The stock markets have been on a roller-coaster ride in recent sessions. However, while volatility is ruling for now, some market watchers see a rising trend on the near horizon.
Setting the tone for this bullish outlook is Credit Suisse strategist Jonathan Golub, who raised his S&P 500 outlook twice in the last two months. Back in January, Golub predicted that the index would hit 4,200 by the end of this year; he has now upgraded that target to 4,300, which implies an upside of 11%.
Backing his stance, Golub writes, “With the economy reopening, stimulus abundant, and Fed policy uber-accommodative, it is no surprise that 2021 GDP is expected to run hotter than at any time in the past 35 years.” The strategist then goes on to tick of some of the boxes that point toward gains: “Rising rates — a benefit to Financials — and copper and oil prices — a boon for Industrials, Energy, and Materials — further augment this favorable backdrop.”
Taking this outlook into consideration, we set out to find exciting opportunities that won’t break the bank, namely penny stocks. These stocks, priced at $5 or less, offer investors some of the highest growth potential available in the market. There is risk here, too, as the ‘pennies’ are often priced low for a reason, so due diligence is essential.
Using TipRanks’ database, we pinpointed two compelling penny stocks, as determined by Wall Street pros. Each has earned a “Strong Buy” consensus rating from the analyst community and brings massive growth prospects to the table. We’re talking about triple-digit upside potential here.
Daré Bioscience (DARE)
We’ll start with Daré Bioscience, a clinical-stage biopharma company with a focus on women’s health. The company is working to develop and commercialize a series of therapeutics to improve the treatment options available to women in the areas of contraception, fertility, and sexual and vaginal health.
Daré has a large and active pipeline program, with 9 drug candidates in various stages of the development process. The leading drug candidate, DARE-BV1 or clindamycin, is an antibiotic gel ointment for the treatment of bacterial vaginosis, the most common form of vaginal infection. In December, the company announced positive topline results from the Phase 3 trial, with patients taking DARE-BV1 showing upwards of 70% clinical cure rate by the end of study.
Daré’s second leading candidate, Ovaprene, is a self-administered, hormone-free monthly female contraceptive. Ovaprene is currently in its pivotal trial, and is expected to show topline data in 2022.
Other drugs in the company’s pipeline are under study as hormone replacement therapy and for the treatment of vulvar and vaginal atrophy.
Thanks to its promising pipeline, several members of the Street are pounding the table on this name, which trades for $1.80 per share.
The company’s research program has caught the eye of 5-star analyst Zegbeh Jallah, from Roth Capital, who has made the stock one of the firm’s top picks.
“With multiple catalysts expected in 2021, and with our overall positive outlook on the Women’s Health category, Daré is another of our top SMICRO cap picks for 2021…. This microcap company is in a strong position to also see a doubling or more of its stock over the next six to twelve months,” Jallah noted.
The analyst added, “Daré announced that Phase 3 top-line data for DARE-BV1 met its primary endpoint… The reported cure rate was also superior to the most commonly used treatment for BV, Metronidazole (70% vs. 64%). These results increase the probability of success of DAREBV1’s approval by YE2021, as well as the potential for a highly lucrative commercial partnership…”
To this end, Jallah rates DARE shares a Buy, and his $9 price target implies an eye-popping upside potential of 400% by the end of this year. (To watch Jallah’s track record, click here)
What does the rest of the Street think? It turns out that they wholeheartedly agree with Jallah. With 3 Buy ratings and no Holds or Sells, the message is clear: DARE is a Strong Buy. If that wasn’t enough, the $7.17 average price target puts the upside potential at ~298%. (See DARE stock analysis on TipRanks)
Aptose Biosciences (APTO)
Next up is Aptose Biosciences, a clinical-stage biopharma company focused on unmet clinical needs in the treatment of chronic lymphocytic leukemia (CLL), non-Hodgkin’s lymphoma (NHL), acute myeloid leukemia (AML), and myelodysplastic syndrome (MDS). In short, Aptose is working to improve the efficacy of treatments for hematologic malignancies.
The company’s leading candidates, CG-806 and APTO-253, are both in early phase trials. CG-806 is the subject of two separate trials and studies, for the treatment of B-cell tumors and myeloid tumors. The Phase 1a/b study is expected to show early results by mid-21. APTO-253, which is in a Phase 1b trial for the treatment of AML and MDS, is expected to show early results by mid-21 as well.
In December of last year, early data on the CG-806 trial for the treatment of CLL and NHL (the B-cell tumor study), was less conclusive than had been hoped. While several patients showed a reduction in tumor size, there were no objective responses. In addition, two out of three patients reported adverse effects and stopped the treatment early – although there is no reason at present to suspect the adverse effects were caused by CG-806. The result was less clinical evidence than had been hoped for at this early stage, and a likely prolongation of the early trial period.
5-star analyst Soumit Roy, of JonesTrading , looks at Aptose’s CG-806 study as a major net positive for the company, and believes the current low price is a buying opportunity.
“Aptose is at the cusp of identifying the go-forward dose in r/r CLL and r/r AML. CLL trial is currently going through the dose escalation phase and multiple biological readouts like PK/PD, dose dependent lymphocytosis and biochemical detection of inhibition of BTK/Flt3 signaling indicates 600/750/900 mg BID dosing will be RP2D. We believe YE21 update would be a key driver for APTO as the registration path becomes clearer,” Roy noted.
Turning to the drug’s potential, Roy adds, “With potential market launch in 2024, 30% peak market penetration in 5 years, and 45% probability of success, we estimate WW adjusted peak sales of approx. $620MN in 2030.”
Roy backs up his optimistic comments with a Buy rating and a $14 price target that suggests an impressive one-year upside of 255%. (To watch Roy’s track record, click here)
Even though this stock saw a collapse in December, Wall Street is still taking an upbeat view. This can be seen by the 5 recent Buy reviews, making a unanimous Strong Buy analyst consensus rating. Aptose shares are trading for $4.04, and their $11.20 average price target implies an upside of 193% in the next 12 months. (See APTO stock analysis)
To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
