Penny stocks have a solid reputation for being a risky investment. However, if the potential rewards excite you, then the list below may provide an interesting starting point for your search.
To create the following list of penny stocks (priced under $5) we chose the names with a market cap above $300M that also met the following bullish indicators:
- Rallying above 20, 50, and 200 day market average (MA).
- Undervalued to analyst target price by over 20%
Want clarification for the terms used above? You got it:
Analyst target prices can be very useful guides for investors. The target price is a price level set by analysts that, based on their data and estimates, represents their predictions for that company in the upcoming year. Because analysts often have different opinions, we use the average analyst target price.
When a company's current market price is deeply lagging to the target price, it may signal that the company has more value to price in (meaning, the stock price may rise).
When a stock is rallying, it means its price is performing above its market average price for a given time period. It is presented as a percentage of price relative to the average (i.e., 10% above the average). When a stock is performing above its 20 day moving average (MA), also known as simple moving average (SMA), as well as its 50 and 200 day moving averages, it signals bullish momentum.
Now that you're armed with information, how do you feel about the following list of stocks? Do you think they have more value to cash in? Will their momentum push them toward their target prices? Use the list below as a starting point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. Abraxas Petroleum
2. BioSante Pharmaceuticals
3. Charming Shoppes
6. Dynavax Technologies
7. GenOn Energy
10. Lexicon Pharmaceuticals
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman does not own any of the shares mentioned above. Target price information from Screener.co, all other data sourced from Finviz.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.