Wall Street has mixed feelings about low-cost stocks. These tickers change hands for less than $ 5 a share or attract investors with their high return potential or make them run for the hills, but why?
When we say high potential for return, we are not exaggerating. Bargain price points allow investors to grab more shares than would be possible when investing in other well-known names. Furthermore, even what appears to be a trivial appreciation of the share price can translate into massive percentage gains.
That said, there is a legitimate reason for some investors to be cautious when it comes to low-cost stocks. The risk involved in these moves scares the weakest, as very real problems, such as weak fundamentals or oppressive winds, can be masked by low stock prices.
So, how should investors approach potential investment in penny stocks? Following a suggestion from the analyst community. These experts bring in-depth knowledge of the sectors they cover and substantial experience to the table.
With that in mind, we used the TipRanks database to find two attractive stocks, according to Wall Street analysts. Both tickers have a strong buying consensus rating and very high bullish potential.
BioPharma Matins (MTNB)
By using its lipid nano-crystal (LNC) platform delivery technology, Matinas BioPharma hopes to solve complex challenges related to the oral delivery of small molecules, genetic therapies, vaccines, proteins and peptides. Currently priced at $ 0.87 each, several Street members believe the stock price represents an attractive entry point.
Writing for BTIG, 5-star analyst Robert Hazlett points to MAT2203 as a key component of his optimistic thesis. The therapy was designed as a liposomal nanocrystal (LNC) version of the broad-spectrum antifungal amphotericin B that allows oral administration of the drug.
Prior to the Phase 2 EnACT trial evaluating the candidate for cryptococcal meningitis, with Cohort 2 enrollment set to start in the short term and the next DSMB data expected in mid-2021, Hazlett points out that this is “the first of potentially several indications with the new antifungal. “
Further explaining his optimism about the therapy, Hazlett stated: “There was unanimous recommendation from the independent DSMB to move on to the second EnACT patient cohort, which is a validation event for MAT2203, as progression through the cohorts is assessed by the rate of fungal elimination of the CSF and the absence of rebound in the fungal count and progression through the EnACT cohorts, therefore, signal MAT2203 activity and its successful crossing of the blood brain barrier (BBB) to maintain a reduced fungal count in the CSF.
In addition, the registration for ENHANCE-IT, a face-to-face test of MAT9001 compared to Vascepa de Amarin, has been completed. MAT9001 is the MTNB-free fatty acid formulation of EPA and DPA and, according to Hazlett, generates substantially higher levels of EPA in the blood than Vascepa.
If that weren’t enough, the company recently announced a collaboration with NIAID to study a liposomal nanocrystalline (LNC) formulation of Gilead remdesivir, for an oral formulation of COVID-19 therapy. “We believe that this collaboration further validates Matinas’ LNC technology,” commented Hazlett.
In line with his optimistic stance, Hazlett values MTNB as Buy, and its target price of $ 5 implies room for a surprisingly high potential of 474% in the next 12 months. (To look at Hazlett’s history, click here)
Moving on now to the rest of the street, other analysts agree with Hazlett’s sentiment. As only purchase recommendations have been published in the past three months, MTNB obtains consensus from Strong Buy analysts. With the average price target of $ 4, shares may rise 359% from current levels. (See MTNB stock analysis at TipRanks)
Equillium (EQ)
Taking advantage of a deep knowledge of immunology and its role in diseases, Equillium is developing innovative therapies for severe autoimmune and inflammatory diseases. With the shares trading at $ 4.25, some analysts believe that now is the time to pull the trigger.
After the company’s Analyst Day highlighting its clinical programs for the anti-CD6 monoclonal antibody itolizumab, Leerink analyst Thomas Smith remains optimistic about its long-term growth prospects.
During the event, EQ released responses from individual patients along with biomarker analyzes, coming in the wake of recent positive provisional data from the first three cohorts of the Phase 1b EQUATE trial studying itolizumab in acute graft versus host disease (aGVHD). In the future, the company wants to drive dose expansion in Cohorts 2 and 3, enrolling three additional patients in each cohort, with first-line trial results expected for 1H21.
Looking at the initial data from the phase 1b EQUATE trial, he showed rapid, deep and durable responses to itolizumab in aGVHD, in Smith’s opinion. As for the updated data, there was an overall response rate (ORR) of 80% at all doses on day 57, with 8 out of 10 patients achieving a complete response (CR). Furthermore, the therapy was also linked to the ability to gradually decrease and reduce the use of systemic steroids in patients.
“These results align with data from biomarkers that show that itolizumab rapidly decreased CD6 expression in CD4 and CD8 T cells. We believe these results are compelling and support EQ’s plans to expand the dosage to additional GVHD patients at dose levels of 0.8 mg / kg and 1.6 mg / kg, ”explained Smith.
As if that were not enough, EQ presented preclinical and translational research supporting the Phase 1b EQUALIZE study for itolizumab in systemic lupus erythematosus (SLE) and lupus nephritis (LN), and Smith expects first-line results in SLE in 1Q21 and the provisional results in LN at 2H21.
To this end, Smith evaluates EQ as a Buy together with a target price of $ 18. If that goal is reached next year, investors can pocket a ~ 328% gain. (To look at Smith’s history, click here)
What does the rest of the street have to say? 3 purchases and no retentions or sales add up to a strong purchase consensus rating. Given the average price target of $ 15, the shares could skyrocket 328% next year. (See EQ stock analysis at TipRanks)
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Legal notice: The opinions expressed in this article are exclusively those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.