Nano-cap penny stocks are arguably the most volatile and speculative investments you can make other than nano-cap cryptos. Shares of these small businesses generally have a market capitalization lower than $50 million. However, since you’ve likely clicked on this article seeking stocks on the extreme end of the risk-reward spectrum, I will be discussing stocks with a market cap between $5 million and $10 million.
Indeed, businesses of this size have little flexibility and funding and may not weather a sudden storm. But they can also generate outsized returns if they can survive this cycle and pull off a recovery.
The following three nano-cap penny stocks have had massive selloffs and now seem to be recovering:
Meiwu Technology (WNW)
Meiwu Technology (NASDAQ:WNW), a Chinese e-commerce company specializing in fresh produce, witnessed a staggering decline in its stock price over the past two years. WNW has lost over 99% of its value and is currently trading below the Nasdaq minimum. However, the worst may be behind as China reopens and monetary policies ease up.
As for the bull case, WNW appears to be bottoming out after significant selloffs, currently changing hands at 20 cents. This suggests some stability and interest from bargain hunters. Additionally, the rapidly recovering Chinese e-commerce market may benefit Meiwu Technology.
According to Statista, China’s e-commerce food sales are projected to reach $188 billion by 2027. Meiwu Technology’s focus on the fast-growing fresh produce segment, with over 711,500 registered users and 3,225 goods on its platform, could provide a competitive advantage.
Conversely, WNW risks Nasdaq delisting due to its low share price and market capitalization. The company received a notice from Nasdaq in February, with 180 days to comply with the $1 per share minimum bid price requirement. Failure to meet this requirement by August 7 may result in delisting unless the company appeals or requests an extension. A reverse stock split could be an option, but this would decrease liquidity and shareholder value.
Nonetheless, it has a lot of upside potential due to its bargain valuation, and the risk seems worth it in this range.
PARTS iD (ID)
PARTS iD (NYSEMKT:ID) is an e-commerce company that identifies and sells car parts. ID has been recovering sharply in the past few days with the tailwinds in the auto parts market, primarily driven by civilians’ aging vehicle fleet and increased crimes. For example, auto glass is becoming a scarcer commodity amidst a surge in carjacking across the U.S. That’s quite expensive to get replaced, and local companies have to go through a complicated process to source them.
On the other hand, PARTS iD enjoys the benefit of having nationwide coverage through agreements with thousands of other locations.
Furthermore, I believe it is likely that car parts are going to be even more in demand going forward. The average U.S. civilian car was 13.1 years old last year, and that number keeps going up.
As of its latest Q3 2022 report, sales decreased to $79.9 million from $102.6 million for the same period in 2021. Management blamed it on “…supply chain constraints, high inflation, rising interest rates and softening consumer demand for discretionary goods…” That’s likely to recover in the long run, and I see the valuation at $8.87 million as a bargain.
Exicure (XCUR)
Exicure (NASDAQ:XCUR) is “an early-stage biotechnology company developing nucleic acid therapies targeting ribonucleic acid against validated targets to neurological disorders and hair loss.” The company has candidates for Huntington’s disease, Angelman syndrome, Batten disease, spinocerebellar ataxia, and sporadic amyotrophic lateral sclerosis.
All of its drugs are currently in the discovery phase except for SCN9A, which is in preclinical development. Naturally, such an early-stage biotech startup comes with a lot of speculation. But any positive news on its drug candidates will likely make this stock a multibagger. The sentiment on this stock has also been rising, up nearly 27.59% this month.
The company has $10 million in cash, which should be enough to last this year with some additional financing.
On the date of publication, Omor Ibne Ehsan 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.
