Penny stocks to watch: The healthcare sector offers some of the best profit opportunities on the market as companies unveil new treatments, drugs, and products with huge revenue potential. In late February, Forbes reported that eight of the top nine small-cap performers on the Russell 2000 Index - and the three biggest small-cap winners year-to-date - all hailed from the biotechnology space.
That's exactly why these three healthcare stocks have landed on our "penny stocks to watch" list. They all have the potential to add to their revenue streams and boost shareholders' investments this year.
Penny stocks can bring investors serious gains - sometimes even triple-digit gains - in a short period of time. Because penny stocks are illiquid and often extremely volatile, investing in penny stocks can be risky. But there's no denying the profit potential from these small-cap stocks, and investors on the right end of a price swing can find major windfalls.
Healthcare penny stocks in particular have tremendous upside potential, as small-cap companies frequently develop breakthrough drugs or products. When these new therapies hit the market, investors win big.
These three penny stocks to watch in 2014 represent some of the most promising in the healthcare industry...
Three Healthcare Penny Stocks to Watch 2014
Biomerica Inc. (OTCBB: BMRA) is a biotech company that develops products primarily for medical universities, pharmaceutical companies, hospitals, clinics, laboratories, and physicians. The company's products help with the early diagnosis of human diseases and conditions.
This week, Biomerica announced that it received two new China Food and Drug Administration (CFDA) approvals for its parathyroid hormone (PTH) and calcitonin products. BMRA also announced that these products will be circulated through a new distribution channel and that this new distributor is one of the top three leading vitamin D test suppliers in China.
That's important news because vitamin D testing is used in the detection of PTH diseases. According to Biomerica, 100 million vitamin D tests were conducted worldwide in 2013. That number is expected to grow to 140 million by 2015.
BMRA stock is up nearly 13% in the last year and currently trades at $0.93 per share. The company has a market cap of just $7.02 million. Zacks Investment Research ranks BMRA stock as a "#1 Strong Buy," the highest rating the research firm gives.
BMRA isn't the only healthcare penny stock to watch in 2014. Our next two also have major pop potential - Zacks expects one to post earnings growth of nearly 69% in 2014, while the other has already gained 58% in stock value so far this year...
Avanir Pharmaceuticals Inc. (Nasdaq: AVNR) develops treatments for ailments of the central nervous system, cardiovascular disorders, inflammation, and infectious diseases. Its lead candidate is FazaClo, which is used to treat severe schizophrenia.
At the end of May, Avanir announced that it was enrolling patients for the phase 2 trials of its drug AVP-923, which is used to treat agitation in Alzheimer's patients. At the time of the announcement, AVNR officials noted that success in those phase 2 trials would help guide the company as it prepares for the phase 3 trials of its other drug, AVP-786, which is designed to treat similar symptoms.
Any positive news during clinical trials can send small-cap pharmaceutical stocks soaring, and conversely, any bad news can send stocks crashing. Because clinical trials can be so difficult to pass, investors will want to keep a close eye on AVNR's upcoming reports. For now, this may be more of a speculative investment - but it has big potential.
AVNR stock is on the pricier end for a penny stock at $5.26 per share. In 2014, AVNR stock has gained more than 56%.
Agenus Inc. (Nasdaq: AGEN) develops immunotherapies that are used to treat life-threatening and chronic medical conditions. The company's lead drug is Oncophage, which is a therapeutic cancer vaccine.
Agenus also has several drugs in its development pipeline, including two vaccines for cancer treatment and a vaccine for genital herpes. Companies with deep product pipelines are attractive to prospective investors because they have a higher chance of receiving FDA approval. If a company hinges on one product and can't secure FDA approval, shareholders can be left holding worthless shares.
AGEN has beaten consensus earnings estimates for three consecutive quarters, and last quarter the company outpaced estimates by 92%. Additionally, analysts at Zacks Investment Research expect AGEN to post earnings growth of nearly 69% this year.
AGEN stock is up 20.89% in 2014. It hit a 52-week high of $5.27 in late February and has since pulled back. At around $3 per share, AGEN is trading at a discounted price.
Which companies are on your "penny stocks to watch" list? Join the conversation on Twitter @moneymorning using #Penny Stocks.
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