Finding stocks with a moonshot potential is like finding gold — you must know where to search, what criteria to use in a stock screener and how to make a narrow list of selections from that info. Even the best penny stocks to buy now are riskier than large-cap or mid-cap stocks. But while this is true, it is often a bad idea to neglect good penny stocks (and their potential for big gains).
If you’re looking to expand into penny stocks, I have a few top picks to share with you.
But first, what does moonshot potential mean? I would say that a return relatively higher than the average U.S. stock market return during the past 10 years meets the definition of a moonshot potential. I am not referring to a 100% increase but to be less realistic to return that is higher than the 28.7% gains of the S&P 500 in 2021. For example, 40% or 50% would be a great return.
Can the best penny stocks to buy now move even higher? I would say yes, but don’t throw everything at them. They remain risky. It is better to keep it at a more conservative expectation.
|TGA||TransGlobe Energy Corporation||$4.78|
|GTE||Gran Tierra Energy||$1.93|
|WPRT||Westport Fuel Systems||$1.26|
|TKC||Turkcell Iletisim Hizmetleri||$2.71|
TransGlobe Energy Corporation (TGA)
TransGlobe Energy Corporation (NASDAQ:TGA), the first on this list of the best penny stocks to buy now, explores, develops, and produces oil and natural gas in Egypt and Canada. TransGlobe Energy Corporation was founded in 1968 and its headquarters are in Canada. The shares have gains of nearly 62% in 2022 and are up approximately 150% in the past year. There is strong momentum that can continue, even with a potential dip.
The first-quarter 2022 financial results were strong, as year-over-year revenue increased to $52.95 million versus $18.05 million and EPS (diluted) rose to 66 cents from a loss of 15 cents.
Despite the volatility in profitability and swinging from a net loss in 2020 to a net profit in 2021, this energy company generates consistent positive free cash flow. This is great news for valuation purposes. Despite the rally in 2022, the stock is trading at a price-earnings ratio (TTM) of 3.2 and offers a forward dividend yield of 3.9%.
The bullish thesis for TGA stock is supported by high energy prices. We do not know when and how oil prices will stabilize or even decline amid the uncertainty due to the war in Ukraine, but as long as energy prices remain elevated, this energy stock has high odds to continue its uptrend.
Gran Tierra Energy (GTE)
Gran Tierra Energy (NYSE:GTE) is an oil E&P company operating in Colombia and Ecuador. The Canadian firm was incorporated in 2003. The shares have rallied approximately 157% in 2022, with soaring energy prices again as a key catalyst.
The first -quarter of 2022 was strong and can push the stock higher.
Gran Tierra reported a net income of $14 million, up from a net loss of $37 million in the first quarter of 2021; a surge of 148% in net cash provided by operating activities year-over-year; and free cash flow of $46 million, the highest quarterly amount in almost 10 years for the firm.
The one-year target estimate of $3.21 signals a 64% upside potential.
Assertio Holdings (ASRT)
Assertio Holdings (NASDAQ:ASRT) is a specialty pharmaceutical company, with medicines focused on neurology, pain and inflammation. It produces drugs like Indocin, for rheumatoid arthritis; Cambia, a non-steroidal anti-inflammatory drug for migraines; and Zipsor, for acute pain relief. The Illinois company was incorporated in 1995.
Assertio Holdings in its first-quarter of 2022 financial results reaffirmed expected 2022 net product sales but also raised the 2022 non-GAAP Adjusted EBITDA guidance.
Net income (GAAP) was $9.1 million versus $4.5 million in 2021, an increase of 102%, while the gross profit margin in the first quarter was 88%, up 344 basis over the same quarter last year. The PEG ratio is 0.79, which indicates an undervalued stock, and the expected three-to-five-year EPS growth of 10% is strong.
The one-year target of $5.83 signals an upside potential of 90%.
Safe Bulkers (SB)
Safe Bulkers (NYSE:SB) is a shipping company that owns and operates dry bulk vessels for transporting bulk cargo, primarily coal, grain and iron ore. As of March 18, 2022, the shipping company had a fleet of 40 dry bulk vessels, each of which is a little more than 10 years old on average. The Monaco firm was founded in 2007.
The shares of Safe Bulkers are up approximately 19% in 2022. The first-quarter 2022 financial results showed a year-over-year increase of 24% for net revenues to $77.7 million and a 71% increase in net income to $36.4 million. The stock trades at a P/E ratio (TTM) of 3 and offers a forward dividend yield of 2%.
In 2021, Safe Bulkers delivered a net income growth of 1,451% to $174.3 million.
The one-year estimate target of $6.12 signals potential gains of 36%. In a year of high volatility, this upside potential is more than enough to earn it a place on the list of the best penny stocks to buy now.
Westport Fuel Systems (WPRT)
Westport Fuel Systems (NASDAQ:WPRT) engineers, makes and sells alternative fuel systems and components for use in transportation applications worldwide. The company has two segments — Original Equipment Manufacturer and Independent Aftermarket segments. The Canadian firm was founded in 1995.
The one-year target estimate is $11, an upside potential of nearly 800%. Yes, this indeed has real moonshot potential.
The P/E ratio (TTM) of 9.2 signals the stock is not expensive. The shares are down nearly 48% in 2022, so a rebound could be underway soon.
The expected revenue growth is bullish. The expected sales growth for 2023, 2024 and 2025 is 21%, 16%, and 15.5%. Crunching the numbers leads to a bargain now. The price-to-book ratio of 0.88 and price to sales (TTM) ratio of 0.68 support the idea that WPRT stock is cheap, and this is why a rally that could be fueled soon.
LightInTheBox (NYSE:LITB) is an e-commerce platform that delivers products directly to its customers around the globe. The Chinese firm was founded in 2007. The shares are up nearly 19% in 2022 but are down around 50% for the past year.
Is it a contrarian play? The fourth quarter and full-year 2021 financial results support this idea.
For the full-year 2021, total revenues increased by 12% to $446.1 million compared to $398.2 million in 2020; gross margin expanded to 46.3% versus 44.2% in 2020; and net income increased to $13.5 million compared to $13.3 million in 2020.
The current price-to-sales (TTM) ratio of 0.3 is too low and profitability has stabilized in the previous two consecutive years.
Jian He, chief executive officer of LightInTheBox, has commented “It has not been an easy year, but thanks to our dedicated team, we have the expertise and the resources to continue expanding our globally sourced quality products, and to provide excellent value-added services and a reliable shopping experience to customers in over 140 countries. We believe this is the cornerstone of a healthy business and the path to better revenue growth. As the global economy reopens, we are well positioned to remain firmly on course with our growth momentum and identify new growth opportunities.”
Turkcell Iletisim Hizmetleri (TKC)
The last of today’s best penny stocks to buy now, Turkcell Iletisim Hizmetleri (NYSE:TKC), provides communication and technology services. It operates through the following segments: Turkcell Turkey, Turkcell International, and Techfin. The Turkish company was incorporated in 1993.
The shares are down nearly 18% in 2022 but this is good news now. The stock trades at a P/E Ratio (TTM) of 3.7 and has a forward dividend yield of 15.5%.
This is a mix of fundamentals that’s hard to ignore. The one-year target estimate is $4.10, an upside potential of 49%.
The sales growth is great. In 2019, 2020 and 2021 the revenue grew 18.1%, 15.8% and 23.4% respectively. Profitability is also great. Net income grew 71.3% in 2020 and 18.7% in 2021 to $5.03 billion.
The logic says that if the free cash flow trend is equally strong, we have a penny stock that deserves attention. This is indeed the case. The firm has an excellent free cash flow trend. In 2020 free cash flow grew 52.3% to $10.18 billion and in 2021 to $15.6 billion, an increase of 53.2%.
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On the date of publication, Stavros Georgiadis, CFA 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.