4 Reddit Penny Stocks Looking to Ride a Recovery Wave

penny stocks - 4 Reddit Penny Stocks Looking to Ride a Recovery Wave

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The economic recovery from the global pandemic is expected to lift all boats, and that includes penny stocks.

So-called micro-cap companies might be small, undervalued and their stocks thinly traded, but many of them are counting on an economic rebound as much as leading large-cap stocks.

Whether they operate in the restaurant, retail or entertainment sectors, many companies whose stocks trade for under $5 a share are hoping to get a boost this year as consumers emerge from Covid-19 lock down measures and begin to spend again. The latest round of stimulus measures coming out of Washington should provide an added boost.

In this article, we take a look at four Reddit penny stocks that are looking to ride a recovery wave.

  • Express (NYSE:EXPR)
  • Hall of Fame Resort & Entertainment (NASDAQ:HOFV)
  • American Resources (NASDAQ:AREC)
  • Rave Restaurant Group (NASDAQ:RAVE)

Penny Stocks: Express (EXPR)

a person carrying several shopping bags
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Columbus, Ohio-based fashion retailer Express will be hoping that the economic recovery will lead American consumers back into its 607 retail stores in this year’s second half, perhaps eager to spend some of their latest stimulus check on the company’s signature line of casual men’s and women’s clothing.

The company’s dress casual items may also prove popular as people either continue working from home or return to the office on a part-time basis.

Any increase in sales and revenue growth will help EXPR stock, which has come down hard after skyrocketing 1,40% in January of this year, vaulting from just 93 cents to a 52-week high of $13.97 after it was driven higher by Reddit traders. Now down 76% from those lofty heights, Express stock is again back in penny stock territory at $3.30 a share.

The pandemic has been tough on the retailer. Emerging from Covid-19, Express has total debt of $1.12 billion, about five times larger than its market capitalization. Its revenues were in decline for years before the pandemic.

Unfortunately, Express has been the type of legacy retail company that Reddit investors love to pump up to unreasonable levels. As the economy recovers, Express will be hoping for improved sales and a more stable share price.

Hall of Fame Resort & Entertainment (HOFV)

the front of the Pro Football Hall of Fame Museum.
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Headquartered in Canton, Ohio, Hall of Fame Resort & Entertainment owns and operates the Hall of Fame Village that adjoins the Pro Football Hall of Fame where die-hard NFL football fans make pilgrimages to when times are good.

The pandemic has caused a downturn and Hall of Fame Resort is thinking outside the box when it comes to generating revenue. The company, which is focused on “leveraging the power and popularity of professional football,” recently announced  a new fantasy football league that it hopes will attract interest.

However, what has drawn the attention of the Reddit crowd has been Hall of Fame Resort’s move into non-fungible tokens (NFTs). The company has announced that it plans to create the equivalent of digital trading cards focused on football players. Using the same underlying technology as many cryptocurrencies, NFTs marketed as “digital art” have sold for millions of dollars at auctions this year.

Can Hall of Fame Resorts achieve success with an NFT-version of trading cards? The jury is out.

Regardless, the move into digital trading cards has helped lift HOFV stock. The company’s share price rose 633% to $12.31 a share following its NFT announcement. Now back down to $3.90, the stock should get some help this summer if tourists return to the Pro Football Hall of Fame.

Penny Stocks: American Resources (AREC)

rods, bars and other forms of steel
Source: Shutterstock

As the economy rebounds and infrastructure projects get underway this summer, it should help American Resources. The Fishers, Indiana-based company produces the coal products that are used in steel manufacturing.

Demand for steel products should increase sharply as the economy begins running at full tilt. With coal operations in Kentucky and West Virginia, American Resources is ideally positioned to respond to demand from U.S. steel mills. Additionally, the company is diversifying its operations with plans to expand into rare earth elements that are used in smartphones and electric vehicles, notably the batteries that power such devices and machines.

AREC stock was pushed up 324% to an all-time high of $8.02 a share from just $1.89 earlier this year. The big leap was due entirely to the stock being targeted by Reddit investors. Since that big run, the share price has been cut in half and the stock now trades at $3.40.

Better days should be ahead though as the economic recovery gathers momentum.

Rave Restaurant Group (RAVE)

Image of a Pie Five Pizza location belonging to Rave Restaurant (RAVE).
Source: Jonathan Weiss /Shutterstock.com

Will people ever tire of eating pizza? Not if Rave Restaurant Group has its way. The Dallas, Texas-based company that has been in business since 1958 and operates pizza restaurants under the Pie Five and Pizza Inn brands is hoping that the economic recovery will lead to a return of in-person dining at its franchise locations even as people continue ordering delivery and takeout from its more than 500 outlets around the U.S.

Rave Restaurant saw its net income increase 629% in 2020 to $102,000. The company also finished last year with cash on hand of $6.3 million. Rave Restaurant will want to build on its success as people emerge from Covid-19 hibernation and begin eating out again.

RAVE stock has had an up-and-down year so far but remains 56% higher year-to-date at $1.39 a share. The share price is down from its 52-week high of $2.36 a share following a Reddit rally in March, but there remains room for the stock to run.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Article printed from InvestorPlace Media, https://investorplace.com/2021/04/4-reddit-penny-stocks-looking-to-ride-a-recovery-wave/.

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