TipRanks
Billionaire Ken Griffin pulls the trigger on these two penny stocks
Risk and reward are the yin and yang of stock trading, the two opposite but essential ingredients in every market success. And there are no stocks that better embody both sides – the risk factors and the reward potential – than penny stocks. These stocks, which are priced below $ 5 per share, usually offer high upside potential. Even a small increase in the share price – only a few cents – quickly translates into a high return. The risk, of course, is also real; not every penny will show these kinds of profits, some are cheap for a reason and not every reason is good. So, how are investors supposed to differentiate between the long-term winners and those who will soon fall short? One of the strategies is to track the activities of the investing titans. Hedge fund manager Ken Griffin, head of investment firm Citadel, is one of the titans and has turned his college business – from a computer into his dorm – into a billion-dollar market giant. A look at Griffin’s performance during the coronavirus crisis shows how successful he can be. In March last year, when corona knocked the bottom out of the market, Griffin’s Citadel still achieved a net positive return of 1.7%. And for the year as a whole, Citadel’s revenue was $ 6.7 billion, almost double the previous high in 2018. We went to Griffin for inspiration, and we recently researched two penny shares of Griffin. Using the TipRanks database to find out what the analyst community has to say, we learned that each tick boasts buy ratings and great upside potential. Abeona Therapeutics (ABEO) We will start with Abeona Therapeutics, a clinical-stage biopharmaceutical company focusing on gene and cell therapy. It is a cutting-edge field that uses the latest genomic technology to treat genetic diseases by inserting corrected copies of the DNA directly into the affected cells. Abeona has seven drug candidates in the pipeline, with EB-101 and ABO-102 the furthest, and most for investors. EB-101 plans to launch a Phase III trial as a treatment for Recessive Dystrophic Epidermolysis Bullosa (RDEB). It is a disorder of the connective tissue, which suffers from severe lesions and wounds in the skin. The cause is a genetic defect that causes patients to be unable to produce the collagen needed to secure the skin layers. If approved, EB-101 will be the first – and only available – treatment for RDEB. Treatment involves the use of the agent to transplant the affected gene into the skin cells of the patient, which is then transplanted into the affected skin areas. In early phase trials, the drug was well tolerated by patients, who showed clear improvement up to 2 years after treatment. The phase III trial is now taking patients. ABO-102, the second-longest drug candidate, is in a phase I / II study as a treatment for Sanfilippo syndrome, a deadly disease in early childhood. The syndrome is currently not treatable except through supportive care, and affected children usually survive to the age of 15. ABO-102 is a drug given by a single IV infusion. It delivers working copies of the affected gene to the child’s central nervous system so that the body can naturally correct the enzyme deficiency behind the disease. Both of these drug candidates received drugs in the U.S. and Europe, which made government assistance available for their development. In addition, they also received the FDA’s rare indication for rare diseases for children. The medical pipeline from Abeona and the $ 2.22 share price significantly boosted Wall Street benefits. This is the position Griffin takes. Citadel increased its stake in the company by a whopping 181% and raised 1.466 million shares in the fourth quarter, now worth $ 4.06 million. 5-star analyst Ram Selvaraju, of HC Wainwright, also considers himself a fan. Selvaraju recently published two notes on ABEO, focusing on the potential of both EB-101 and ABO-102. Regarding the first, the analyst notes that the “After the successful completion of the FDA meeting, Abeona continues with all the necessary steps to enroll the next patient in the VIITAL study and expects to complete the enrollment in 2021 … We believe the FDA meeting and consequent feedback is good for Abeona as the agency is apparently on board the company’s study design and statistical analysis plan for the VIITAL [Phase III] trial … ”Referring to ABO-102, Selvaraju said,“ In our opinion, this data is very intriguing and is being monitored to see if it can be confirmed in a larger patient group. From our point of view, the preservation of neurocognitive development in young children with MPS IIIA is probably the most important measure of effectiveness that resonates with regulators. Consistent with his optimistic view, Selvaraju ABEO is considering a buy, along with a price target of $ 8. If his thesis plays out, a potential twelve-month jump of ~ 264% could be in the card. (To see Selvaraju’s record, click here. Overall, 2 buys and no hold or sell were awarded in the last three months. Therefore, the analyst’s consensus is a moderate buy. At $ 6.50, the average price target sets upside potential at ~ 188%. (See ABEO stock analysis on TipRanks) Mereo Biopharma (MREO) The second stock we are looking at, Mereo, is another biopharmaceutical company focusing on rare diseases. Mereo has a large and diverse pipeline, with six drug candidates in different stages of development.The company’s research programs examine, among other things, treatment for solid tumor cancer, ovarian cancer and chronic obstructive pulmonary disease, among other serious conditions.Griffin is one of those who have high hopes for this health care name.Griffin’s Citadel acquired 4.097 million shares in the fourth quarter, now worth $ 16.3 million, with the biggest news for Mereo being the December 17 announcement of a joint venture and license agreement with the California company Ultragenyx for the further development of Setrusumab, a candidate being tested as a treatment for osteogenesis imperfecta, or cartilage bone disease. This incurable condition is usually treated with lifestyle changes and exercise. However, in phase 2b studies, cetrusumab has been shown to cause dose-dependent increases in bone formation in affected adults. Leerink analyst Joseph Schwartz writes about the Mereo / Ultragenyx partnership: “Although the RARE / MREO agreement was unexpected, we were not surprised by the news, as MREO was looking for a partner and RARE had enough experience with the development and introduction of successful bone agents … considered [the] announcement as a win-win for both RARE and MREO because the two can complement each other’s strengths to bring setrusumab to market. In light of these comments, Schwartz rates MREO shares as a buy, and its price target of $ 8 indicates that it has an upward one year of 103%. (To see Schwartz’s record, click here.) Some stocks are flying under the radar, and MREO is one of them. MREOs is the only recent analyst review of this company, and it is definitely positive. (See MREO stock analysis on TipRanks) To find great ideas for penny stocks at attractive valuations, visit TipRanks ‘best stocks to buy, a newly introduced tool that unites all of TipRanks’ shares on the stock. 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.