The central idea behind cheap speculative stocks under $3 is simple: small-capitalization investments may lever a greater potential for outsized returns. Of course, that depends greatly on the stars aligning perfectly, which rarely happens. Still, analyst-endorsed ideas could put the odds in the gamblers’ favor.
Another reason why speculative stocks are so enticing is accessibility. Not all brokerages offer fractional ownership of shares. Therefore, some retail investors may be blocked out of investing in popular securities. Plus, there’s a psychological benefit of buying whole shares – and lot of them.
Finally, lesser-known enterprises enjoy a possible opportunity for discovery. Part of the reason why small caps are small is because Wall Street isn’t paying attention to them. But if the spotlight comes their way, the returns could be enormous. That’s the allure behind these high-risk, high-reward speculative stocks to consider.
periodic table concept with black cubes. uranium element is glowing. Uranium stocks
Source: Shutterstock
A volatile but enticing idea among speculative stocks, UR-Energy (NYSEAMERICAN:URG) engages in the acquisition, exploration, development, and operation of uranium mineral properties. Per its public profile, the company holds interests in 12 projects located in the U.S. Its flagship property is the Lost Creek project, comprising a total of approximately 1,800 unpatented mining claims.
Now, before you decide to jump aboard URG stock, you should realize that we’re dealing with an operationally unpredictable framework. For example, in the fourth quarter of 2023, analysts anticipated UR-Energy to post a loss per share of 1 cent. It instead posted a loss of 2 cents. That said, they also believe a turnaround is possible this fiscal year based on uranium market fundamentals.
For the current fiscal year, analysts forecast a loss per share of 2 cents atop revenue of $43.74 million. Last year, losses per share fell to 12 cents on sales of only $17.68 million.
Lastly, analysts rate URG a unanimous strong buy with a $2.89 average price target. The high-side target lands at $3.60.
Bitfarms (BITF)
Bitcoin and crypto mining farm. Big data center. High tech server computers at work. Bitfarms (BITF) mines crypto.
Source: PHOTOCREO Michal Bednarek / Shutterstock.com
Specializing in the mining of the benchmark blockchain asset, Bitfarms (NASDAQ:BITF) doesn’t need much explanation regarding its relevance. With cryptocurrencies skyrocketing since last October, enthusiasm for the ecosystem has been through the roof. Now, Bitfarms along with other mining firms have been choppy as the mining difficulty rate may rise. Still, with the assets priced so robustly, this sector should be lucrative.
Admittedly, though, Bitfarms depends heavily on crypto market sentiment, which can be unpredictable in the best of times. For example, in Q4 2023, the company posted a loss per share of 19 cents. However, analysts were anticipating a loss of only 3 cents per share. In the past three quarters, the average earnings surprise was came out to 236% below parity.
At the same time, analysts are excited about the crypto fervor lifting Bitfarms. They believe sales could reach $217.65 million at the end of this fiscal year. And in 2025, the top line could run up to $690.58 million. For context, 2023 sales was only $146.37 million.
Analysts peg BITF as a unanimous strong buy with a $4.56 price target. For gamblers, BITF could be one of the speculative stocks to consider.
Gritstone bio (GRTS)
Biochemical/biotech research scientist team working with microscope
Source: Mongkolchon Akesin / Shutterstock.com
A clinical-stage biotechnology firm, Gritstone bio (NASDAQ:GRTS) is developing vaccine-based immunotherapy candidates against cancer and infectious diseases. Per its corporate profile, its primary product candidate is Granite, an individualized immunotherapy candidate for the treatment of microsatellite stable colorectal cancers. The company is also developing a therapeutic called Slate, an off-the-shelf immunotherapy candidate.
Of course, speculative stocks within the biotech space – especially those priced under $3 – presents extraordinary volatility risks. That said, the company tends to perform well on paper. For example, in Q4 of last year, Gritstone posted a loss per share of 26 cents, mitigating expectations for a loss of 33 cents. Overall, in the past four quarters, the average positive earnings surprise came out to 10.4%.
For 2024, there’s some debate about its top-line performance. On average, analysts expect sales to fall ot $15.15 million, down from last year’s print of $16.34 million. However, the most optimistic target calls for $48 million. Where agreement lies is 2025, with sales on average potentially hitting $55.81 million.
Finally, analysts rate GRTS a unanimous strong buy with an $8.80 price target. Further, the high-side target stands at an impressive $20. This is one to watch.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
