Due to its low price, penny stocks may seem like a good place to invest your money. But they come with high risk. Depending on the company, especially if it’s traded over-the-counter (OTC) it may be hard to find accurate financial information.

Another issue you may face is liquidity. If you want to purchase a large number of shares, you may find it hard to do so without pushing the price higher.

However, if you find the right penny stock, you could be greatly rewarded.

Avalo Therapeutics, Inc. (NASDAQ: AVTX)

Avalo Therapeutics, Inc. is a clinical-stage biotech company focused on the treatment of immune dysregulation. One of its products, called AVTX-002, is an anti-light monoclonal antibody treatment for non-eosinophilic asthma, Crohn’s disease, and COVID-19.

The company recently announced an asset sale of its rights, title, and interest in assets that are part of the AVTX-800 series to AUG Therapeutics. The company will get a $150,000 upfront payment and up to $15 million for each compound milestone.

Morningstar’s quantitative equity report gives AVTX a fair value of $0.18, which is 18% below the current price of $0.22.

Morningstar quantitative equity report for the AVTX stock. Source: Interactive Brokers Fundamentals Explorer

Affimed (NASDAQ: AFMD)

Affimed is a clinical-stage biopharmaceutical company focused on discovering and developing cancer immunotherapies. Its products are developed in the field of immuno-oncology.

On September 12, the company received a fast-track designation for an experimental therapy of Hodking lymphoma by the US Food and Drug Administration (FDA).

That said, Morningstar’s analyst equity report gives a 119% higher fair value of $1.14 per share, than AFMD’s market price of $0.52.

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Morningstar analyst equity report on the AFMD stock. Source: Interactive Brokers Fundamentals Explorer

ZyVersa Therapeutics, Inc. (NASDAQ: ZVSA)

Immersion Corp is a clinical-stage biopharmaceutical company focused on leveraging advanced technologies to develop drugs for patients with chronic renal or inflammatory diseases. 

The company received an upgrade from analyst firm H.C. Wainwright on September 8, with a ‘buy’ rating and a target price of $2.50.

ZyVersa has been given a fair value of $0.31 by Morningstar’s analyst equity report. That’s 63% higher than ZVSA’s market price of $0.19 per share.

Morningstar analyst equity report on the ZVSA stock. Source: Interactive Brokers Fundamentals Explorer

S&P 500’s 16% return year-to-date has outperformed all three stocks. ZVSA is down 89%, AFMD is down 57% and AVTX is down 95% during the same period.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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Dennis is a business and financial writer, who had spent almost his entire life independently reporting on different business ventures with major impact on the US and global economy. Dennis places a special focus on examining tech stocks, biotech stocks all while investing a great part of his early hours to researching and writing on the companies in the US markets. Dennis has 15+ years of experience in financial markets.