In recent months, the market’s appetite for penny stocks has been seriously curbed. This makes sense, given that cryptocurrencies have again become the risky plays favored by most retail speculators. Success in investing in sub-$5 stocks has become even more elusive. But that doesn’t mean you should skip out on the category completely.
Why? Well, while few are trading at or near all-time highs right now, there are still scores of low-priced names that could see big spikes in the coming year. These spikes could arise from game-changing developments. For instance, for an electric vehicle (EV) play, shares could see progress after flagship products are brought to market.
Even less-than-cutting-edge companies stand to see major developments next year, setting up their respective stock prices for a jolt. Think of a successful turnaround, or news of a big customer sign-up. Changes in U.S. federal policies could also result in big moves for pot stocks, which have floundered after the “blue wave” failed to deliver.
So, among the penny stocks, which ones should you keep an eye on ahead of big moves in 2022? These seven names — a collection of early-stage companies, fallen angels and turnaround plays — are just a few to keep on your radar:
- Beasley Broadcast (NASDAQ:BBGI)
- Foresight Autonomous (NASDAQ:FRSX)
- Globalstar (NYSEAMERICAN:GSAT)
- Romeo Power (NYSE:RMO)
- Sesen Bio (NASDAQ:SESN)
- Sundial Growers (NASDAQ:SNDL)
- ContextLogic (NASDAQ:WISH)
Penny Stocks to Buy: Beasley Broadcast (BBGI)
First up on this list of penny stocks is Beasley Broadcast. An owner and operator of radio stations, BBGI definitely is not in the “cutting edge” category I described above. Or is it? Besides owning 62 radio stations in 15 markets, the company also has exposure to industries that are anything but old school.
Take for example BBGI’s ownership of the Houston Outlaws, an Overwatch e-sports team. Or, the company’s investments in several audio media-related startups, such as Quu and SpokenLayer. Yet, while these non-core assets may pique your interest, the company’s less glamorous core business may be what potentially gives BBGI stock a boost in 2022.
Admittedly, the company’s post-Covid-19 recovery hasn’t happened as quickly as some may have hoped. Revenue over the past 12 months has come in at $239.2 million. That’s a nice increase from the $206.1 million reported in 2020, but still below the $261.6 million reported in 2019. However, as one Seeking Alpha commentator argued back in May, Beasley could become much more profitable post-outbreak than it was before, thanks to the aggressive cost-cutting implemented during the pandemic.
Besides its turnaround appeal, BBGI stock could be a takeover play as well. The company is controlled by the family of its late founder, George Beasley. They could decide to sell to an even larger radio operator that could squeeze out additional cost savings and therefore be willing to pay a healthy premium.
I wouldn’t buy the stock for this reason alone, but it’s something to keep in mind as BBGI trends lower at around $2 per share.
Foresight Autonomous (FRSX)
As fellow InvestorPlace contributor Alex Sirois recently wrote, FRSX stock is a growth stock that has seen better days. The former special purpose acquisition company (SPAC) once traded for as much as $12.14, back when both SPAC and autonomous vehicle (AV) plays were popular. But now, as both trends have taken a breather? Shares have tanked. The stock now changes hands for a little above $2 per share.
Why buy this stock when the market has seemingly thrown it into the bargain bin? Sure, challenges in the auto industry have delayed this Israel-based name’s commercialization efforts. Yet, if these issues start to clear up in 2022 and the company continues to make progress moving out of the pre-revenue stage, it’s hard not to see investor confidence returning. This would enable FRSX to climb back toward its 52-week high. That said, keep in mind that it’s anything but certain this one of the penny stocks comes back in a big way.
Foresight Autonomous’ current cash position of around $49 million may be enough to keep the lights on for now. However, I wouldn’t rule out the possibility that the company raises money down the road via a secondary offering. This would be dilutive and potentially limit upside. Nevertheless, with the advanced driver assistance systems (ADAS) trend set to accelerate, it can’t hurt to give this currently out-of-favor play a closer look.
Penny Stocks to Buy: Globalstar (GSAT)
I wouldn’t go as far as to call it a meme stock. However, Globalstar was just one of many penny stocks that made some wild moves this year thanks to speculative frenzy. Specifically, this satellite communications play has spiked and sunk thanks to rumors of Apple (NASDAQ:AAPL) signing on as a customer to give iPhones satellite connectivity.
Unfortunately, I wouldn’t bank on an Apple partnership anytime soon. The verdict on that rumor is pretty much in at this point. However, tremendous upside for GSAT stock could arise due to factors independent of any sort of possible partnership with the FAANG component.
As I said back in November, Globalstar could go parabolic if it manages to lock down a connectivity deal with another big-ticket end user. Given the continued high growth of the internet of things (IoT) industry, demand is only going to get stronger for satellite communications services.
Considering how much C-band spectrum it owns, this company has the capacity to take on much more business than it generates today (around $123 million in annual sales). A quarter or two of bad results could sink shares down to sub-$1 levels. Yet, with its high leverage serving as a double-edged sword, a major deal would likely result in another round of epic moves for GSAT stock.
Romeo Power (RMO)
An EV battery maker that also went public via the SPAC route, RMO stock has been a dud since its December 2020 deSPACing. Year-to-date, it’s down more than 82%. Sell-side analysts have soured on it. Meanwhile, investors are placing their chips on other early-stage EV battery companies like Quantumscape (NYSE:QS).
Even so, you may want to go against the grain and make a contrarian wager on Romeo Power. Reporting higher-than-expected revenue and lower-than-expected losses last quarter, it’s clear the situation here isn’t as dire as the market suggests. Of course, that’s not to say that Romeo has finally reached its “payoff” moment.
Although it is focusing on a niche — providing EV batteries for trucks — competition is still fierce. Rivals like Microvast (NASDAQ:MVST) have made more progress grabbing market share. Still, I wouldn’t discount Romeo Power’s chances. With $181 million in cash on hand and making progress building out its manufacturing, the company could continue to level up and deliver strong results.
Beaten down by investor disappointment, RMO stock trades for around $4 per share today. But considering its prospects for progress, plus its potential as a short-squeeze play (with 28.85% of float sold short), you may want to get into this overlooked pick of the penny stocks ahead of a possible 2022 rebound.
Penny Stocks to Buy: Sesen Bio (SESN)
If you’re looking for penny stocks with 10x potential, biotechnology is a great place to search. It’s not definite that SESN stock has what it takes to rise 1000% next year. But, given the degree to which this biotech play has been beaten down this year as well as the fact it’s not “game over” just yet for its flagship drug candidate? A big recovery for Sesen Bio may be possible.
What’s the story here? Well, the stock surged earlier this year on hopes that its bladder cancer treatment could get U.S. Food and Drug Administration (FDA) approval. Unfortunately, that didn’t happen. Instead, the drug was flat-out rejected in August.
Because of that, SESN stock collapsed in price. Trading for as much as $6.04 right before the announcement, shares fell over 50% on that day alone — and fell further the following day. By October, shares neared the 52-week low of 70 cents.
That said, things are now looking brighter for this risky clinical-stage company. Announcing that it was having a meeting with the FDA on Oct. 29, hope has started to return to Sesen Bio. As such, ahead of it making more progress, you may want to buy SESN stock. However, keep in mind that it’s still a very risky play. Position accordingly.
Sundial Growers (SNDL)
Next up on this list of penny stocks is Sundial Growers. Traders got ahead of themselves last winter, bidding up SNDL stock due to its appeal as a pot legalization play. Yet, this name’s days of “to the moon” moves may not be over. The Canada-based cannabis purveyor trades for around 60 cents as of this writing. This comes after it saw a brief “dead cat bounce” thanks to news about it launching a share repurchase program.
This program could help counter some but not all of the high Sundial shareholder dilution seen in 2021. However, buybacks aren’t going to be what potentially moves this low-priced marijuana stock higher over the next twelve months. Rather, that could occur if U.S. federal cannabis legalization finally happens next year.
Although the market isn’t confident in that happening (with signs it’s becoming a bi-partisan issue), legalization could still come about much sooner than expected. But better yet, big gains could happen even without legalization progress in the near future.
How so? Well, if Sundial’s other plans start to pan out. Synergies and cost savings from the company’s Alcanna (OTCMKTS:LQSIF) acquisition could do just that. What’s more, success with its SunStream Bancorp venture may lead to big gains for SNDL stock as well.
Penny Stocks to Buy: ContextLogic (WISH)
Less than a year after its initial public offering (IPO) at $24, ContextLogic has already fallen into the penny stocks category. As you likely remember, shortly after its IPO, shares in this e-commerce operator took off despite a bumpy debut.
Shares slid into the spring as it started to emerge that growth would fall off post-Covid. Then, WISH stock tried to make a comeback in the summer — this time as a short-squeeze play. Like other squeeze attempts such as Clover Health (NASDAQ:CLOV), however, this one failed to take.
Another round of disappointing results sank WISH even lower. By late summer, it was clear that sales were tumbling. Most of the company’s success in 2020 was a one-and-done event during lockdowns. Since then, management has announced big plans to right the ship. Still, investors remain unconvinced that the major overhaul will prove successful.
So, after all this, why try to catch this apparent falling knife? With some signs that its new strategy is starting to work, the market may have overreacted when it sent WISH stock under $4 per share. Further turnaround success could send this pick all the way back above $20. Because of that, taking a risk here may be worthwhile.
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On the date of publication, Thomas Niel 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.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.