The first half of 2022 was marked by concerns over inflation, rising interest rates and recession, with the S&P 500 registering its worst half year since 1970.
However, not everyone is seeing dark times ahead. Marko Kolanovic, head of global markets strategy for JPMorgan, believes that current conditions may also be a set-up for a rebound in the second half of the year, especially among the small-cap stocks. Kolanovic writes of this case, “If there is no recession – which is our view – then risky asset prices are too cheap. For instance, small cap stocks in the US currently trade near the lowest valuations ever.”
If Kolanovic is right, and we’re looking at a potential rebound in the small-cap sector, then the natural response for investors would be a move toward the ‘pennies,’ the stocks priced below $5 per share. While not always a sure indicator, low share price usually goes hand-in-hand with low market cap – but it also comes with the solid upside potential, as even small gains in absolute terms can quickly turn into large-percentage increases in share price.
That said, before jumping right into an investment in a penny stock, Wall Street pros advise looking at the bigger picture and considering other factors beyond just the price tag. For some names that fall into this category, you really do get what you pay for, offering little in the way of long-term growth prospects thanks to weak fundamentals, recent headwinds or even large outstanding share counts.
Taking the risk into consideration, we used TipRanks’ database to find 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 over 200% upside potential here.
Codiak BioSciences (CDAK)
We’ll start with Codiak BioSciences, a medial research firm working on new therapeutics agents for the treatment of a wide range of diseases that have in common high levels of unmet medical needs. Codiak’s main research focus is on exosomes, or the RNA…
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