2 promising penny stocks to buy on the downside

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For those willing to endure volatility, penny stocks offer an exciting opportunity to enter the ground floor of tomorrow’s successful businesses.

Here are two that might fit my portfolio:

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red cat backgrounds

This Puerto Rico-based company produces drone products, technologies, and services.

Over the past decade, drones have become increasingly visible in parks, beaches, and other open spaces.

Besides the hobbyist drone market, the technology is also being adopted in a range of industries, from videography to weather monitoring, firefighting and even delivery services.

red cat backgrounds (NASDAQ:RCAT) offers investors a chance to get a share of the drone market, valued at $100 billion in 2020 and growing at 20.5% annually.

Most eye-catching is the company’s “drone box” technology, which is the equivalent of the “black box” on an airplane. By tracking drone flight data, the technology makes it easier for operators in this nascent industry to comply with increasing regulatory requirements and qualify for drone insurance.

Then there’s Rotor Riot, which is the retail and media arm of Red Cat Holding, which streams smooth YouTube videos for its 200,000 subscribers, drawing customers to its online drone store, rotorriot.com.

Red Cat Holdings is a small fish in this business, and its lunch could end up being eaten by behemoths like Chinese drone makers DJI or Yuneec.

But with year-over-year revenue growth in the last quarter up more than 300% from $428,000 to $1.9 million, Red Cat Holdings is gobbling up shares so far. market in this booming sector.

Trading at $2, down more than 8% year-to-date, I’d be happy to buy the Red Cat Holdings drop, which is priced at a reasonable multiple of 12x trailing sells.

Clovis Oncology

This Colorado-based small-cap pharmaceutical company saw its stock price soar more than 100% in June, from $0.66 to $1.49, following the release of positive interim clinical trial results of phase 1/2 for one of its patented medicines.

Still, brave investors can talk about “buying the dip” on Clovis Oncology (NASDAQ:CLVS) as risk aversion sentiment triggered by rising interest rates and high inflation is causing the company’s stock price to trade at a 48% discount from the start. of 2022.

Clovis Oncology offers two main products:

  • Rucaparib, sold under the brand name Rubraca, is a pill for certain types of ovarian and prostate cancer that has been approved for use in the UK, EU and US.
  • FAP-2286, a radioactive substance that binds to solid tumors for imaging and therapeutic purposes. FAP-2286 has not yet been approved for use anywhere.

On June 14, Clovis Oncology announced positive results from its Phase 1 trial of FAP-2286, leading to a massive increase in its stock price.

Other news from the company’s FAP-2286 trial will likely lead to equally large price swings – and new investors could suffer surprising losses if the drug’s effectiveness is called into question by unfavorable results.

So far, however, the trial is going well and none of the nine patients who received FAP-2286 for solid tumors had to discontinue or reduce their dosage due to side effects, while one of the patients showed a partial response to radiotherapy. medication.

Garland K. Long