In the last week, Reddit’s r/WallStreetBets lost its influential buying grips on GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). Both stocks fell quickly from the highs. This could have happened because retail investors in the subgroup chased short-lived momentum stocks like Newegg Commerce (NASDAQ:NEGG) for a few days. Clover Health’s (NASDAQ:CLOV) fade away from a $28.85 peak to around $9.00 by the end of last week also knocked Reddit’s influence on meme stocks. But this doesn’t mean all Reddit penny stocks are off the table.
Any hedge fund that bet on WSB losing its buying power after the Jan. run-up would have paid a high price in June. Short-sellers are still making bearish bets Reddit is better off picking penny stocks about to explode higher.
There are seven stocks either trading at $10.00 or less or is a micro-cap to consider. They are listed in alphabetical order:
- Amarin (NASDAQ:AMRN)
- 1847 Goedeker (NYSEAMERICAN:GOED)
- Iamgold (NYSE:IAG)
- OMNIQ (OTCMKTS:OMQS)
- OPKO Health (NASDAQ:OPK)
- Transocean (NYSE:RIG)
- Wipro (NYSE:WIT)
In the chart to the right, Amarin, OPKO Health, and Iamgold score well in at least one metric.
The other stocks may have lower scores but that could quickly change. As the turnaround firms rebuild the business, investors will flock to the site.
Reddit Penny Stocks Ready to Explode: Amarin (AMRN)
On June 21, the Supreme Court rejected Amarin’s bid to revive its Vascepa drug patents. The court affirmed that Amarin’s patents for the heart drug were invalid. Previously, Hikma and Dr. Reddy’s Laboratories challenged the patent. The justices said that the earlier publications already disclosed their innovations.
Vascepa is made of omega-3 oil. Patients who take the drug experience lower fat levels in their bloodstreams. To deal with the incoming increasing generic competition, Amarin will concentrate on the European markets. In the near term, the company expects that direct sales in the region will drive sales higher. Senior Vice-President of Commercial Head Europe, Karim Mikhail said it has more than 160 employees in Germany. The direct employees and outsourced field sales force will raise awareness of Vascepa. They will communicate with general practitioners, cardiologists, and specialists.
On Wall Street, analysts have a price target in the range of $5.00 to $15.00. The average price target is $9.20 (according to Tipranks).
1847 Goedeker (GOED)
Online appliance retailer 1847 Goedeker traded in the double digits before the stock fell. On May 28, GOED priced its public offering of ~91.1 million units for $2.25. This raised $205 million in gross proceeds. The stock also comes with a five-year warrant at an exercise price of $2.25.
GOED needed the proceeds to fund its acquisition of Appliances Connection.
In the first quarter, 1847 Goedeker posted revenue growing by 84% year-over-year to $123.0 million. Gross profit topped $32.2 million. Beyond the Q1 results, growth will come from the pending Appliances Connection acquisition. It will create what the company believes will be the largest pure-play online retailer of household appliances.
The appliances market is demand elastic. Inflation may raise product pricing, hurting demand. Still, the U.S. did not experience inflation in years. This suggests that GOED may expand revenue and profit margins as it gets bigger. It is opening a new 86,000 square-foot fulfillment center in St. Louis. Once shipping trends return to normal, investors will buy shares of Goedekers.
Reddit Penny Stocks Ready to Explode: Iamgold (IAG)
In the gold mining space, Iamgold is on a steady downtrend. Falling gold prices are pressuring shares.
In the first quarter, IAG posted non-GAAP earnings per share of a penny. Revenue rose by 8.3% Y/Y to $297.4 million. The company forecasted up to 65,000 ounces of production, assuming a restart of its underground mining.
IAG generated a solid $102 million in operating cash flow. It has $1.5 billion in available liquidity and has $967.8 million in cash. It could pay off its $466.7 million in debt and buy back shares or reward investors with a dividend. Historically, management did not take positive action to enhance shareholder value. So, the stock price depends on the price of gold.
Iamgold has multiple catalysts ahead, as shown in slide 10 of their investor presentation. It completed a mill optimization project, expects a return to full mining rates at Rosebel, and has expansion and exploration plans. Eventually, gold prices will rebound as investors seek anti-inflationary assets. This will give IAG stock a strong lift.
Omniq is an object identification company that provides artificial intelligence-based solutions. It posted a few positive press releases in the last month. On June 15, it signed an agreement with the City of Watkinsville, Georgia. Omniq has a three-year revenue-sharing agreement to deploy Q Shield Vehicle Recognition.
On June 9, Omniq won a contract with Philadelphia Airport to install EZ Edge. This will automate and manage the entry and exit of vehicles at the airport.
On the Q1 conference call, Chief Executive Officer Shai Lustgarten was optimistic that gross margins would bounce back in the 20% range starting in the current second quarter. The highlight of Q2 is the revenue contribution from the Dangot Computers Limited acquisition. Dangot has non-GAAP gross profitability of 35%. Its EBITDA is around $4 million to $5 million. In the second half of the year, gross margins will be in the 20% to 25% range.
The up-listing and attaining profitability are the two positive catalysts that could send this stock sharply higher.
Reddit Penny Stocks Ready to Explode: OPKO Health (OPK)
OPKO Health posted first-quarter revenue growing by 157.8% Y/Y to $545.2 million. It earned 5 cents a share. The stock is trending flat to lower because revenue from Covid-19 testing may slow. Vaccinations around the world may decrease the demand for virus testing.
In Q1, OPKO handled around 16 million Covid tests. It ended with $90 million in cash and reported four straight quarters of operating profits. This is due to Covid testing. In Q2, the company expects a breakeven to slight profitability.
Beyond Covid testing, OPKO may benefit from the growth of its hormone product. If the Food and Drug Administration approves its growth hormone, it may share profits with Pfizer (NYSE:PFE). Years of steady cash flow and modest profitability will attract investors back to the stock. Short-sellers are betting against its prospects with a 14.3% short float. It takes a small earnings beat to squeeze the bears and to send the stock back to the $6.47 yearly high.
Two analysts offering a price target on OPK stock have a $7.50 average target.
Short interest on Transocean is 14.6%, favoring the bears. Plus management took advantage of RIG stock getting Reddit meme status in June. It planned a stock issuance worth as much as $400 million in equity.
Transocean’s share sale would improve the company’s balance sheet. It would position the deep-sea driller to take advantage of rising oil prices. Long-time investors will not forget that levering its balance sheet to higher oil prices is a double-edged sword. The Organization of the Petroleum Exporting Countries (“OPEC”) may increase supply at any time. That could send oil prices lower within weeks.
RIG stock could explode to the upside if oil prices rise. Transocean will take delivery of Titan in May 2022 and Atlas in December 2021. Thanks to the stock sale, it will not need to draw funds from its revolving facility. This is positive for the equity, despite the near-term dilution for shareholders.
On stock rover, Transocean scores a 51/100 on valuation and 32/100 on growth (as shown above).
Reddit Penny Stocks Ready to Explode: Wipro (WIT)
Wipro is an Indian multinational information technology and consulting firm. The company is a steady performer, posting a 3.8% Y/Y revenue growth to $2.152 billion.
Operating margins are rising steadily. In the fourth quarter, Wipro posted a 21.0% IT services operating margin. Net income grew by 27.8% Y/Y. Its global business is a growth opportunity. Offering applications and data and engineering solutions, customers have a higher demand for its services. WIT stock is an unnoticed opportunity. Customers need digital operations platforms, security and infrastructure services.
CEO Thierry Delaporte highlighted major contract wins in the quarter. For example, it won a five-year deal with Telefonica O2. It also won a contract with a European firm in the mapping and location data space. Wipro will supply next-generation hybrid cloud operation centers. It will enable agile and DevOps through its home AI robotics platform.
On Tipranks, the average price target is $7.10. Most analysts last posted a price target over 2-3 months ago. Once Wipro beats consensus estimates next quarter, the stock may rise to new multi-year highs.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.