Photo by National Cancer Institute on Unsplash

In this piece, we will take a look at the ten best medical stocks under $5. If you want to jump ahead to the top five stocks in this list, then head on over to 5 Best Medical Stocks Under $5.

The medical industry is one of the most lucrative sectors globally, and it is one that sees the highest spending in terms of research and development, and breakthrough advances through keeping up the pace with technology. The technologies used to research and develop new medicines today would very well be thought of as magic just a century ago, and the biotechnology sector in particular proved crucial in the world’s fight against the devastating coronavirus through the use of novel mRNA technologies that target the body’s very genetic structure.

As such, market research firms are full of optimism for the medical and healthcare stocks. A research report from Research and Markets suggests that the global healthcare market was worth a whopping $8.4 trillion in 2018 after it grew at a compounded annual growth rate (CAGR) of 7.3% since 2014. From then until the end of this year, the growth accelerated to 8.9%, and the industry will be worth a staggering $11 trillion by the end of this year, believes the research firm. Driving this growth will be factors such as an aging population, technological advancements, and a sedentary lifestyle. Delving deeper inside the industry, the firm outlines that biologics will have the strongest growth rate of 13.6%.

Another report, this time from Insider Intelligence, estimates that healthcare spending accounted for a massive 19.7% of the U.S. gross domestic product (GDP) in 2020. National healthcare expenditure, which sat at $4.1 trillion in 2020, will grow to $6.2 trillion by 2028 according to Centers for Medicare and Medicaid.

A research article published in Health Affairs estimates that national health expenditures will grow by 5.4% between 2018 to 2028, and continue to account for 19.7% of GDP spending by 2028 end. It attributes the growth to the rise in medicine prices and more people signing up for Medicare.

Finally, Policy Advice takes a look at different segments of the healthcare industry to provide a holistic look. For instance, it estimates that an average healthcare employee earns almost $61,000 a year, which is significantly higher than the national average of $47,060. It also outlines that the U.S. healthcare industry is the largest in the world, and it consists of 784,626 companies, with patient care accounting for $1 trillion or 64% of the overall revenue. Looking at the future, the research firm shares that technology is king, with 94% of U.S. hospitals on the road to digitization to avoid doctors having to fill out paperwork, and the Internet of Things (IoT) set to take over hospitals by allowing for improved training, workflow management, and patient monitoring.

Therefore, the healthcare industry clearly has a bright future ahead of it. Out of the hundreds of thousands of companies in it, we have narrowed down a handful of players with low stock prices. The top firms on our list are Verastem, Inc. (VSTM), Karyopharm Therapeutics Inc. (KPTI), and CTI BioPharma Corp. (CTIC).

 

Our Methodology

We took a broad look at the healthcare industry to pick out which companies have promising technologies and a low share price. These were then evaluated through their product strength, financial performance, and outlook. After this, the companies were ranked through Insider Monkey’s Q2 2022 survey of 895 hedge funds. All these stocks are priced under $5 as of October 21.

 

Best Medical Stocks Under $5

 

10. T2 Biosystems, Inc. (TTOO)

Number of Hedge Fund Holders: 3

T2 Biosystems, Inc. (TTOO) is a diagnostics product manufacturer based in the U.S. The firm makes and sells devices that diagnose pathogens, infections, genes, and skin diseases. It is headquartered in Lexington, Massachusetts.

T2 Biosystems, Inc. (TTOO) scored a big win in October 2022 when it announced that its products are capable of rapidly detecting sepsis – which is a life threatening medical emergency that is caused by an overreaction by the body’s immune system. The firm is also aiming to finish the commercialization of a new system that detects Lyme disease in 2023.

T2 Biosystems, Inc. (TTOO)’s fiscal year 2021 saw the firm grow its revenue by 55% annually to $28.1 million. Its Sepsis diagnostic machines are operating in a market that sees U.S. hospitals spend $62 billion annually in healthcare costs. By the end of this year’s second quarter, three of the 895 hedge funds polled by Insider Monkey had invested in the firm.

Out of these, Israel Englander’s Millennium Management is T2 Biosystems, Inc. (NASDAQ:TTOO)’s largest investor. It owns 453,687 shares that are worth $73,000.

Along with Karyopharm Therapeutics Inc. (NASDAQ:KPTI), Verastem, Inc. (NASDAQ:VSTM), and CTI BioPharma Corp. (NASDAQ:CTIC), T2 Biosystems, Inc. (NASDAQ:TTOO) is hot medical stock under $5.

 

9. Zomedica Corp. (ZOM)

Number of Hedge Fund Holders: 5

Zomedica Corp. (NYSE:ZOM) is an animal health firm that develops and sells products that allow for the diagnosis of different diseases in dogs and cats and treating horse and small animal injuries such as broken bones and torn ligaments. The firm is based out of Ann Arbor, Michigan, the United States.

Zomedica Corp. (NYSE:ZOM) posted a 51% revenue growth during its second fiscal quarter as the firm brought in $4.2 million through sales. This growth was fueled by the firm’s TRUFORMA diagnostics platform, which brought it $92,000 in sales for a 486% annual increase.

Zomedica Corp. (NYSE:ZOM) is also rapidly diversifying its operations, and it has already acquired two firms this year. The firm’s PulseVet platform was also named the National Cutting Horse Association’s official shock wave therapy platform to stimulate healing in October 2022. Insider Monkey’s Q2 2022 survey of 895 hedge funds outlined that five had invested in Zomedica Corp. (NYSE:ZOM).

 

8. HOOKIPA Pharma Inc. (HOOK)

Number of Hedge Fund Holders: 9

HOOKIPA Pharma Inc. (NASDAQ:HOOK) is a bio-pharmaceutical company that develops drugs for kidney patients, prostate cancer, lung cancer, and pancreatic cancer. It is headquartered in New York, New York, the United States.

HOOKIPA Pharma Inc. (NASDAQ:HOOK) partnered up with a large healthcare company earlier this year to provide its arena-virus platform for treating HIV patients. This marked a big win for the firm as the global HIV market is estimated to reach $36 billion in 2027, and provide the firm with huge revenue potential. The firm also signed a deal with the pharma giant Roche in October 2022, through which it will develop a therapy for mutated cancers. This agreement sees HOOKIPA Pharma Inc. (NASDAQ:HOOK) benefit from potentially $1 billion in royalties and net sales.

By the end of this year’s June quarter, nine out of the 895 hedge funds polled by Insider Monkey had bought a stake in HOOKIPA Pharma Inc. (NASDAQ:HOOK).

Out of these, David Kroin’s Deep Track Capital is HOOKIPA Pharma Inc. (NASDAQ:HOOK)’s largest investor. It owns 5 million shares that are worth $8.2 million.

 

7. Xeris Biopharma Holdings, Inc. (XERS)

Number of Hedge Fund Holders: 11

Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) is an American healthcare company that develops therapies for paralysis, excess cortisol levels, hypoglycemia, and Cushing’s syndrome. The firm is based in Chicago, Illinois.

Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) grew its revenue by 170% during its first fiscal quarter to bring in $22 million in net sales. This was fueled by its Gvoke glucagon drug growing its prescriptions by 88% annually and managing to capture 22% of the market with total patients growing annually by 12%.

Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) then maintained its strong growth trajectory in the second fiscal quarter, when its 189% revenue growth solidified the upward momentum. During this time period, Gvoke’s prescriptions and net revenue also grew, despite a price cut. Insider Monkey’s June quarter of 2022 survey covering 895 hedge funds revealed that 11 had invested in the firm. Jefferies set a $4 share price target for the company in October 2022 alongside a Buy rating on the shares.

Xeris Biopharma Holdings, Inc. (NASDAQ:XERS)’s largest investor is Timothy P. Lynch’s Stonepine Capital which owns 11 million shares that are worth $17 million.

 

6. Agenus Inc. (AGEN)

Number of Hedge Fund Holders: 11

Agenus Inc. (NASDAQ:AGEN) is a biotechnology firm that researches and develops treatments for cancer and immune system disorders. These include cervical cancer, solid tumors, myeloma, and other liver problems. The company also has agreements with large companies such as Gilead, and it is headquartered in Lexington, Massachusetts.

Agenus Inc. (NASDAQ:AGEN)’s partnership with GSK, through which the firm develops respiratory tract disease treatment for older results, yielded fruitful results in October 2022 when the latter announced that the treatment had achieved a vaccine efficacy of 83%.

Agenus Inc. (NASDAQ:AGEN) also has a strong pipeline of drugs, which includes a colorectal cancer treatment that has already shown positive results in patients that had failed to respond to several types of therapies before. This drug, called Botensilimab, reduces genetic polymorphism by a strong 40% in target cancers, through which it outpaces its next closest rival Yervoy, which has failed to show any results. Nikko set an Outperform share rating and a $5 price target for the company in October 2022.

Insider Monkey’s Q2 2022 research covering 895 hedge funds revealed that 11 had held a stake in Agenus Inc. (NASDAQ:AGEN).

Out of these, Agenus Inc. (NASDAQ:AGEN)’s largest investor is David Kroin’s Deep Track Capital which owns 22 million shares that are worth $43 million.

Agenus Inc. (NASDAQ:AGEN) joins Verastem, Inc. (NASDAQ:VSTM), Karyopharm Therapeutics Inc. (NASDAQ:KPTI), and CTI BioPharma Corp. (NASDAQ:CTIC) in our list of top cheap medical stocks.

 

5. Geron Corporation (GERN)

Number of Hedge Fund Holders: 11

 

Geron Corporation (NASDAQ:GERN) is a biopharmaceutical company that is involved in the development of drugs for advanced blood cancers. These include fighting the spread of stem cells in blood cancer such as hematologic myeloid malignancies. It is based in Foster City, California, the United States.

Geron Corporation (NASDAQ:GERN) is witnessing strong interest and momentum for its blood cancer drug Imetelstat which stops the growth of malignant cells in the disease. This drug focuses on patients that continue to develop anemia after being treated with other drugs, and the market stands at a peak value of $1.2 billion.

Its phase 2 results show that the treatment’s effects last for 88 weeks, more than double the 33 weeks for its closest rival. The market is optimistic about Imetelstat’s potential, and Geron Corporation (NASDAQ:GERN)’s shares have rallied by 77% year to date. Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 12 had held a stake in the company.

Out of these, Peter Kolchinsky’s RA Capital Management is Geron Corporation (NASDAQ:GERN)’s largest investor. It owns 30 million shares that are worth $46 million.

 

4. Ardelyx, Inc. (ARDX)

Number of Hedge Fund Holders: 16

Ardelyx, Inc. (NASDAQ:ARDX) develops several treatments for patients with kidney diseases, irritable bowel syndrome, heart diseases, and metabolic acidosis. The firm is headquartered in Waltham, Massachusetts.

Ardelyx, Inc. (NASDAQ:ARDX)’s Ibsrela drug is for patients with irritable bowel syndrome, and the drug is playing in a $3 billion market with 5 million annual prescriptions. The drug is a strong product as it is different from the other three medicines for the diseases, as it is the only option for patients that do not respond well to the other treatments. Ardelyx, Inc. (NASDAQ:ARDX) is also using the active ingredient in this drug to treat kidney patients, in a market with 550,000 patients in the U.S.

Ardelyx, Inc. (NASDAQ:ARDX)’s shares are up by 27% year to date. By the end of this year’s second quarter, 16 out of the 895 hedge funds polled by Insider Monkey had invested in the company.

Ardelyx, Inc. (NASDAQ:ARDX)’s largest investor is Steven Cohen’s Point72 Asset Management which owns 5 million shares that are worth $2.9 million.

 

3. CTI BioPharma Corp. (CTIC)

Number of Hedge Fund Holders: 17

CTI BioPharma Corp. (NASDAQ:CTIC) is a blood cancer treatment developer headquartered in Seattle, Washington, the United States. The firm’s treatments target adults with myelofibrosis.

CTI BioPharma Corp. (NASDAQ:CTIC) reported $12.3 million in revenue during its second quarter, and at the same time, the firm also had $8.2 million in receivables – a strong indicator of its third quarter revenue especially since they are more than half of what the revenue was. CTI BioPharma Corp. (NASDAQ:CTIC) has also been an analyst darling in October 2022, with Jefferies and SVB Securities setting $13 share price targets for the company, and setting Buy and Outperform ratings for the shares, respectively.

CTI BioPharma Corp. (NASDAQ:CTIC) also expects its current financial resources to last one more year of operations. The firm’s shares have rallied by a whopping 78% year to date. As this year’s second quarter ended, 17 out of the 895 hedge funds polled by Insider Monkey owned CTI BioPharma Corp. (NASDAQ:CTIC) shares.

CTI BioPharma Corp. (NASDAQ:CTIC)’s largest investor is Mark Lampert’s Biotechnology Value Fund / BVF Inc which owns 53 million shares that are worth $8.9 million.

 

2. Verastem, Inc. (VSTM)

Number of Hedge Fund Holders: 18

Verastem, Inc. (NASDAQ:VSTM) is a biotechnology company headquartered in Needham, Massachusetts that focuses on developing cancer treatments. It targets several kinds of cancers such as ovarian cancer and lung cancer.

Verastem, Inc. (NASDAQ:VSTM) has a strong balance sheet, with the company’s cash balance totaling $94 million by June 2022 while it reported $19.6 million in operating expenses in its second quarter. At this run rate, the firm is in a good position for more than a year. All of the firm’s treatment regiments for a host of indications of lung and ovarian cancers are in phase two trials, providing it with sufficient future catalysts.

Verastem, Inc. (NASDAQ:VSTM)’s share price target was lowered to $5 from $8 by BTIG in October 2022, but the firm kept a Buy rating for the shares as it maintained that the firm’s deal for a drug with another company has favorable terms. Insider Monkey’s Q2 2022 survey of 895 hedge funds saw 18 as having bought Verastem, Inc. (NASDAQ:VSTM)’s shares.

James Baker and Felix Baker’s Baker Bros. Advisors is Verastem, Inc. (NASDAQ:VSTM)’s largest investor. It owns 26 million shares that are worth $31 million.

 

1. Karyopharm Therapeutics Inc. (KPTI)

Number of Hedge Fund Holders: 21

Karyopharm Therapeutics Inc. (NASDAQ:KPTI) targets nuclear export with its cancer drugs. They battle diseases such as myeloma and lymphomas by inhibiting nuclear export compounds such as the XPO1 protein. The company is headquartered in Newton, Massachusetts.

Karyopharm Therapeutics Inc. (NASDAQ:KPTI) second quarter saw the firm grow its revenue by 76% annually as it reported $39.7 million in the segment. The bulk of this revenue was contributed by the $29 million worth of sales in the United States, which marked 44% annual growth. Additionally, the firm’s compounded annual revenue growth rates stand at 332%, 192%, and 146% for the past five, three, and one year, respectively.

Karyopharm Therapeutics Inc. (NASDAQ:KPTI)’s XPOVIO treatment for myeloma penetrated 67% of the top 20% of patients in the U.S. in the second quarter, a significant achievement as 80% of the total patients come from the top 20%. Baird lowered the firm’s share price target to $14 (its current share price is $4.55) from $17 in August 2022 as it shared that the revenue guidance for XPOVIO had been lowered.

Insider Monkey surveyed 895 hedge fund portfolios for their June quarter of 2022 holdings to discover that 21 had invested in the firm.

Out of these, Karyopharm Therapeutics Inc. (NASDAQ:KPTI)’s largest investor is William Leland Edwards’s Palo Alto Investors which owns 5.6 million shares that are worth $25 million.

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