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What Will 7 of 2021’s Best Performing Penny Stocks Do for an Encore?

penny stocks - What Will 7 of 2021’s Best Performing Penny Stocks Do for an Encore?

In this article, we’ll be looking at some of 2021’s top-performing penny stocks. That performance is what causes me to deliver this caveat. Because of their performance in 2021, many of the stocks that you’re about to read about no longer fit even the most generous description of a penny stock.

Penny stocks became a favorite among many retail investors, particularly first-time investors whose initial exposure to the stock market may have come from a trading app like Robinhood Markets (NASDAQ:HOOD). The ability to buy a significant amount of shares with a smaller investment holds some appeal. And because of their low price, these stocks can deliver a strong profit even with a small price move.

That can be true, but that brings me to my second caveat. Penny stocks are among the most volatile of all investment types. The potential for large gains must be balanced with the possibility for large losses, including perhaps your entire investment. You shouldn’t be investing money that you can’t afford to lose.

With those cautionary notes out of the way. It’s time to look at seven penny stocks that performed well in 2021. While that doesn’t mean any or all of these stocks will repeat that performance in 2022, many of these stocks continue to garner bullish sentiment from the analyst community which could be a harbinger of continued growth.

  • AMC Entertainment (NYSE:AMC)
  • Lightwave Logic (NASDAQ:LWLG)
  • SeaChange International (NASDAQ:SEAC)
  • Vertex Energy (NASDAQ:VTNR)
  • CES Energy Solutions (OTCMKTS:CESDF)
  • Destination XL Group (NASDAQ:DXLG)
  • Sundial Growers (NASDAQ:SNDL)

Best Performing Penny Stocks: AMC Entertainment (AMC)

Neon sign of an AMC (AMC) theater
Source: rblfmr / Shutterstock.com

AMC Entertainment, along with GameStop (NYSE:GME), was an original meme stock. Retail traders illustrated the power of community and powered one of the most profound short squeezes of all time. At one point, AMC stock was trading at an all-time high of $72.62; it closed yesterday at $20.66 a share.

It’s hard to look at a penny stock that posted a 1,183% gain in 2021 as a disappointment. However, when you consider that AMC stock is down 65% from its 52-week high, investors who bought at the top are holding a heavy bag.

But if you’re reading this, you may be wondering where AMC stock is going. If you’re an investor who places a value on earnings, then it might be best to avoid AMC at this time. The company is not profitable and is not forecast to become profitable in the next year. However, other financial metrics, such as free cash flow (FCF) paint a more optimistic picture.

That being said, the retail army (known as the Apes) that have engineered the AMC stock price have made it clear that they are in for the long haul. With that kind of commitment on its side, it makes you look differently at a company that is still the world’s largest operator of brick-and-mortar movie-plexes.

Lightwave Logic (LWLG)

Image of a penny held between two fingers with a white indoor background
Source: Shutterstock

A stock that performed every bit as well as AMC but without the limelight is Lightwave Logic. Like many technology stocks, LWLG stock has been under pressure lately. But the stock still delivered a 1,500% return last year.

Lightwave Logic manufactures and develops electro-optic polymers that are used in fiber optic communications. The company has more than 50 global patents and applications that are either issued or pending. Late in 2021, the company demonstrated that its technology could transmit data faster while using less power.

However, the technology has not yet been launched into the commercial marketplace. That leaves investors with a company that is not just pre-earnings, but pre-revenue. And the company’s net losses continue to widen.

The stock is not yet covered by the analyst community and is not on the radar of institutional investors. However, that could be just the kind of combination that many retail investors are looking for.

Best Performing Penny Stocks: SeaChange International (SEAC)

Metaverse stocks: kid in front of a computer screen playing video games
Source: Shutterstock

Investors who are familiar with SeaChange International may wonder if I got my years wrong. SEAC stock was one of the big penny stock winners of 2019. The global supplier of video delivery software was up 213% that year. However, since the pandemic the stock gave back all those gains and was negative in 2021 until December.

In the last month of 2021, SEAC stock jumped 116% and SeaChange posted a respectable 14% gain for the entire year. The reason for the jump in stock price was the announcement of the company’s reverse merger with Triller. The combined company, which will be named TrillerVerz and trade under the ILLR ticker will have an estimated value of $5 billion and is looking to become a rival to TikTok among social media creators and influencers.

If all goes as planned, investors can anticipate more predictable growth this year. In fact, the single analyst following the shares has a $3 price target for the stock, double current levels.

Vertex Energy (VTNR)

a bunch of oil barrels are stacked high
Source: Shutterstock

The energy sector was a no-go for most investors in 2020. But 2021 was a different story. And even penny stocks such as Vertex Energy participated in the recovery rally. VTNR stock soared 538% in 2021. And despite a year-end sell-off, Vertex Energy is starting to trend higher.

The company is involved in the refined distribution and marketing of petroleum products. Specifically, Vertex is one of America’s leading processors for recycled motor oil. Keeping in mind that penny stocks are usually small-cap companies, it’s not a surprise that investors got spooked when the company announced that it was raising $155 million in debt.

But this may be a case of investors missing the larger story. In this case, Vertex is transitioning away from its core operations (i.e., recycling motor oil) to become a renewable diesel producer. And its first step in that direction is its $75 million acquisition of Shell’s refinery near Mobile, Alabama.

That may make for a choppy first half of the year, but if you’re willing to hold on, the median number of 10 analysts suggests the stock could have 52% upside with a 12-month price target of around $3.80 a share.

Best Performing Penny Stocks: CES Energy Solutions (CESDF)

Image of an oil wells with an orange-red sky at dusk
Source: Shutterstock

Another energy stock that was one of the best performing penny stocks in 2021 was the Canadian oil and gas company, CES Energy Solutions.

The company provides “consumable chemical solutions throughout the life-cycle of the oilfield” in North America. An attractive part of the company’s business is its asset-light model that allows it to generate significant free cash flow (FCF).

In fact, it was that free cash flow in part, that has allowed the company to begin to issue dividends. If that trend continues, it may provide an additional catalyst for the stock.

Keep in mind, CESDF stock is a true penny stock. As of this writing, investors can buy shares for just $1.73 a share. However, the stock went up 56% last year. Remember these stocks only need a small boost in stock price to generate a significant percentage gain. And the average 12-month price target of seven analysts is $2.34, a gain of about 37%.

Destination XL Group (DXLG)

a figure of a shopper standing on top of a credit card
Source: Shutterstock

Destination XL Group was one of the best-performing penny stocks with a gain of over 2,000%. Shares of the big-and-tall clothing retailer started 2021 trading at just 27 cents. But by the end of the year, the stock was trading at over $5 a share and that growth has continued into the first month of 2022.

The company recently announced its 2021 holiday sales and notably comparable sales in its omni-channel retail business were up from 2019 as well as 2020. This is allowing the company to project total sales of between $500 million to $505 million. Although that’s slightly less than a previous forecast, it still shows that the company’s recovery remains strong.

Only two analysts give DXLG a rating. But the stock gets a buy rating with a price target of $9.25 which is a 58% gain from the stock’s current level.

Best Performing Penny Stocks: Sundial Growers (SNDL)

sndl stock Sundial Growers company logo icon on website
Source: Postmodern Studio / Shutterstock.com

It might surprise you to see a marijuana stock on this list of best-performing penny stocks. However, as I mentioned in the introduction, it doesn’t take much of a price increase for investors to realize a significant gain.

Retail investors got a substantial gain early in 2021 when SNDL stock became one of the “meme stocks.” At one point in February, the stock – which started the year below $1 a share (a literal penny stock) surged to nearly $3.

The stock failed to hold those gains. Neither did it hold the gains when it popped above $1 per share in the summer. Nevertheless, the stock did rally in December to post a 23% gain for the year. And it’s this last spurt that might wind up giving the stock a growth story for 2022.

The company announced a proposed acquisition of Canada’s largest private liquor retailer, Alcanna (OTCMKTS:LQSIF) for approximately $346 million. As InvestorPlace contributor Ian Bezek pointed out last week, if the transaction goes through as expected, it will likely give Sundial an injection of much-needed revenue that can stabilize the company’s financials as it waits for the cannabis bear market to end.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More: Penny Stocks — How to Profit Without Gettting Scammed

On the date of publication, Chris Markoch 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 Markoch is a freelance financial copywriter who has been covering the market for eight years. He has been writing for InvestorPlace since 2019. 


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