Stock Analysis & Ideas

2 “Perfect 10” Penny Stocks With Substantial Upside Potential

Story Highlights

Penny stocks are risky bets as they are quite speculative. Identify those that are outranking others using TipRanks’ valuable datasets, like the Smart Score. Penny stocks with a “Perfect 10” Smart Score rating are more likely to beat the broader market averages.

Penny stocks generally refer to the ones that trade for $10 or less. While their low price attracts, they are relatively a risky bet as they are quite speculative. Using TipRanks’ penny stock screener, we have zeroed in on Superior Industries International (NYSE:SUP) and Lulu’s Fashion Lounge Holdings (NASDAQ:LVLU). Both these penny stocks have earned a “Perfect 10” Smart Score and have substantial upside potential.

Superior Industries International

Superior Industries is a leading aluminum wheel supplier. The ongoing momentum in its business, its focus on capturing the demand for premium wheels, and increased revenue from existing and new customers continue to support its growth. Also, its ability to pass through costs to its customers, expense control, and favorable product mix are positives. 

Barrington analyst Gary Prestopino is bullish about SUP stock. His price target of $12.50 implies 131% upside potential. Prestopino expects the company’s “portfolio of leading premium wheel technologies” to “generate consistent growth through 2025.” The analyst has a price target range of $10-15 on SUP stock. 

SUP stock also has positive indicators from hedge funds, insiders, and retail investors, who have increased their holdings in the recent past. Hedge funds bought 88K SUP stock in the last quarter. Meanwhile, insiders added SUP stock worth $1.7 million during the same period. Further, in one month, 12.4% of TipRanks’ investors increased their exposure to SUP stock. 

Overall, according to our data-driven stock score, SUP stock sports a maximum Smart Score of 10.

Lulu’s Fashion Lounge Holdings

Lulu’s Fashion is an online retailer of women’s apparel, shoes, and accessories. Despite macro concerns, LVLU continues to grow its top line in double-digits. 

LVLU recently announced the preliminary results for Q2. It expects to deliver net revenue of about $131.0 million to $132.0 million, representing year-over-year growth of 26.5% to 27.5%. LVLU CEO, David McCreight, stated, “Despite macroeconomic headwinds, we delivered double-digit year-over-year and sequential revenue growth in Q2.” 

However, LVLU is not immune to macro headwinds, leading management to lower full-year revenue growth guidance. LVLU expects to deliver net revenue of $440 million to $480 million, down from its previous forecast of $490 million to $500 million. Despite the guidance cut, LVLU’s forecast implies a year-over-year growth rate of 17.1% to 27.8%.  

In response to the guidance cut, Jefferies analyst Randal Konik stated, “Macro headwinds are elevated and volatility is increasing, so we take down our numbers in line with mgmt’s revised guidance. With the company nicely profitable, opportunity to grow long-term compelling, and valuation extremely compressed, we would buy shares on today’s pullback.” 

LVLU stock has received six Buy and two Hold recommendations for a Strong Buy rating consensus. Meanwhile, analysts’ average price target of $14.38 implies 97.8% upside potential. 

LVLU stock also has positive signals from insiders and retail investors. Insiders bought LVLU stock worth 23.9K in the last quarter. Meanwhile, 74.9% of TipRanks’ investors increased their exposure to LVLU stock. Overall, LVLU has a maximum Smart Score of 10 on TipRanks.

Bottom Line 

Superior Industries and Lulu’s Fashion have well-established businesses and are benefitting from the continued momentum in their businesses. Further, with positive signals from analysts, hedge funds, insiders, and retail investors, these stocks have a maximum Smart Score, implying they are more likely to outperform other penny stocks.  

Disclosure 

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