- Penny stocks offer potentially significant upside over short investment horizons for investors who can stomach the volatility.
- BGC Partners (BGCP): Converting legacy brokerage revenues into high-tech, high margin sales with better earnings and cash flow generation potential.
- UWM Holdings (UWMC): An 11% dividend yield makes this mortgage lender an attractive penny stock to buy now.
- ObsEva (OBSV): A clinical-stage pharma drug developer that’s hitting all the good milestones with strong revenue growth potential in 2023.
- Safe Bulkers (SB): This maritime shipping company is growing its fleet, significantly reduced its debt in 2021 and pays a dividend.
- Telefonica (TEF): A deep-value telecom stock with decent upside and a 6.8% dividend yield.
- B2Gold (BTG): An underappreciated dividend stock with strong upside and defensive attributes.
- Carrefour (CRRFY): A defensive penny stock with growing retail revenue, earnings, and increasing dividends.
Despite their notorious volatility and higher-than-average investment risk, penny stocks can energize a portfolio’s returns profile for investors seeking aggressive growth opportunities. Investors looking for some interesting low-priced stocks to buy may wish to check out some penny stocks to buy for the remainder of 2022.
Returns on these investments can be phenomenal, quick and yet very risky. Due to their very low prices, a very small increase in the price of a penny stock can result in substantial capital gains. Imagine a $1 increase on a share you just acquired for $1 – that would be a straight 100% gain, and it might happen in a matter of days.
The U.S. Securities and Exchange Commission’s (SEC) definition of a penny stock includes a small company that trades below $5 a share. At times, the SEC also refers to microcap stocks as penny stocks. These are listed companies with small market capitalizations of less than $250 million or $300 million.
Penny stocks are not for the faint of heart, as the associated companies carry a lot of risk. That said, they can generate robust growth and quick returns that can be potentially life-changing. However, rather than concentrating on the price of a stock, investors may be better off assessing the underlying business for its wealth-generating potential and future capacity to generate positive cash flows.
With that in mind, below is a curated list of the top seven penny stocks I’d buy today.
BGC Partners (BGCP)
BGC Partners (NASDAQ:BGCP) is a long-established brokerage firm that is transforming into a high-tech company with fewer human traders. It’s also expanding its offerings to include cryptocurrency services, and the results are a high margin business with stable cash flow.
The brokerage firm services market provides for the needs of the world’s largest banks, trading firms, hedge funds, governments and investment firms. These have a more rigid and loyal institutional customer base that industry disruptors like Robinhood (NASDAQ:HOOD) may struggle to penetrate, snatch and retain.
In a recent earnings release, BGC’s Fenics revenue hit a record $125.3 million during the first quarter of 2022 to comprise 25% of total sales. That’s a 16% year-over-year (YOY) increase. Advanced technology-based offerings will lift profit margins as they replace some “costly” human traders.
BGCP stock is a screaming buy in its current trading range of $3.20 to $3.60 per share. The dividend-paying stock’s forward price-to-earnings (P/E) multiple of 5.4x puts it in a deep value basket while a price-to-free-cash-flow (P/FCF) multiple of 5.3x compares too well against an industry average multiple of 10.7x.
Most noteworthy, BGCP stock’s forward-looking PEG multiple of 0.3x implies its future earnings growth isn’t properly accounted for in the current valuation.
UWM Holdings (UWMC)
Leading U.S. mortgage originator UWM Holdings (NYSE:UWMC), the parent company of United Wholesale Mortgage (UWM), has seen its common stock print new 52-week lows lately as investors shun related stocks. You may wish to pounce on this rare opportunity to scoop UWMC stock at its cheap valuation.
Shares trade at a forward price-to-sales (P/S) multiple of 0.16x today. An equity stake in the top mortgage lender in America may never be this cheap again.
UWMC stock is down 38% year-to-date (YTD), and the company’s historical 5 cents per share dividend now yields an incredible 11% annually. Given a projected decline in business volumes as mortgage rates rise and inflation bites disposable incomes, perhaps the dividend could be at risk. However, UWMC was repurchasing shares during the past year, and the company paid out 20% of earnings for 2021.
There’s significant room for management to maintain the high-yielding distribution through a turbulent 2022. Patient investors in this top penny stock will get paid while they wait for a recovery in U.S. mortgage volumes as the economy stabilizes.
ObsEva (NASDAQ:OBSV) is a Geneva-based clinical-stage biopharmaceutical company. It is developing therapies targeting serious conditions compromising women’s reproductive health, including Linzagolix, a drug for treating uterine fibroids.
OBSV stock rallied 20% during the past week. The company announced positive efficacy results for Linzagolix in a Phase 3 trial. Further data during the next quarter could unleash bullish investor spirits. More capital gains could accrue as the company enters a new revenue growth phase that could result in positive cash flow generation within the next few years.
Wall Street analysts project a strong 384% growth in OBSV’s revenue to $35 million in 2023. This signifies the start of a strong sales growth curve over the next decade as the company matures into a globally respected pharmaceutical name.
Safe Bulkers (SB)
Safe Bulkers (NYSE:SB) is a small international bulk shipping company that provides marine dry bulk transportation services for grains, coal and iron ore. The recent surge in rates during an ongoing shipping crisis pushed the company to record revenue, earnings and free cash flow in 2021, and even better times could roll in 2022.
The company recently acquired a new giant Capesize class dry bulk ship for $30 million out of its own liquidity resources. Nine more vessel orders are scheduled to be delivered within the coming two years. Even if shipping rates were to soften in the near future, Safe Bulkers’ growing shipping capacity should drive organic revenue growth and strengthen free cash flow generation going forward.
Safe Bulkers stock is profitable, generates positive cash flow and reduced its debt by 42% in 2021. Shares trade cheaply at a P/E multiple of 3x as of May 11. Most notably, SB stock pays dividends.
SB stock has generated8.7% in gains so far this year. Meanwhile, the S&P 500 has lost 16.4% year-to-date.
Telefonica (NYSE:TEF) is Europe’s third-largest telecommunications company based in Spain. It operates mobile and fixed networks in several countries, including Spain, Germany, the U.K. and Brazil. Investors seeking exposure to value-priced penny stocks with decent operating histories and hefty dividend payouts can’t miss TEF stock.
The company’s innovation arm WayraX is making multiple investments in new growth opportunities, including a pipeline of Israel-based moonshots. Its old telecom business is increasingly being diversified while cash flow generation remains strong in legacy business lines.
TEF stock is a buy today because it looks significantly underpriced relative to industry peers. Its forward P/E ratio of 15.6x compares very well to the industry average. Meanwhile, its P/S multiple of 0.7x is half its industry’s average of 1.4.
Further, TEF’s PEG ratio, which adjusts the forward P/E to the company’s earnings growth rate, is a low 0.1 (which is far below a fair reading of 1.) It also pays a 17 cents per share semi-annual dividend that yields 6.2% annually.
B2Gold (NYSEAMERICAN:BTG) is a gold miner with low-cost open-pit operations in Mali, Namibia and the Philippines. It also has new development projects in Colombia and the Anaconda area in Mali. Mining operations have remained highly profitable, even during the inflationary periods reported lately.
The company’s first-quarter 2022 production of 209,365 ounces exceeded internal targets. Management guides for 950,000 to 1 million ounces in full-year 2022 at a cash operating cost of $620 to $660 per ounce. Huge profits will be made again this year, as gold trades above $1,800 on the spot market.
BTG stock retains a “strong buy” rating from Wall Street analysts for tangible reasons. The company is profitable and remains cash flow positive, plus new development projects will result in increased productivity and cash flow growth. Analysts project a five-year earnings growth rate of 20% on the miner’s shares. Shares pay a regular quarterly dividend that yields nearly 4% annually.
Carrefour (OTCMKTS:CRRFY) is a profitable grocery store with a growing consumer defensive business. It should offer better downside protection to an investment portfolio as inflation and rising interest rattle consumer spending habits. The company operates in 30 countries globally, and its recent adoption of smaller-store formats reduces exposure to the non-food shopping categories.
Profitability, value and defensiveness combine to make CRRFY stock a top penny stock to buy right now. The company runs a growing and profit-generating business.
Earnings per share could surge considerably over the next two years as revenue grows with inflation and improving operating efficiencies. Carrefour also pays a quarterly dividend that yields 2.7%. Analysts expect a 29% dividend increase for 2023.
This top penny stock has generated 19% in gains for investors so far this year, yet shares remain cheap. Its forward P/E ratio of 11.8x is far below an industry average of 22.7x, while Carrefour’s enterprise value to free cash flow (EV/FCF) multiple of 13.2x is lower than an industry average of 16.2x.
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.
On the date of publication, Brian Paradza did not hold (either directly or indirectly) any positions in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.