Investing in little-known penny stocks can facilitate stock ownership in relatively unknown industries. Though they tend to be wildly risky, these inexpensive stocks tend to offer the potential for outsized gains down the road. Hence, hunting for little-known penny stocks is a good way to add a new dynamic to your portfolio.
Investment professionals are likely to be averse to penny stocks due to the risks involved in such investments. Though that holds some truth, it is also important to understand how penny stocks can add new gear to your portfolios.
The current stock market is remarkably volatile, and one of the best plays at this time is to use the volatility to your advantage and invest in stocks that have become oversold due to market headwinds.
Furthermore, penny stocks tend to be mispriced in bear markets. When the markets are bullish again, these stocks can produce outsized gains. Investing in penny stocks with favorable risk/return propositions is imperative. Additionally, considering how many blue-chip stocks started off as penny stocks, it’s perhaps always a wise idea to invest in unknown penny stocks.
|FREE||Whole Earth Brands||$4.82|
Esports Entertainment (GMBL)
Esports Entertainment (NASDAQ:GMBL) effectively leverages its expertise in the eSports realm to facilitate its wagering business. Its wagers are accepted in more than 140 jurisdictions, which are likely to increase in line with the industry’s growth.
Moreover, its business has grown incredibly over the past several quarters, despite market headwinds. In its third quarter, its revenues have grown over 190.8% from the prior-year period, expecting to close out the year with $55 million to $60 million.
eSports is already massive but has the potential to become even bigger down the road. The global eSports market is currently valued at a whopping $1.38 billion and could grow by as much as $1.87 billion by 2025.
Some of the leading companies have jumped in on the action and are lining up behind eSports teams and leagues to be part of the massive opportunity. The global live streaming audience has been growing rapidly and could climb to over 920 million by 2024.
Whole Earth Brands (FREE)
Whole Earth Brands (NASDAQ:FREE) produces and markets various branded artificial sweetener products.
With the growing concerns over obesity, the acceptance of healthy diet plans has been growing rapidly across the globe. According to research, the artificial sweetener market, valued at a massive $7.2 billion last year, is expected to reach an amazing $9.7 billion by 2027.
The company has been growing its business at a steady pace over the past couple of years. Earnings results have taken a hit of late due to inflationary pressures, but overall its margins have held up well.
Moreover, it’s pursuing an aggressive merger and acquisitions strategy, picking up complementary businesses to expand its revenue base. It is still early in its growth story, and if it continues dishing out strong results, FREE stock is likely to speed past the penny stock territory.
Gerdau (NYSE:GGB) is one of the top Brazilian steel producers with massive international operations.
The company has gone through its fair share of ups and downs and has done well to grow its business in volatile geography such as Brazil. The steel sector strongly correlates to industrial and population growth, which is why the market has been incredibly lucrative for Gerdau.
The firm has been benefitting from the sustained demand for steel. It has become one of the largest and most efficient steel producers, as it operates in one of the lowest-cost regions in the sector.
This has allowed Gerdau to effectively produce steel significantly cheaper than most of its peers. It’s nothing but glowing reports so far this year, and given the current trends, things are unlikely to change anytime soon.
Qurate Retail (QRTEA)
Qurate Retail (NASDAQ:QRTEA) is one of the stocks that has fallen out of favor with investors over the past few years.
Its operating results have fluctuated each quarter, which is why its stock now languishes in the penny stock territory. It now trades at just 0.08 times forward sales, roughly 80% lower than its 5-year average. Its plans to reorganize its business could pay many dividends as we advance.
The video commerce player markets and sells multiple consumer products through merchandise-focused televised shopping programs and on the Internet. It reaches more than 200 million homes globally and millions through its mobile application.
The firm continues to push forward with its three-year plan to effectively reorganize its business, focusing on marketing, inventory management and pricing. It’s a much-needed catalyst to turn things around for the enterprise.
AMMO Inc. (POWW)
AMMO Inc. (NASDAQ:POWW) designs and markets ammunition and component products for recreational shooters, hunters, and those seeking personal protection. Moreover, it operates an outdoor sports business that it aims to operate as a separate entity.
The company’s ammunition business has been growing aggressively over the past few years. Lockdowns and the Black Lives Matters protests were key drivers of the growth in demand for firearms. Though things have quieted down significantly, demand remains as elevated as ever.
Ammo acquired one of the leading firearms marketplaces in Gunbroker, enabling third-party sales and firearm purchases. The acquisition will likely pay a lot of dividends as the company builds off its success over the past couple of years.
Boxlight (NASDAQ:BOXL) is an innovative education platform offering an incredible academic market solution.
It essentially develops and sells interactive classroom technology products and services for the K-12 education market globally. According to Mordor Intelligence, the K-12 market is expected to grow at a staggering 9.53% from 2022 to 2027. Moreover, the surge in online education over the past few years has been remarkable and will continue more emphatically in the future.
The tech firm is coming off another stellar quarter, with $56 million in back orders, a robust balance sheet, and $12 million in cash. Moreover, its revenues were up 27.5% from the prior-year period to $81.2 million.
It expects to generate positive cash flows and sees substantial gross profit margin improvement in the year’s second half. Additionally, it re-iterated its impressive guidance for the full year at $250 million.
B2Gold (NYSEAMERICAN:BTG) is a Canadian gold miner that has taken a hiding in the stock market in the past six months.
Naturally, with the strengthening U.S. dollar, gold stocks have fallen out of favor with investors. Nevertheless, B2Gold has a few competitive advantages over its peers, which makes it a compelling penny stock.
For starters, the company has low operating costs compared to its peers. Its all-in, sustaining costs were at just $1,111 per ounce in the second quarter. This is perhaps why its gross margins are spectacular and are well ahead of sector averages. The company also expects to generate a healthy $575 million operational cash flow with gold prices around $1,700.
It also offers an extraordinary dividend, yielding over 5%, which is well covered by its tremendous cash balance. Layer that up with its industry-leading margins and development and exploratory assets; you have a highly attractive penny stock to bet on at this point.
On the date of publication, Muslim Farooque 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.