Those drugs are aimed at the treatment of leukemia and ovarian cancers.
The company believes it has sufficient capital to fund operations through the middle of 2024, absent any further cash infusions. That means investors are betting that the company will successfully navigate its way into, but not through, Phase 2 trials, which normally take 2 years. The company is hitting milestones, but not yet at commercialization at this point. Phase 3 trials take an additional one to four years, meaning investors may have to be patient with this stock.
The company recorded very little in the way of revenues in 2022, all $390k of which was collaboration revenues. In 2021, Shattuck was more successful in generating collaboration revenues, so the potential to do so again remains.
Banco Bradesco (BBD)
Banco Bradesco (NYSE:BBD) is one of the top penny stocks in the banking sector I’ve got my eye on. A Brazilian financial services company that provides banking and insurance products and services, Banco Bradesco has been garnering significant attention of late. This is likely due to volatility around small banks globally as instability remains. Traders have greater ability to move stock prices in such banks, and that means investors could reasonably expect to see quick returns through BBD stock.
Based on the financial statements of Banco Bradesco, it looks like the company’s troubles are increasing. The company’s Q4 recurring revenues dropped by 75.9%, and operating income fell by more than 100%, dipping below zero. The company’s delinquency ratios for both the 60 and 90 day periods have steadily increased over the last year. This all points to a company in increasingly greater trouble.
Again, the company’s stock price is likely to fluctuate wildly, as traders have seized upon the opportunity to wager on low-priced, troubled banks. It’s a very risky proposition for investors, but the investment thesis here is relatively easy to understand.
Momentous (NASDAQ:MNTS) is a space company that provides payload delivery services, in-orbit services, and other revenue-generating operations primarily in low earth orbit. The company has deployed eight satellites for its customers, and is developing a line of vehicles called Vigoride that it refers to as Orbital Service Vehicles.
Momentous is attempting to develop launch and transport vehicles that rely on a water-plasma propulsion system to reduce environmental impacts while also reducing operating costs for customers.
Momentous is a relatively small company and recorded around $300k in revenues in 2021 and 2022. Neither result is particularly impressive, but operating losses have steadily declined, suggesting the company is at least somewhat financially responsible.
Momentous announced on March 23 that its Vigoride-5 vehicle is maneuvering under its own power in earth orbit. The recency of that milestone could make MNTS stock pop in April, as the news spreads.
The company also granted inducement awards to 12 employees on March 24. Such grants are often used to retain top executives, so Momentous could be moving into a new phase of its lifecycle.
ESS Tech (GWH)
ESS Tech (NYSE:GWH) is a company that produces energy storage batteries that utilize iron, salt, and water as electrolytes. The batteries are more environmentally friendly than their lithium-ion counterparts, and are utility-scale solutions built in shipping containers.
ESS Tech looks to be crossing the chasm, after winning contracts in Michigan, Sacramento, and with Amsterdam’s Schiphol airport. The firm will develop a battery storage project for Burbank Water and Power in California, a microgrid for Consumer’s Energy in Michigan, and energy warehouses at Schiphol airport. It also announced the future delivery of two energy warehouses in Central California for the Turlock Irrigation District.
The company reported a mere $16,000 of revenues in all of 2022 and none in 2021. That said, its net losses have decreased dramatically. With a strong project pipeline, it’s reasonable to anticipate that GWH could be among the penny stocks to see rapid gains in the near future as its plans to commercialize environmentally-friendly battery systems come to fruition.
Tritium DCFC (DCFC)
Tritium DCFC (NASDAQ:DCFC) is among the top penny stocks for EV enthusiasts. The company makes hardware and software used in creating DC fast chargers that power electric vehicles.
Now is a good time to buy DCFC stock, as Tritium DCFC recently released record earnings that forecast an even stronger 2023. The firm reported $102 million in sales in 2022, at the high end of guidance. Additionally, $73 million of those sales occurred in the second half of the year, so it’s fair to say that the company has very strong momentum.
Tritium received $195 million in sales orders in 2022, 41% more than in 2021. The company had an order backlog worth $159 million on Dec. 31, 2022.
The company expects to report over $200 million in sales in 2023, much more than the $102 million recorded in 2022. The company is still losing money, but anticipates positive EBITDA in the first half of 2024. Its growth is difficult to ignore, suggesting DCFC stock can easily move much higher than its current $1.20 per share price.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.