In his iconic song The Gambler, Kenny Rogers famously sang, “Every hand’s a winner, and every hand’s a loser.” This line offers valuable wisdom for investors: no matter the strategy, success in the stock market ultimately depends on how well you navigate the balance between risk and reward.
Few corners of the stock market present a greater potential return for the risk than penny stocks, which trade at $5 or less. These ultra-low-priced equities offer an attractive entry point for investors looking to seize high-risk, high-reward opportunities.
The low entry cost of penny stocks offers the potential for substantial gains, as even a small increase in share price can lead to impressive percentage returns. It’s not uncommon for penny stocks to have upside potentials of 300%, 400%, or more. However, the other side of the coin is just as important – with high reward comes heightened risk.
The key here is to find the difference between penny stocks priced low due to weak fundamentals, and those that are undervalued, with real potential to soar.
To help with the due diligence process, we used the TipRanks database to zero in on only the penny stocks that have received bullish support from the analyst community. We found two that not only hold a “Strong Buy” consensus rating but also carry projections of over 500% gains in the coming months. Let’s take a closer look.
Regulus Therapeutics (RGLS)
We’ll start with Regulus Therapeutics, a clinical-stage biotech company innovating treatments for genetically driven orphan diseases, which are often hard to treat. Regulus is currently focused on nephrology, specializing in kidney diseases. Its lead drug candidate, RGLS8429, is in clinical trials targeting Autosomal Dominant Polycystic Kidney Disease (ADPKD).
ADPKD is one of the most common life-threatening heritable kidney diseases, causing serious degradation in kidney function and having multiple potentially lethal side effects. Regulus has developed a microRNA approach to treating this and other genetic diseases. This approach targets protein expressions that are regulated by microRNA molecules, and in early testing, the company’s drug candidate has demonstrated that it can ‘preferentially distribute our therapeutic molecules to the kidney,’ a key advantage in treating a genetic kidney disorder.
RGLS8429 is currently undergoing a Phase 1b multiple ascending dose trial as a potential treatment for ADPKD. In June of this year, the company released topline data showing positive results from the trial’s third cohort, results that were statistically significant and encouraged the company to continue the trial with a fourth cohort. Regulus confirmed the enrollment of the fourth cohort, bringing the Phase 1b MAD trial to a total of 26 participants, with further results anticipated in early next year.
Looking beyond the current trial, Regulus states that it remains on schedule to meet with the FDA before the end of the current calendar year, to outline its plans for further clinical trials when the current Phase 1b study concludes.
The quality of Regulus’ Phase 1 study, and its potential for further development, has caught the eye of Canaccord analyst Whitney Ijem, who writes of the company and its drug candidate: “While there has yet to be a miRNA-based therapeutic approved, RGLS has an anti-miRNA-17 product in Ph1b development for Autosomal Dominant Polycystic Kidney Disease (ADPKD), a disease with ~160k diagnosed patients in the US alone. Early clinical data are highly encouraging showing both positive safety data as well as impressive early efficacy.”
“RGLS continues to be one of our top ideas given the significant upside potential (yes, our PT represents >1000% potential upside) though remains relatively under the collective radar. We think that could change early next year with more data + confirmation of accelerated pivotal trial plans that could bring this best in class therapy to an underserved, large rare disease,” the analyst added.
To this end, Ijem rates RGLS shares a Buy, along with a $28 price target, suggesting a robust 1,791% upside for the next 12 months. (To watch Ijem’s track record, click here)
Overall, it’s clear that the Street likes RGLS shares; the stock has 6 recent analyst reviews that include 5 Buys against a single Hold, supporting its Strong Buy consensus rating. With a current trading price of $1.48 and an average target price of $10.80, Regulus’ shares boast a ~630% potential upside on the one-year horizon. (See RGLS stock forecast)
Ventyx Biosciences (VTYX)
Next up is Ventyx Biosciences, a biopharmaceutical company that targets autoimmune and inflammatory disorders. These conditions, known for their chronic symptoms, can severely impact patients’ quality of life and often resist treatment with existing therapies.
Ventyx is working on a line of orally dosed medications to treat these conditions, which, in itself, would mark an important advance as most current drug treatments are dosed via injection or IV infusion. The company is hoping to shift the treatment regimen from injectable drugs to oral medications – while also meeting the high unmet medical needs created by the targeted diseases.
Currently, Ventyx has four drug candidates at the clinical trial stages. These include potential treatments for ulcerative colitis, Parkinson’s, obesity, and cardiovascular conditions.
Leading the pipeline is VTX002, aimed at treating ulcerative colitis. On the 15th of this month, the company presented 52-week results from the Phase 2 trial on this indication. The data showed high rates of clinical remission and endoscopic remission, as well as a potential best-in-class safety profile.
Additionally, in September, Ventyx initiated patient dosing in a Phase 2a trial of VTX3232, an NLRP3 CNS-penetrant targeting Parkinson’s disease. This open-label, 28-day trial is enrolling 10 patients in the early stages of the disease, with a focus on safety and tolerability. Topline results are expected next year. VTX3232 also has potential applications in the treatment of obesity and neuroinflammatory diseases.
On the financial front, Ventyx announced a major development in late September: a $27 million investment from Sanofi. In exchange, Ventyx granted Sanofi exclusive rights for first negotiation on specific VTX3232-related programs.
For Jefferies analyst Michael Yee, the key point here is that Ventyx is on an upswing. He notes that the company faced headwinds recently when investor excitement did not pan out – but explains that the current optimism on the stock appears to be more durable.
“Stock had a big run-up earlier this year on competitor’s NLRP3 mouse data and a potential obesity drug in the pipeline, but it soon came back down because investors didn’t fully appreciate VTYX’s preclinical data and the fact that a competitor didn’t show material % weight loss data in their 28-day in-human study. We point to potential upside for VTYX — which is now trading way below cash — as the co expands clinical activities in obesity, Parkinson’s, and recurrent pericarditis, and now with multiple potential clinical readouts in 2025 to bring potential stock upside… The $27M equity investment from SNY further validates NLRP3 and helps VTYX with financing w/ runway to H2/26,” Yee opined.
Yee goes on to give VTYX shares a Buy rating, which he complements with a $15 price target indicating his confidence in a ~573% gain in store for the coming year. (To watch Yee’s track record, click here)
All in all, the Strong Buy consensus on Ventyx is based on 8 recent analyst reviews that include 6 to Buy and 2 to Hold. The shares are currently trading for $2.23 and their $11.29 average price target implies a one-year upside potential for the stock of nearly 405%. (See VTYX stock forecast)
To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a 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.
