If you're willing to take on some risk and invest in low-priced growth stocks that may still be a bit unproven, it can lead to significant returns in the long run. Stocks trading at low prices can have a lot more room to run than higher-priced ones.
Two stocks you can buy today for less than $6 a share are Hims & Hers Health (HIMS -0.17%) and WM Technology (MAPS -2.70%). And these aren't your typical small-cap stocks, as Wall Street analysts believe they can double in value.
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1. Hims & Hers
Healthcare company Hims & Hers has a market cap of just over $1 billion and went public through a special purpose acquisition company (SPAC) in January 2021.
It focuses on what could be a promising niche: addressing uncomfortable issues for patients, including hair loss and erectile dysfunction. The company makes the bulk of its revenue online, through subscriptions where customers are billed on an ongoing basis and products are regularly delivered to them.
Last month, the company reported its year-end results, including revenue of $271.9 million that rose 83% year over year. Its online revenue accounted for more than 95% of the top line, with the remainder coming from its wholesale segment, which includes non-prescription products that are sold to retailers. This year, Hims & Hers expects revenue to grow up to 40%, potentially hitting $380 million. It anticipates that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will come in between negative $20 million and negative $30 million (which is where it finished 2021).
Trading at just over $5 today, there could be significant potential for Hims & Hers if it can hit its targets for the year; it's hard to find businesses that are growing at rates anywhere near 40%. Bank of America is also bullish on the stock, setting a price target of $12 for the healthcare stock last year. Citigroup has been more conservative, recently lowering its price target from $14 to $9 amid the bearishness in growth stocks of late, but even that would represent an upside of at least 70% from where Hims & Hers stock trades today.
2. WM Technology
WM Technology, or Weedmaps as it is more commonly known, is another relatively new growth stock. And it too went public through a SPAC last year. The company's platform helps connect cannabis consumers to the nearest pot shop. It also makes it easy for marijuana businesses to advertise in the highly restrictive industry.
Given the cannabis industry is still in its early growth stages, it's easy to see the potential for this business, which is currently worth over $900 million, to soar in value.
Its fourth-quarter results came out on Feb. 23. And for 2021, the company announced that its revenue grew by 19% to $193.1 million. Its adjusted EBITDA of $31.7 million was on the right side of breakeven, but it was down 26% as the company's operating expenses rose by 67% with WM ramping up its operations; general and administrative expenses totaled $97.4 million and were 91% higher than they were a year ago.
For the current year, WM projects that its revenue will total between $255 million and $265 million. If it hits the top end of that forecast, that will mean revenue growth of more than 37% for the business. Its adjusted EBITDA will, however, be no higher than $20 million as the company plans to invest in its growth, which will negatively affect the bottom line in the near term.
In the past year, multiple brokerages have set price targets for WM that are $15 or higher, which is more than double the roughly $5.80 that the stock currently trades at.
Weedmaps is a popular brand in the cannabis industry that has more than 15 million monthly active users on its site. And with some strong revenue and profit numbers behind it, this can be a solid business to invest in while it's still relatively small.
