In this article, we will take a detailed look at the 12 ChatGPT Penny Stock Picks Right Now. For a quick overview of such stocks, read our article5 ChatGPT Penny Stock Picks Right Now.
In a world where inflation remains sticky, interest rates high and markets uncertain, why would anyone think of investing in individual stocks let alone riskier, volatile penny stocks? Isn't just investing your money in index funds a safer, better option? While the jury is still out when it comes to this question, data keeps showing that sensibly investing in individual stocks is still rewarding long-term investors with major gains. Bloomberg in a latest report mentioned several hedge funds and money managers who are crushing it by successfully beating the market with just a handful of stock picks. Oftentimes these are small-cap companies with strong growth catalysts. Some of these funds rode the AI wave by timely investing in large-cap tech stocks like Alphabet Inc Class C (NASDAQ:GOOGL), Microsoft Corp (NASDAQ:MSFT) and NVIDIA Corp (NASDAQ:NVDA).
Hedge Funds Making Big Money Investing in Small Companies
For example, a small-cap fund run by Crimson Asset Management, based in Canada, has reportedly returned 10.2% annual since its inception in 2018. This was double the performance of the small cap-focused Russell 20000 index. Crimson's website says that since its inception its small-cap fund has outperformed the Russell 2000 by+4.4% net of all fees and expenses on an annualized basis.
Another great example of funds beating the market by taking risks in the current environment is of billionaire Rajiv Jain, who founded GQG Partners, which has over $47 billion in managed securities as of the end of 2023. Jain's fund has managed to return 13% annually since its inception in 2016, double the gain of its benchmark, according to the Bloomberg report. When investors were exiting Adani Group shares following a scathing short report by Hindenburg Research last year, Jain was piling into the conglomerate's shares. When the Gautam Adani-led empire rebounded, Jain's bets paid off. The Bloomberg report cited Jain as saying:
"We are a business of taking risks. You have to be uncomfortable sometimes. If you look like an index all the time, guess what? You get indexlike returns."
It might be easy for Jain, worth over $4 billion, to say that you should keep taking risks. But can beginner investors also act as contrarian investors in the current market environment without breaking the bank?
ChatGPT Penny Stock Picks Right Now
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"We Have Not Lived by the Magnificent 7 and We Ought Not Die by Them"
Akre Focused Fund, run by Akre Capital Management of legendary value investor Chuck Akre, shared some interesting insights in its Q1 letter to investors, highlighting how it was able to beat the market without relying on the Magnificent Seven stocks. The fund's commentary said that while the Mag. 7 companies of today have strong fundamentals and the stock market today isn’t anything like the late-90s internet bubble, sooner or later their valuations would reach questionable levels.
"The problem is that financial excess is often built on kernels of truth: exotic tulips were rare in the Netherlands; the South Sea Company’s exclusive rights to international trade would prove lucrative; the Internet would, in fact, change the world; housing prices nationally only went up. However strong a foundation, financial markets can build valuations up past the point of structural soundness. And in today’s heavily “instructed” market environment, where momentum begets momentum regardless of value, this risk is not lessened. Will the Magnificent 7 defy market history and drive index performance over the next decade just as they did the preceding? Time will tell. In the meantime, we will stick to our knitting: concentrating capital in what we believe to be exceptional businesses, managed by great people, with extensive reinvestment opportunity and acumen. All the while making judgments about value. We have not lived by the Magnificent 7 and we ought not die by them. For us, that’s one less thing to worry about."
Methodology
The market is always teeming with investing opportunities and smart investors are always finding them. While we keep telling our readers about what stocks are being picked up by smart investors, in this article we decided to turn to AI to ask its opinion on top penny stocks it believes have the potential to grow. We asked ChatGPT which penny stocks have the strongest upside potential. Here was our exact prompt:
"Act as a stock advisor and wealth manager and give me a list of the best penny stocks that have the biggest upside potential and strong growth prospects."
The chatbot, after several standard warnings and cautions, returned a list of penny stocks that "have shown potential for growth."
TRxADE HEALTH, Inc. (NASDAQ:MEDS) provides IT solutions for the pharmacy industry. The stock has gained about 31% year to date through April 16. In March TRxADE HEALTH, Inc. (NASDAQ:MEDS) announced a special dividend of a whopping $8 per share.
Biopharma company Aeterna Zentaris Inc. (NASDAQ:AEZS) ranks 11th in our list of the top ChatGPT penny stock picks. Aeterna Zentaris Inc. (NASDAQ:AEZS) is working on treatments for oncology and endocrinology-related diseases. Ken Griffin's Citadel Investment Group owns an $18,000 stake in Aeterna Zentaris Inc. (NASDAQ:AEZS).
Zomedica Corp. (NYSE:ZOM) is one of the ChatGPT penny stock picks right now. The animal health company posted Q4 results earlier this month. Its revenue jumped 19% YoY in the quarter to $7.3 million.
As of the end of the fourth quarter of 2023, just one hedge fund tracked by Insider Monkey reported owning stake in Zomedica Corp. (NYSE:ZOM).
ChatGPT thinks Castor Maritime Inc. (NASDAQ:CTRM) has "potential" in the maritime transportation sector. Of the 933 hedge funds tracked by Insider Monkey, just one hedge fund had stakes in Castor Maritime Inc. (NASDAQ:CTRM). In March, Castor Maritime Inc. (NASDAQ:CTRM) said its board approved a 1-for-10 reverse stock split of Castor Maritime Inc.'s (NASDAQ:CTRM) common shares.
Kartoon Studios Inc (NYSE:TOON), formerly known as Genius Brands International, Inc. (NASDAQ:GNUS), is a penny stock pick by ChatGPT since the AI chatbot believes Kartoon Studios Inc (NYSE:TOON) has "potential for growth" in the streaming and content creation industry. Earlier this month Kartoon Studios Inc (NYSE:TOON) posted revenue of $8.8 million for the fourth quarter of 2023.
Kartoon Studios Inc (NYSE:TOON) said it decreased its costs in the fourth quarter by 70% on a YoY basis.
Just one hedge fund reported owning stake in Kartoon Studios Inc (NYSE:TOON) as of the end of 2023.
Unlike major companies like Alphabet Inc Class C (NASDAQ:GOOGL), Microsoft Corp (NASDAQ:MSFT) and NVIDIA Corp (NASDAQ:NVDA), Kartoon is a risky stock.
ChatGPT said EV company Ideanomics Inc (NASDAQ:IDEX) has shown potential in the past. However, the stock seems to be a bad pick since it has lost about 88% in value over the past one year. Lack of growth and challenges in the EV sector are crushing the stock.
Just one hedge fund had stakes in Ideanomics Inc (NASDAQ:IDEX) as of the end of 2023.
While hedge funds aren't much interested in penny stocks like IDEX, they are piling into quality names like Alphabet Inc Class C (NASDAQ:GOOGL), Microsoft Corp (NASDAQ:MSFT) and NVIDIA Corp (NASDAQ:NVDA).
UK-based biopharma company Biodexa Pharmaceuticals PLC-ADR (NASDAQ:BDRX), formerly known as Midatech, is one of the penny stock picks of ChatGPT. The chatbot said Biodexa Pharmaceuticals PLC-ADR (NASDAQ:BDRX) has potential as it goes through "clinical trials and regulatory approvals."
