The stock market continues to push through to new highs after its early pandemic nadir, soon coming up on its one-year anniversary. With the renewed optimism in the market, investors are left wondering there are any penny stocks to scoop up, those stocks that have either a low valuation or price.
These stocks are typically cheap for a reason, as you wouldn’t find high-quality companies in this category. It’s best to keep a baseline price of $5 when assessing penny stocks.
Cheap stocks are often flouted by investors, who feel frightened by the volatility that comes with the investment. However, a fair amount of research and some investing know-how will enable readers to find penny stocks with substantial upside potential.
Here are seven penny stocks that our research indicates are close to breaking the $5 mark:
- LiveXLive Media (NASDAQ:LIVX)
- Limelight Networks (NASDAQ:LLNW)
- Nokia (NYSE:NOK)
- OrganiGram (NASDAQ:OGI)
- OPKO Health (NASDAQ:OPK)
- Waitr Holdings (NASDAQ:WTRH)
- BioDelivery Sciences (NASDAQ:BDSI)
Penny Stocks To Buy: LiveXlive Media (LIVX)
Shares of streaming content platform Livexlive Media are up 48% in the past six months. It offers a platform for live streaming and on-demand digital video and audio. Its platform resembles other commodity audio streamers in Spotify (NYSE:SPOT) and Apple Music (NASDAQ:AAPL). LIVX stock is moving in the right direction after a torrid few years, marred by fruitless acquisitions.
A lot of positive news has been coming from the company of late. It recently announced that its platform had topped 1 million paid subscribers. Moreover, its PodcastOne reported over 2.2 billion downloads since January. It also acquired an e-commerce merchandise company, Custom Personalization Solutions, to strengthen its fast-growing global merchandising market.
It has also sought financial advice from investment bank JP Morgan (NYSE:JPM) to review potential strategic transactions. The company’s revenue numbers continue to grow, reporting double-digit growth in the past three quarters. Therefore, I wouldn’t be surprised if it goes past the $5 mark on the back of these positive developments.
Limelight Networks (LLNW)
Content delivery network (CDN) specialist Limelight Networks a business poised to grow over the long term. This is mainly because CDNs provide the computing infrastructure needed for flawless digital experiences in line with modern-day users’ demands. However, it has had trouble commanding higher prices due to its reliance on a few large customers. Moreover, it faces stiff competition from fast-growing players such as Cloudflare (NYSE:NET). However, there is a lot of upside to LLNW stock due to the uniqueness of its product offering.
Among the offerings that set it apart from the competition are direct integration with publisher CDNs, reduced server origin output costs, and unmatched real-time and live-streaming support. Moreover, it plans to increase its features further to command higher prices from its customer base.
Exposure to the mid-market will allow the company to reduce its dependence on few customers. Therefore, through product innovation and strategic planning, it could hang tough with its industry’s cut-throat competition.
One-time mobile phone giant Nokia has evolved into one of the world’s largest telecommunication infrastructure companies. It sold its mobile phone unit to Microsoft (NASDAQ:MSFT) in 2014 and has worked hard to expand its network business. NOK stock is being discussed as one of the 5G stocks with the most potential to do well this year.
Unfortunately, Nokia has been slightly late to the party with its 5G investments and lags behind its competition. However, it is now aggressively ramping up its 5G investments and plans to win over several new contracts.
Fourth-quarter revenues dropped 5% year-over-year, continuing its negative streak from the past four quarters. Also, 2021 is likely to be difficult for the company, with a decline in revenues from its mobile networks division. Nevertheless, the company has strong long-term potential which should help NOK stock reverse the 21.1% decrease suffered over the last six months.
Canadian marijuana producer OrganiGram had a stellar 2019, posting triple-digit growth in its revenues. Then Covid-19 came on the scene, with a debilitating impact on its top- and bottom-line. However, in the past couple of quarters, it is showing signs of recovery.
Belt-tightening efforts have helped fortify its balance sheet impressively. Moreover, OGI stock has benefited from a reduction in short interest, from almost six days to cover at the end of October to one day for each of the most-recent settlement dates. Its past-month return stands at a healthy 77%.
The company has done well to increase its adult-use recreational marijuana sales in the past few quarters. However, pandemic-induced shutdowns have hampered revenue growth significantly in the past few quarters. It expects its Israeli brand Cannadoc to ramp up production again and factor into its revenue stream. Moreover, its high-margin Edison dried flower and pre-roll offerings will also contribute to increasing its profitability.
I wouldn’t think of it more than a short-term play, though, but it does, however, have a considerable growth runway.
OPKO Health (OPK)
OPKO Health is a pharmaceuticals and diagnostics company operating in the United States and internationally. OPK stock has been on a tear this year, rising over 180%. Covid-19 has had a lot to do with its rise, as its diagnostics segment is currently the third-largest laboratory testing services provider in the country. Additionally, it is also conducting trials on its Covid-19 vitamin D therapeutic offering called Rayaldee. Hence, 2020 has been its most successful year so far, marked by solid execution and widespread recognition.
The company recently reported its stellar fourth-quarter results, including revenues of $494.6 million, up 121% year-over-year. Additionally, it reported net income of $32.3 million compared to a net loss of $112.4 million in the prior-year period. The growth in revenues was driven by its BioReference Laboratories diagnostics business which saw its sales volume rise by 170% year-over-year.
The lower efficacy rates for some Covid-19 vaccines are likely to boost demand for testing. Additionally, its therapeutics business could also take off once it reaches the latter stages of its trials.
Waitr Holdings (WTRH)
Emerging food delivery company, Waitr Holdings, had a remarkable 2020, boosted by Covid 19-induced tailwinds. Moreover, under the dynamic leadership of its new CEO, Carl Grimstad, the company has streamlined expenses and become profitable. It has clawed back from the brink of bankruptcy to profitability in just six months. WTRH stock is up a whopping 765% in the past 12 months.
The third-quarter results announced in November showed revenues grew 7.1% year-over-year to $52.7 million. Additionally, it reported GAAP earnings per share of 4 cents after a $2.89 per share loss in the same period last year. Moreover, for the nine-months, order size improved by a considerable 15%. It exited the quarter with an incredible $77.1 million in cash, which is astonishing considering its past financial troubles.
Grimstad feels that the business is sustainable and will have further upside in the post-pandemic world. WTRH stock is trading more than 54% lower than its $7 per share median target price, suggesting that it should break the $5 mark soon.
BioDelivery Sciences (BDSI)
BioDelivery Sciences is a small-cap pharmaceutical company that has witnessed explosive growth in its flagship Belbuca chronic pain medication. Despite posting impressive numbers, it continues to fly under the radar. As a result, BDSI stock is trading at almost 48% lower than the $8 per share median price target.
It recently posted its spectacular third-quarter results, as revenues shot up 30% on a year-over-year basis. Product sales were up almost 30.9% to $38.8 million, driven primarily by Belbuca. Additionally, sales of its opioid-induced constipation treatment drug, Symproic, also posted impressive numbers during the quarter.
What’s more impressive is the growth in its EBITDA margin, which is 34% compared to 12% in the prior-year period. Moreover, its cash flow from operations is at $14 million, a 339% increase from the same period last year. Hence, with two major products along with others in its pipeline, the company looks extremely promising.
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Read More: Penny Stocks — How to Profit Without Gettting Scammed
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. He does not directly own the securities mentioned above.