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These two penny stocks could yield three-figure gains, analysts say
Is there a pause in the continued rise in the stock market? The conversation pointed to rising interest rates and inflation against the backdrop of growth driven by Covid fiscal stimulus. Strategists, however, say it is not yet necessary to sound the alarm. According to Goldman Sachs stock strategist Ryan Hammond, the stock market may stay with us for a while. Hammond notes that interest rates remain low and considers this to be the most important factor. “Given the historically low interest rate, we expect interest rates to remain well below the levels that would be considered a ‘tipping point’ for equities,” Hammond said. Hammond points to the broader markets and points out that the S&P 500 performance has been positively correlated with inflation betting since 2012. “Improving growth expectations often coincides with higher break-even inflation, rising earnings expectations and improving investor sentiment, which more than offsets the higher discount rate,” Hammond wrote, supporting his belief that fears of inflation should remain low. With the low rate and inflation, it makes the stock market the best place for investors looking for higher returns. And within the stock market, penny stocks will definitely attract attention. These names, which are traded for less than $ 5 a share, are considered to be among the most controversial on the street, dividing market viewers into two factions: critics and supporters. The former brings a valid argument to the table. Shares are not just trading at such low levels; mostly there is a very real reason for their cheap price tags. As for the latter, the potential for an investment that is only worth appreciating even a seemingly insignificant amount, the result of which can be a large percentage of profit, is tempting to ignore. The implication for investors? Careful investigations are necessary as some penny stocks may not have the need to climb again. Using TipRanks’ database, we identified two compelling penny stocks, as determined by Wall Street professionals. Each has achieved a ‘Strong Buy’ consensus rating from the analyst community and brings great growth prospects to the fore. We are talking here about triple digit upside potential. Checkpoint Therapeutics (CKPT) We will start with Checkpoint Therapeutics, a biopharmaceutical company operating in the oncology field. Checkpoint acquires, develops and commercializes immune-enhanced combination treatments for solid tumor cancer. Checkpoint has two leading candidates for medicine, CK-101 and CK-301. CK-101, known as cosibelimab, is a small-molecule-targeted drug against cancer, which is currently undergoing a Phase 1/2 clinical trial for the treatment of specific non-small cell lung cancer (NSCLC). The drug candidate targets cancers that are susceptible to the EGFR mutation, making it applicable to approximately 20% of NSCLC patients. The drug has shown promise compared to traditional chemotherapy treatments. Further studies will test CK-101 against tumor progression due to resistance mutations. The second candidate, CK-301, is an antibody drug currently in a phase 1 clinical trial focused on patients with selected recurrent or metastatic cancers. The selected cancers include NSCLC, as well as metastatic melanoma, renal carcinoma, head and neck cancer, and urothelial carcinoma. All of these cancers respond to the therapeutic action of CK-301, an antitumor response due to the blockade of the PD-1 / PD-L1 interaction. CK-301 showed an objective response rate of 44% in treated patients during the Phase 1 study, together with a median of a progression of 10.3 months without survival, compared to currently available approved treatments. Based on these results, the company is continuing with its clinical phase program, including an early registration of patients for a phase 3 study. Among the fans is Jennifer Kim, Cantor’s analyst, who writes: ‘We think the risk reward is favorable to enable the full phase version of cosibelimab in the metastatic CSCC in 2H21. We consider this to be the most important short-term focus for CKPT. We expect a positive reading based on what we considered to be strong interim data recently presented for cosibelimab (SITC 2020, ESMO 2020). The analyst added: “In our opinion, the potential peak selling opportunity for cosibelimab is not appreciated, and we expect the upward appreciation of earnings in CKPT shares to be higher.” Consistent with her optimistic outlook on the potential for cosibelimab, Kim estimates that CKPT has an overweight stock (ie buy), and its $ 16 price target indicates confidence in an upward potential of 331% for the stock. (To view Kim’s record here, click here.) If we now look at the rest of the street, other analysts are on the same page. With only Buys awarded over the past three months, 3 to be exact, word on the street is that CKPT is a strong buy. On top of that, the average price target of $ 17.67 brings the upside potential to 365%. (See CKPT stock analysis on TipRanks) Galmed Pharmaceuticals (GLMD) Next we have Galmed Pharmaceuticals, a clinical stage of biotechnology specializing in liver, metabolic and inflammatory diseases. The company’s main candidate is aramchol, a liver-targeted SCD-1 modulator designated for the treatment of non-alcoholic steatohepatitis (NASH), for which the FDA has been granted Fast Track designation status. NASH is a fatty liver disease, which is closely linked to obesity, for which there are currently no drugs available. Due to the growing obesity rates, the market for NASH medicines is expected to grow significantly over the next few years, and some believe it may be worth $ 35 billion. Whoever brings a solution into play can make nice money. Aramchol has completed Phase 2a and Phase 2b trials and is currently in Phase 3. However, enrollment for the study has recently been temporarily halted; Aramchol meglumine – an NCE (new chemical entity) with extended IP compared to aramchol, and after which the company switched – was earmarked to take aramchol’s place in the ongoing Phase 3 ARMOR study. In Q2, Galmed expects to sit down with the FDA to discuss the replacement of aramchol meglumine for aramchol, and submit the IND in 1H21. Steven Seedhouse, analyst at Raymond James, believes the company played its cards right. ‘Of course, postponing Phase 3 by one year in a competitive NASH field is suboptimal, but since all NASH trials are delayed by COVID anyway, we think Galmed has made the right decision to move on now na aramchol meglumine. At this stage, FDA approval remains the most important catalyst in 2021, followed by 24-week open data from the first group, ‘says the 5-star analyst. Galmed also recently added a new candidate to the pipeline called Amilo-5MER, a 5 amino acid peptide that inhibits Serum Amyloid A (SAA) polymerization and aggregation. The company believes that Amilo-5MER may play a role in numerous indications, such as inflammatory bowel disease, rheumatoid arthritis and COVID-19. “Preclinical data provided by Galmed show good activity in IBD and RA mouse models … This adds an interesting new value driver for Galmed outside of NASH, which continues,” Seedhouse added. To this end, Seedhouse rates GLMD as a better performer (i.e. buy), coupled with a price target of $ 17. If its dissertation plays out, a twelve-month profit of 270% could be possible in the card. (To view Seedhouse’s record, click here.) Wall Street analysts stand firm on Galmed’s side; The stock’s strong buy consensus rating is based solely on Buys – a total of 4. Like Seedhouse, other analysts expect big returns; The average price target, at $ 19, implies a profit of 314% in the coming year. (See GLMD stock analysis on TipRanks.) To find great ideas for penny stocks at attractive valuations, visit TipRanks ‘best-selling stocks, a newly launched tool that combines all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the proposed analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.