24 August 2020 16:34
High risk comes with high potential rewards, and some stocks take this a step further by staking their entire business model on a single catalyst for growth. These stocks can make good investments, because their potential gains vastly outweigh potential losses (which are capped at 100%). Here are two dirt cheap Robinhood stocks poised to deliver multi-bagger returns if they successfully execute on their long-term growth drivers. The first pick is Corbus Pharmaceuticals (NASDAQ:CRBP), a small-cap biotech betting everything on its cannabinoid drug lenabasum. The second pick is Virgin Galactic (NYSE:SPCE), a mid-cap space tourism company with the potential for rocketship returns.
Both companies have market caps below $5 billion, and enjoy binary (yes or no) catalysts for explosive growth. 1. Corbus Pharmaceuticals Corbus Pharmaceuticals is a late-stage biotech company with an exciting all or nothing business model. The company is working on a drug called lenabasum, which targets the endocannabinoid system to fight autoimmune diseases like systemic sclerosis, dermatomyositis, and lupus erythematosus. All three indications have successfully passed Phase 1 testing, and the drug is on schedule for Phase 3 data for systemic sclerosis this summer, with a projected launch in 2021. If lenabasum wins regulatory approval, Corbus Pharmaceuticals stock could skyrocket significantly higher than its current $630 million market cap. According to Jefferies, systemic sclerosis has 200,000 patients in the U.S., E.U, and Japan, representing a $1.4 billion- $2.2 billion potential market opportunity for the drug in this indication alone. That's not even including lenabasum's other indications like dermatomyositis and cystic fibrosis, which could potentially generate $0.7-$3 billion in combined annual revenue. While Corbus Pharmaceuticals has a preclinical library of over 700 drug candidates, the company looks like an all-or-nothing bet on lenabasum. That's because the biotech's relatively small cash position ($63.5 million as of the second quarter) may not be enough to bring its other drugs to market without significant equity dilution for investors. 2. Virgin Galactic Virgin Galactic is another cheap Robinhood stock that could potentially skyrocket (literally). Trading at $17.53 at the time of writing, this space tourism company's relatively small $4.1 billion market cap could become significantly bigger if it successfully sends passengers to space. Virgin Galactic's key growth catalyst will be the launch of its maiden voyage with passengers. But before taking this step, the company is shoring up its balance sheet with cash, and conducting a series of tests to establish the safety and viability of its space mission. Most recently, Virgin Galactic closed a public offering of 23.6 million shares of common stock at $19.50 per share, a deal that netted the company $460.2 million. While dilutive equity raises can be discouraging for some investors, this is the right move because it buys Virgin Galactic more runway to safely execute its strategy. The new cash boosts the company's already strong balance sheet, which stood at $359.9 million as of second quarter earnings report on August 3. Virgin Galactic completed eight test flights in the second quarter, and has cleared 27 of 29 verification and validation elements required by the FAA to conduct spaceflight missions. The company has also registered 600 potential paying customers and plans to send its first passengers to space in 2021. (RTTNews) - European stocks rose sharply on Monday as hopes for a coronavirus treatment as well as signs of a thaw in U.S.-China tensions offset fears about a resurgence in virus cases across the continent. Investor sentiment was boosted after U.S. regulators authorized the use of blood plasma from recovered patients as a treatment option for Covid-19. The U.S. FDA's emergency authorization came on the eve of the Republican National Convention, where Donald Trump will be nominated to lead his party for four more years. Meanwhile, a Bloomberg report citing people familiar with the matter said that Trump's team is privately seeking to reassure U.S. companies that they can still do business with the WeChat messaging app in China. The pan-European Stoxx Europe 600 rallied 1.7 percent to 371.17 after declining 0.2 percent on Friday. The German DAX rose 2.3 percent, France's CAC 40 index jumped 2.2 percent and the U.K.'s FTSE 100 added 1.7 percent. AstraZeneca shares jumped 3.3 percent. The Financial Times said the Trump administration is considering fast-tracking an experimental Covid-19 vaccine being developed by AstraZeneca Plc and Oxford University to return the economy closer to normalcy. Spanish multinational pharmaceutical and chemical manufacturer Grifols added 3.3 percent. Shares of BT Group soared 5.6 percent. Sky News reported the telecoms giant has asked Goldman Sachs to update its defense strategy from possible suitors. Bunzl rose nearly 3 percent after the distribution and outsourcing firm resumed dividends and reported a 16.6 percent rise in first-half profit. BP Plc climbed 2.8 percent and Royal Dutch Shell added 3.3 percent as oil prices rose amid storms in the Caribbean and the Gulf of Mexico. Insurance firm Axa SA advanced 2 percent. The company has announced an agreement with India's Bharti Enterprises to combine their non-life insurance operations in India, Bharti AXA General Insurance Company Limited or Bharti AXA GI, into ICICI Lombard General Insurance Co. Ltd. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.