You’ve likely heard that penny stocks are high-risk investments, and if so, you’ve heard right. However, a significant part of investing is finding the right balance between risk and reward. As you can imagine, taking on large amounts of risk could pay off with significant gains from time to time.
Of course, you shouldn’t invest your entire portfolio in high-risk penny stocks, but what if you have $100 that you’re comfortable risking in the space? What are some penny stock picks that have the potential to turn that $100 into something a bit more meaningful? Here are a couple of low-cost penny stocks that may be worth diving into:
Key Points:
- Considering the high risk associated with penny stocks, you should never bet your entire portfolio on them, though allocating limited funds is OK. Doing so can produce meaningful profits.
- RLX Technology has minimal debt, which is a rarity in the penny stock arena.
- Prime Medicine just signed an agreement with Bristol Myers Squibb, an ode to the value of the company’s scientific achievements.
- If you’re tired of searching for low-cost stocks with significant growth potential, stop now! Check out our free Discover “the Next NVIDIA” report today to learn about two stocks we believe will grow by 10X or more ahead.
RLX Technology’s Debt Position Alone Makes It Attractive
Most penny stocks are companies that are drowning in liabilities. They’re young and trying to raise the money needed for research and development. Once that process is done, they need money for marketing and more. But RLX Technology (Nasdaq: RLX | RLX Price Prediction) is an exception to that rule.
The company’s total debt amounts to $5.68 million as of June. That may sound like quite a bit, but it’s only a drop in the bucket when you consider the company’s $2.24 billion in total assets. Ultimately, unlike most other penny stocks, RLX Technology isn’t drowning in debt. Even when you account for the company’s liabilities, it has plenty of assets to cover them.
So, what does RLX Technology do?
The Chinese company is focused on the development and sale of e-vapor products. The company has a wide range of products typically sold offline through a network of distributors and retail outlets.
This could prove to be a highly lucrative move. As consumers increasingly switch from combustible tobacco products like cigarettes and move toward vapor-based products, the market in which RLX Technology operates is only likely to grow. That market is expected to grow at a compound annual growth rate of over 30%. That’s significant when the market was already worth over $28 billion as of late last year.
Prime Medicine Just Landed a Bristol Myers Squibb Deal
Prime Medicine (Nasdaq: PRME) is a clinical-stage biotechnology company. That means that while it is currently developing therapies, it doesn’t have any on the market yet. Nonetheless, the company is focused on gene editing therapies for debilitating genetic diseases.
It only has one ongoing clinical program. That program is focused on a potential therapeutic option for Chronic Granulomatous Disease (CGD). However, it also has five preclinical programs focusing on indications like cancer, liver disease, and lung disease.
Most recently, the company made headlines after announcing that it has entered into an agreement with Bristol Myers Squibb. Under the agreement, Bristol Myers Squibb will make a $55 million investment in the company. Prime Medicine could also receive $3.5 billion in various milestone payments alongside royalties on net sales.
So, what is all this money in exchange for?
The two companies will work together to develop and commercialize several Prime Edited T-cell therapies. Bristol Myers Squibb plans to oversee the process while Prime Medicine supports the gene-editing strategy and development of therapeutic options.
This is huge news for Prime Medicine, as it gives the company the cash it needs to continue operations into the first half of 2026. That’s important because it plans on reporting data from its clinical trial in 2025. If that data is positive, it could lay the groundwork for further deals that put cash on the company’s balance sheet. Moreover, it plans on applying to begin clinical studies for its Wilson’s disease therapy at the beginning of 2026.
To put it simply, Prime Medicine has quite a bit going on and a massive backer in Bristol Myers Squibb. With data from a Phase 1/2 clinical trial expected to come next year and other potential catalysts hidden in the company’s preclinical programs, Prime Medicine is a stock that’s well worth watching.
The Bottom Line
Penny stocks are usually risky plays. But, when you pick the right penny stocks, you have the potential to generate meaningful profits. I believe the stocks above represent such opportunities. It’s rare to find a penny stock in the positive debt position RLX Technology is in. As it tackles a massive market with early success, it seems to be a compelling opportunity. Prime Medicine is pioneering the way in gene editing therapies, and its work has garnered the attention of Bristol Myers Squibb, one of the largest companies in its field.
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