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Penny stocks often get a bad reputation for being risky and volatile, but not all low-priced stocks are created equal. Wall Street analysts occasionally identify hidden gems in this space, stocks that may be undervalued and risky today but that could offer significant upside in the years ahead. These stocks might be more suitable for investors with a high risk appetite and a longer investment horizon. Here are two such under-$10 stocks that have earned a “Strong Buy” rating from analysts, signaling confidence in their long-term growth prospects. Penny Stock #1: Hoth Therapeutics Valued at $18.4 million, Hoth Therapeutics (HOTH) is a clinical-stage biopharmaceutical company focused on discovering innovative medicines to address unmet medical needs in oncology, dermatology, neurology, and inflammatory diseases. Hoth’s stock has surged 87.1% year-to-date, outperforming the broader market, and Wall Street predicts more upside ahead. Instead of relying on a single asset, Hoth has a diversified pipeline strategy that includes many studies across various therapeutic areas. Hoth’s lead clinical program, HT‑001, is a topical formulation designed to address skin toxicity caused by EGFR inhibitors during cancer therapy. The company has submitted a Clinical Trial Application (CTA) to the European Medicines Agency (EMA), allowing its ongoing Phase 2 trial to expand beyond the U.S., pending approval. The company plans to begin patient enrollment in Europe in early 2026. Another key asset is HT-KIT, which targets mast cell-related cancers and rare disorders. Recently, the company released promising preclinical findings showing effective gene suppression and rapid tumor reduction in systemic mastocytosis (SM) and gastrointestinal stromal tumors (GIST). The U.S. FDA has granted HT-KIT the Orphan Drug Designation (ODD). Hoth believes that the candidate’s design may provide new hope for individuals suffering from aggressive forms of systemic mastocytosis, mast cell leukemia, GIST, and certain leukemias. Furthermore, Hoth is also expanding its focus into metabolic health through its VA obesity program, developed in collaboration with the U.S. Department of Veterans Affairs. Hoth is also integrating advanced artificial intelligence (AI) tools to optimize its research and development (R&D) process. It is using Lantern Pharma’s (LTRN) PredictBBB.ai platform, an AI model that achieves roughly 94% predictive accuracy in assessing blood-brain barrier permeability. Hoth also has various other candidates in early development stages, such as HT‑ALZ for Alzheimer’s disease and neuroinflammatory disorders, HT‑TBI for secondary brain injury (from ischemic stroke or traumatic brain injury), and BioLexa lotion for atopic dermatitis (eczema). The company has promising signals but remains in early development. Therefore, risk is high, as with all early stage biotech stocks, but so is potential if things go well. On Wall Street, analysts have given Hoth stock a “Strong Buy” rating. The average target price of $4.50 suggests the stock can climb by 226% from current levels. Its high target price of $5 implies a potential 262.3% gain over the next 12 months. Penny Stock #2: Arcturus Therapeutics Valued at $287.8 million, Arcturus Therapeutics (ARCT) is a specialized biotech company using advanced RNA delivery technologies to address both rare diseases and vaccines. KOSTAIVE, Arcturus’ groundbreaking self-amplifying mRNA COVID-19 vaccine, is steadily expanding its global footprint through its partner CSL Seqirus and Japanese collaborator Meiji Seika Pharma. Arcturus stock has fallen 41.4% YTD, underperforming the overall market. Arcturus is building clinical momentum with its two primary mRNA therapy candidates, ARCT-032 for cystic fibrosis (CF) and ARCT-810 for ornithine transcarbamylase (OTC) deficiency. The company intends to finish enrollment in its ongoing Phase 2 cystic fibrosis trial by the end of the year. The company recently reported encouraging Phase 2 interim data for ARCT-810, which targets OTC insufficiency by improving indicators of urea cycle performance. Arcturus intends to meet with the U.S. FDA and other regulatory bodies in the first half of 2026 to finalize the Phase 3 trial design, including pediatric expansion plans. In vaccines, Arcturus’ mRNA vaccine efforts, which are based on its patented STARR self-amplifying RNA and LUNAR lipid delivery systems, have advanced across seasonal and pandemic flu indications. Notably, the ARCT-2138 seasonal influenza vaccine and the ARCT-2304 pandemic influenza (H5N1) program are currently in Phase 1 studies. Arcturus reported $28.3 million in the second quarter, down from the year-ago quarter due to reduced CSL collaboration revenue. Net loss stood at $9.2 million, better than a $17.2 million loss in the prior-year quarter. The company ended the quarter with $253.4 million in cash and equivalents, giving it a runway through 2028 and a good position to advance its clinical and commercial initiatives. With a diversified RNA platform, strong partnerships, and a streamlined cost structure, Arcturus Therapeutics is well-positioned to advance the next generation of RNA medicines across rare diseases and infectious threats. However, like most development and early commercialization biotech stocks, Arcturus also carries significant risks. What Does Wall Street Say About Arcturus Stock? On Wall Street, analysts have given Arcturus stock a “Strong Buy” rating. Of the 11 analysts who cover the stock, seven rate it a "Strong Buy,” and four rate it a “Hold.”The average target price of $52.78 suggests the stock can climb by 434% from current levels. Its high target price of $140 implies a potential 1,222% gain over the next 12 months.
