The Federal Reserve is sticking to its low interest rate policy for the time being, so the stock market is the place to look for investors looking for a high yield. To find names that can deliver solid returns and are now offered at a bargain price, investors often turn to penny stocks or those that trade for less than $ 5 per share.

Sure, there could be a very good reason these tickers are so affordable, but should the price increase even slightly, it could generate massive percentage gains along with hefty returns for investors. The risk is that a small loss in value can also cause a large percentage loss, so investors need to do their homework carefully before investing in the pennies.

With that in mind, we used the TipRanks database to identify two Strong Buy Penny Stocks that received thumbs up from members of the analyst community. Not to mention that everyone has a significant upside potential of over 200%.

Surgalign holdings (SRGA)

First and foremost is Surgalign, a medical device manufacturer with a focus on spinal diseases and treatments. The company develops and markets a comprehensive line of devices for the surgical and non-surgical treatment of spinal problems. Originally founded in Marquette, Michigan, the company now has offices in Illinois and Germany and sells its products worldwide.

In October 2020, Surgalign acquired Holo, a surgical technology maker focused on enhancing spinal surgery using augmented reality and artificial intelligence. Surgalign filed its first 510 (k) filing with the FDA for the Holo digital surgery platform in May and expects clearance in the second half of 21.

While many medical and medical-related companies saw business spikes during the Covid crisis, Surgalign faced headwinds: the cancellation and reduction of many inpatient surgeries, both essential and elective. However, there is some evidence that the company is beginning to recover. The report for Q2 21 showed a net EPS loss of 9 cents, but that wasn’t as low as the projected loss of 12 cents. At the top, sales were $ 24.8 million, up 20% year over year. The company found that the increase in sales was due to the partial resumption of elective surgery, fueling demand for Surgalign products.

Another note to investors: The company’s President and CEO Terry Rich bought well over 1 million shares in SRGA last week. He paid $ 1.01 million for the stock and increased his total stake in the company to $ 2.498 million.

At $ 1.00 per share, analysts also believe now is the time to pull the trigger. The bulls include Cantor analyst Brandon Folkes, who rates SRGA overweight (i.e. buy) along with a target price of $ 4. If his thesis works, a twelve-month profit of 308% could potentially be in sight. (To see Folkes’ track record, click here)

“We believe that Suralign has been developing its spine skills and specializations since it became a standalone spine company and continues to develop its software capabilities with Holo. We see SRGA still in the early stages of a turnaround and portfolio refresh that is likely to drive long-term growth, but we believe investors will be rewarded for their patience from 2022 and beyond as the company’s investments begin to pay off today . We expect revised earnings estimates and several expansions to drive SRGA shares higher, ”said Folkes.

Judging by the breakdown of the consensus, other analysts like what they see too. 6 buys and no holds or sells results in a consensus rating for Strong Buy. Based on the average price target of $ 3.42, the upside potential is ~ 244%. (See SRGA stock analysis on TipRanks)

Flexion Therapeutics (FLXN)

The second penny stock we’re looking at, Flexion, is a biopharmaceutical company focused on the discovery, development, and commercialization of new drugs for local pain relief, particularly for patients with musculoskeletal disorders. The company’s primary focus is paid relief medication for osteoarthritis (OA).

Flexion is, to some extent, a biopharmaceutical company that has reached the Holy Grail of its niche; that is, the company has an approved drug on the market. Zilretta by Flexion, the brand name for the synthetic corticosteroid triamcinolone acetonide, was approved for use in 2016. Zilretta is dosed as a prolonged-release injectable suspension and is used for knee pain due to osteoarthritis. The drug is also being studied for shoulder indications, and recently published Phase 2 pharmacokinetic (PK) and safety study results showed efficacy for this use. The company expects to begin a pivotal study of Zilretta for osteoarthritic shoulder pain later this year.

In addition to Zilretta, Flexion has two drug candidates in earlier stages of the development pipeline. FX201 is in an open phase 1 study in OA knee pain. 40 patients were enrolled and administered to the study this month, and initial results are expected by the end of this year. FX301 or Fuanpide is a thermosensitive extended-release hydrogel intended as an analgesic nerve block for patients with post-operative pain. This drug candidate is currently undergoing a phase 1b feasibility study with patients following foot and ankle operations. As with FX201, the results of the clinical trials are expected later this year.

For the second quarter of this year, Flexion reported sales (of Zilretta) of $ 28.2 million. This had increased sequentially by 15%. The company’s net loss decreased from $ 32.6 million in the second quarter of 20 to $ 22.2 million in the current report; the moderation of the net loss was credited to the increasing Zilretta sales.

In his note for Raymond James, analyst Elliot Wilbur makes an optimistic case for buying Flexion.

“Since the sales of Zilretta have largely returned to the pre-pandemic path, coupled with the almost restored number of patients and the increase in sales … we see the risk / opportunity for the name as very favorable. Refinancing the debt in the quarter removed any short-term financial backlog the name had and extended liquidity through 2023, bolstering our positive outlook for the name. Ultimately, stocks went through a heavy sell-off in July in the month of July without any change in the underlying fundamentals of the business, which we believe gives investors a strong uptrend accumulation opportunity, ”said Wilbur.

To that end, Wilbur views the stock as a strong buy, and its target price of $ 16 suggests the potential for an upward movement of ~ 252% this year. (To see Wilbur’s track record, click here)

Like Surgalign above, Flexion has 6 recent purchases from the analysts. These outweigh a single hold, and the stock has a consensus rating of Strong Buy. The average target price is $ 15.83, suggesting a ~ 248% increase over the current share price of $ 4.54. (See FLXN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the analysts featured. The content is provided for informational purposes only. It is very important that you do your own analysis before making any investment.