Economic uncertainty is reflected in the markets, with volatility remaining high. The bear-bull spread indicator clearly reflects the nervousness in the markets. Legendary investors will quickly point out that it’s the best time to be greedy. Be it blue-chip stocks or penny stocks to buy. There seem to be several attractive opportunities.
The market participants have already seen the kind of returns penny stocks can deliver in a bull market. Looking at undervalued penny stocks to buy for potential multi-fold returns is not a bad idea. Of course, it’s time to hold with some patience than expect quick gains.
Therefore, my focus is on non-speculative penny stocks with reasonable underlying fundamentals. I would not lose my night’s sleep even if I had to hold these penny stocks for the medium to long term.
Let’s look at the reasons that make these penny stocks attractive.
| TLRY | Tilray | $3.10 |
| BITF | Birfarms | $3.65 |
| BORR | Borr Drilling | $0.94 |
Tilray (TLRY)
In the last few days, there has been good and bad news for Tilray (NASDAQ:TLRY). The good news is that President Biden has pardoned individuals jailed for using or possessing marijuana. Biden has also called for a review of the Federal law that classifies marijuana under Schedule I of the Controlled Substances Act. These comments revive hopes of accelerated legalization of marijuana at the Federal level.
The bad news is that Tilray reported weak numbers for Q1 2023. The company reported revenue de-growth of 9% on a year-on-year basis to $153.2 million. The company has, however, reaffirmed its guidance for adjusted EBITDA in the range of $70 to $80 million. Tilray also expects to be free cash flow positive for the financial year.
Overall, regulatory hurdles remain the critical factor. Legalization will help accelerate top-line growth. With renewed hopes on that front, the correction in TLRY stock is a good accumulation opportunity.
Bitfarms (BITF)
The cryptocurrency crash has presented an attractive investment opportunity in crypto stocks. Bitfarms (NASDAQ:BITF) stock traded at 52-week highs of $9.4. The stock trades below $1 and is worth considering among penny stocks to buy.
In business development, Bitfarms reported a hashing capacity of 4.2EH/s as of September 2022. The company’s hashing capacity has increased by 80% in the last three quarters. Bitfarms continues to expect steady growth in capacity in the coming quarters.
Digital assets are likely to swell further in the next year. This has translated into healthy growth in Bitcoin (BTC-USD) mined for year-to-date 2022. As of September 2022, the company reported 2,065 Bitcoin in its balance sheet. Once Bitcoin reverses, BITF stock will be positioned for a meaningful rally.
Another reason to like Bitfarms is that the company reports positive cash flow from mining operations. Even in a scenario where Bitcoin is trading at around $20,000 levels. For Q2 2022, Bitfarms reported an adjusted EBITDA margin of 45%.
Borr Drilling (BORR)
The recent production cut by OPEC underscores the point that oil is likely to remain above $80 per barrel. Even in a global economic slowdown scenario. A geopolitical risk premium is also being factored into oil prices.
I am, therefore, bullish on the oil and gas sector as an investment theme. Borr Drilling (NYSE:BORR) is an attractive pick from offshore drilling rig services. After having surged by 80% in the last 12 months, BORR stock seems to be in a consolidation mode. This is a good accumulation opportunity.
Currently, Borr Drilling has a fleet of 28 jack-up rigs with an average age of five. The demand for the company’s modern rigs is likely to remain strong. Further, with five rigs under construction, there is top-line growth visibility. For year-to-date 2022, Borr has been awarded contracts with a revenue potential of $650 million.
Borr has no significant debt repayment commitments with the recent debt refinancing agreement. Fundraising $250 million through equity dilution has also boosted the balance sheet.
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 Getting Scammed
On the date of publication, Faisal Humayun did not hold (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.
