I’ll begin this article by giving the same caveat every investor should heed with very inexpensive stocks: Tread carefully, do your own research, and dedicate an appropriate portion of your portfolio to this sector. You need it to tell bargain stocks from traps.
By now, most everyone is aware that stocks under $5, aka penny stocks, carry a significantly higher risk profile than most other stock classes. Yet, the appeal remains although many do ultimately lose when betting on this stock class.
Are they exceptional? Absolutely. Should investors anticipate finding such gold mines by simply sifting through penny stock articles like this one? Probably not.
But the chance remains that any of the stocks on this list could be the next to blow up. So, let’s take a look at these potential bargain stocks.
- Verb Technology Company (NASDAQ:VERB)
- Electrameccanica Vehicles (NASDAQ:SOLO)
- Trivago (NASDAQ:TRVG)
- NuCana (NASDAQ:NCNA)
- Alkaline Water Co. (NASDAQ:WTER)
- Alexco Resource Group (NYSEAMERICAN:AXU)
- Gold Resource Corp. (NYSEAMERICAN:GORO)
Bargain Stocks: Verb Technology Company (VERB)
To begin our list of bargain stocks, Verb Technology Company has something underpinning it which many other stocks in its price range don’t: Strong analyst sentiment. All three of the analysts with coverage of VERB stock have it rated as a buy.
That is a very good sign for the Utah based company that provides a suite of sales enablement tools through its sales platform. Verb Technology is a Software-as-a-Service platform for sales and marketing professionals. The company boasts proprietary interactive video technology and sales software all offered on a subscription basis.
The company sees itself as being ideally positioned to take advantage of several burgeoning markets. Its products and services have utility across livestream ecommerce, video conferencing, CRM, and online eLearning, among others. Each of these markets is currently undergoing rapid growth. The company was even ranked the number one direct-selling app by Social Selling News.
The company is well-regarded, but small. However, it is growing. Total digital revenue is up 8% year-over-year. Total SaaS recurring revenue is increasing as well, in fact by 26%. The company is keen to increase this figure due to the security it brings to its business model.
As the company noted in its recent Q2 earnings: “SaaS recurring revenue as a percentage of Total Digital revenue was 88%, compared with 76% for the same period last year and up over the 81% we reported in Q1 2021.”
Electrameccanica Vehicles (SOLO)
If a fledgling EV company with lots of potential is your thing, then SOLO stock is an equity to consider.
The Canadian company will produce two vehicles: A three-wheeled vehicle with a car front called the SOLO, and an eRoadster which looks an awful lot like a 1950s Porsche. While the SOLO carries an MSRP of $18,500, the eRoadster is priced at a much higher $150,000. The company is also planning to release a third vehicle, the Tofino.
Investing in Electra Meccanica Vehicles is for the person who believes in the company’s ability to produce EVs that sell, not those which are currently selling. The company is in the process of finalizing its manufacturing location in Mesa, Arizona. The site will be finished by the end of next year and will be capable of producing 20,000 vehicles annually.
So, an investment in SOLO stock can be fairly characterized as one of hope and potential. And apparently analysts are on board. The two analysts with current coverage of the stock give it a target price of $11.32 and $15.32, respectively. Both of those prices are well above the $3.30 price at which shares currently trade. It will be a waiting game, but one which could pay off very handsomely.
Bargain Stocks: Trivago (TRVG)
Trivago is a global hotel and accommodation search platform. Given the current state of travel and its potential for a rebound, it isn’t difficult to see Trivago’s catalysts. Ultimately travel will rebound and Trivago should rise along with the tide.
Of course the Delta variant is complicating that rebound. That isn’t good news in the broadest sense, and may push back the window for purchasing TRVG stock.
Trivago is now trading around $2.50 per share. However, earlier in 2021, when vaccine rollouts were in full effect, it reached over $5. The hope for investors is that another resurgence in price occurs. That is a risky bet, to be certain, but the upside makes it potentially worthwhile.
The 10 analysts who track Trivago see its potential rising through next year. They anticipate that the company will see approximately $353 million in revenues through this year, and believe that figure should jump to nearly $610 million in 2022.
So the play here is fairly obvious. Establish a position while TRVG is cheap. There may be bumps in the road, but things should look much better by the end of next year. There will be returns for such a gamble in all but the worst case scenario.
NuCana is a company focused on the treatment of cancer. The company name is an amalgamation of “new cancer agents” and “nucleotide analogs.” Without getting overly technical, the company is focused specifically on the use of ProTides in the treatment of cancer.
Gilead’s (NASDAQ:GILD) remdesivir, approved for use against Covid-19, is one example of a ProTide medicine.
Essentially the company hopes that its ProTide drugs can be applied to nucleoside analogs widely used in chemotherapy. ProTide drugs promise to make common chemotherapy agents safer, more tolerable, and more efficacious.
NuCana’s pipeline includes four such therapies, three of which are currently in Phase 1. The other, Acelarin, is in Phase 3. The company anticipates that it could reach objectives allowing it to submit to the FDA’s accelerated approval program as early as the first half of 2022 for Acelarin.
That is the gamble in investing in NCNA stock. If it hits the milestone objectives and is eligible to submit to the FDA accelerated approval program, it will move upward quickly. That is the nature of pharmaceutical stocks in their early days. If Acelarin succeeds, it will set the company up for a long period of success. If not, then the company’s pipeline of three other drugs is its only other hope.
Bargain Stocks: Alkaline Water Co. (WTER)
Say what you will about the rise of so-called lifestyle brands selling products catering to trendy diets, or about the brand ambassadors who advertise these products. You can argue that none of it really matters and that these aren’t good businesses worth investing in.
And you can argue that Alkaline Water Co. exemplifies all of these things listed above. After all, it sells alkaline water products which successfully leveraged trends including the alkaline diet and pink Himalayan salt. Further, it recently signed NBA legend Shaquille O’Neal as a brand ambassador.
But the truth is that the company recorded $14.1 million in revenues for the quarter that ended June 31. That’s a 5% increase on a year-over-year basis. Further, that’s $56 million in annualized revenues for the company. However, the company did record a $7.4 million net loss in the same period. The company attributes $4.2 million of that loss to non-recurring charges, including those of Shaquille O’Neal.
So, in a best-case scenario the company lost around $3 million, similar to its performance last quarter. By no means is this a stellar business. It is, however, an emerging one with a share price under $2 and the potential to record approximately $60 million in revenue on a pro forma basis. That should keep the market interested while the company looks toward posting net gains in the future.
Alexco Resource Group (AXU)
Alexco Resource Group is a mineral resource property developer based in British Columbia. The company focuses on the production of lead, silver, and zinc primarily, while also mining lesser amounts of gold.
The good news is that the company’s mining operations have resumed. Mining operations were nil in the second quarter of 2020 from a revenue perspective. The company recorded $7.501 million CAD of revenue from mining operations in Q2 of 2021.
The story of investing in Alexco Resource Group is a story of a rebound. In Q2 2020 the company suffered a net loss of $12.229 million CAD while recording zero mining revenues. This year, in the same period, it posted a much improved $2.748 million CAD loss. However, it has still posted a $1.411 million CAD net gain through the first half of 2021.
As the importance of mineral mining increases due to multiple factors, AXU stock becomes more and more attractive.
Bargain Stocks: Gold Resource Corp. (GORO)
Continuing with the bargain stocks in resource mining theme, the last stock on this list is Gold Resource Co. The Colorado company develops resources which produce gold, silver, copper, lead, and zinc.
The company has analyst coverage. The fact that it has a buy rating and a $5.50 target price will attract some given its current $1.67 price. Take that with a grain of salt, though. That buy rating and target price is the result of a single analyst opinion.
That said, the company looks to be on solid footing given its $30.5 million cash position as of June 31. The company recorded $16.1 million of cash inflow through 2021 at the same date.
The company is currently facing a headwind — it has suffered a spike in Covid-19 cases. This necessitated a ramp-down in operations on Aug. 18. However, the company has had a strong year, recording net gains in each of its first two quarters. That is something which did not occur last year at the same time.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.”