There are several strategies that investors employ to beat the broader markets. One such strategy that can be considered high-risk is to invest in penny stocks. Generally, stocks trading below $5 are defined as penny stocks. These lower-priced companies offer investors an attractive risk/reward combination that can help them outpace index returns.
The Finscreener penny stocks dashboard provides you with a list of companies that can be added to your watchlist. But here, we look at two penny stocks that are backed by Wall Street analysts so that you can make an informed investment decision. Both the stocks have significant upside potential at current prices.
A micro-cap penny stock in electroCore
Valued at a market cap of less than $100 million, electroCore (NASDAQ: ECOR) is a commercial-stage medical device company. Its engaged in the development and commercialization of a range of non-invasive vagus nerve stimulation or nVNS therapies. Its developing gammaCore which is a prescription only nVNS therapy for the treatment of pain associated with migraine and episodic cluster headaches in adults. The company’s flagship product is gammaCore Sapphire which is a rechargeable and reloadable handheld delivery system for multi-year use.
Right now, electroCore is involved in the investigation of nerve treatments related to nervous system disorders such as PTSD and Parkinson’s. In August 2021, it published a pilot study that indicated vagus nerve stimulation lowered inflammatory response to stress in PTSD patients.
In the second quarter of 2021, electroCore’s revenue stood at $1.3 million which was 69% higher than the year-ago period. Its sales are forecast to rise by 66.2% to $5.81 million in 2021 and by 74.7% to $10.15 million in 2022. The company’s sales stood at just $811,000 in 2017.
A majority of electroCore’s sales are driven due to its contract with the Department of Veterans Affairs which results in stable revenue. This market is relatively untapped and remains a key revenue driver for the firm. Further, electroCore is planning to expand its suite of solutions to include treatments for other neurological disorders.
Analysts tracking the stock expect it to gain more than 200% in the next 12-months.
Accuray Inc. is a top small-cap stock
Accuray Inc. (NASDAQ: ARAY) has a market cap of $353 million and the stock is down 31% in the last five years. It develops, manufactures, and sells radiotherapy systems for alternative cancer treatments. The company’s CyberKnife System is a robotic stereotactic radiosurgery and stereotactic body radiation therapy system used for the treatment of various types of cancer and tumors in the body, such as prostate, lung, brain, spine, liver, pancreas, and kidney.
Its portfolio of products is marketed directly to customers via sales agents and group purchasing organizations in the U.S. In the fiscal fourth quarter of 2021 that ended in June, Accuray’s sales rose 17% year over year to $111 million. Its gross orders also grew 19% to $112.7 million, allowing the company to end the year with a backlog of $616.4 million.
Accuray confirmed that trade-ins/trade-ups accounted for 27% of global orders as bookings were robust across regions including the Americas, Asia-Pacific, Europe and the Middle East. Analysts expect sales to rise by 4.9% to $415.82 million in 2021 and by 6% to $441 million in 2022. Its adjusted earnings per share are also forecast to rise from $0.04 in 2020 to $0.11 in 2021.
Accuray stock is currently trading at $3.89 which is significantly lower than its 12-month average price target of $8.20.
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