When discussing penny stocks to buy, no one should be under any illusion: this sector presents extreme dangers. And it’s not just about the severity and acceleration of losses when getting things wrong. Rather, the red ink can also lead to significant psychological distress. You must not invest more than you can comfortably lose.
At the same time, penny stocks don’t represent a monolith. Yes, the vast majority of ideas can be considered wildly risky. And even the ones that have legitimate upside potential may be incredibly volatile before making good on their underlying narratives. However, what about analyst-endorsed speculative ideas? They do exist. Each of the names below carries an overall bullish assessment. Even better, they each have average price targets implying at least 200% growth or 3X returns over the next year. On that note, below are penny stocks to buy (if you dare).
Gold Royalty (GROY)
Based in Vancouver, British Columbia, Canada, Gold Royalty (NYSEAMERICAN:GROY) is exactly what it sounds like, a precious metals royalty firm. Under a royalty contract, a mining operation will provide the other party in the agreement with a percentage of metals production or revenue. In exchange, the miner will receive an upfront payment. Fundamentally, such arrangements offer business predictability, making GROY an interesting idea for penny stocks to consider.
It’s an awfully risky proposition. Since the beginning of this year, Gold Royalty shares plunged more than 42%. Over the past five years, they’re down over 71%. On a wider level, the Federal Reserve’s hawkish monetary policy doesn’t necessarily help matters.
As you might suspect, the company’s financials aren’t exactly sterling. On a trailing 12-month basis, Gold has printed revenue of $2.68 million, down 32% from its fiscal year 2022 performance. Still, analysts peg GROY as a consensus strong buy. Their price target for the next 12 months averages $4.32, implying exactly 200% upside potential.
LuxUrban Hotels (LUXH)
An awfully risky proposal for penny stocks to buy, LuxUrban Hotels (NASDAQ:LUXH) is building a rapidly growing portfolio of high-quality hotel assets in major metropolitan cities in the U.S., per its website. In particular, LuxUrban markets its hotels to business and vacation travelers, presumably for the professional or higher-income demographic.
Impressively, since the beginning of this year, LUXH gained nearly 85% of its equity value. Some of this robust sentiment could come down to the sticking power of revenge travel. Basically, consumers prioritized pandemic-denied experiences over the acquisition of physical goods. Despite fissures in the consumer economy recently, people are still vacationing.
Will this trend continue? Well, if you speculate on LUXH, you better hope so. Undeniably, LuxUrban is a growth machine. But it likely needs to show a credible pathway to profitability soon. Nevertheless, analysts believe in LUXH, pegging it a unanimous buy among three expert voices. Further, their average price target for the next 12 months lands at $9.33, implying 204% upside.
Verastem (VSTM)
Invariably, many if not most penny stocks endorsed by Wall Street analysts focus on the biotechnology sector. With a major breakthrough, a promising therapeutic can send an underlying biotech storming for the stars. Could that be the case for Verastem (NASDAQ:VSTM)? It’s off to a good start. Since the January opener, VSTM nearly doubled, up 96%. However, it’s relatively undervalued given that in the past year, it lost about 29%.
According to its website, Verastem is committed to providing alternatives for cancer patients who have run out of therapeutic options. Specifically, the company focuses on RAS proteins, which represent a vital component for normal development. By addressing mutations in the RAS family of genes that cause almost 30% of all human cancers, Verastem could be a potential lifeline.
As with other biotech penny stocks to buy, VSTM is tied to a fiscally challenged profile. Therefore, you would be investing in a narrative. That said, analysts peg VSTM as a unanimous strong buy among five voices. As well, the average price target hits $31.70, implying almost 222% upside.
Penny Stocks
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Josh Enomoto 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.