Wagering on the best penny stocks for 2023 is prudent for savvy investors.
Traditionally, stocks with $5 and below price tags have been considered too risky to dabble in. However, the stock market rout has effectively propelled several innovative businesses below the $5 mark, paving the way for multiple penny stock winners in 2023.
2021 was a massive year for penny stock investing, which allowed investors to build sizeable long-term wealth. However, amidst the market’s risk-off sentiment in the past couple of years, risky bets such as penny stocks have taken a massive hit.
It has created an effective buying opportunity for investors in innovative penny stocks that might gain big in more conducive conditions.
However, to reap long-term benefits, the trick is to select the best penny stock opportunities in 2023. Among the myriad microcap names, three penny stocks are likely to explode in 2023.
Ambev (NYSE:ABEV) is a seasoned campaigner in the Brazilian brewing space that has effectively carved a niche for itself in the South American market.
It also holds exclusive rights to sell and distribute Pepsi drinks across Brazil.
Despite posting lackluster top-line growth in the past decade, it has been delivering strong double-digit growth over the last few years.
Its profitability metrics have improved substantially, significantly higher than its historical averages. For instance, it’s EBITDA and levered free-cash-flow margin year-over-year are at 7.7% and 11.5%, respectively, more than 100% higher than its 5-year average.
The stock yields over 5%, with its one-year dividend growth rate at more than 26%. Additionally, its cash-rich balance sheet suggests its dividend is safe and poised for more upside ahead.
With its robust regional presence and encouraging top-line growth, Ambev remains an intriguing investment prospect.
Nokia (NYSE:NOK) was once a trailblazer in the smartphone realm but has undergone a metamorphosis over the past few years and emerging as a formidable force in the 5G landscape.
Under the able leadership of its CEO, Pekka Lundmark, the telecommunications leader has returned to prominence, establishing itself as a frontrunner in the lucrative 5G business.
The astonishing turnaround in its business is because of its stellar execution, capital allocation prowess, and the growth of 5G technology.
Nokia boasts an impressive track record of securing lucrative deals each quarter, a testament to its extraordinary revenue growth across its core divisions. With it boasting over 286 commercial 5G deals, the firm’s accomplishments speak for themselves.
Its comeback reflects Nokia’s incredible top and bottom-line growth in the past few years. Its YOY revenue and EBITDA growth are at 13.1% and 23%, respectively, comfortably dwarfing its 5-year averages.
Nokia has emerged as a resilient contender in the 5G space, proving to be an ideal investment for investors seeking dynamic opportunities.
Vaalco Energy (EGY)
Vaalco Energy’s (NYSE:EGY) acquisition of TransGlobe Energy last year has unlocked robust upside potential for improved bottom-line results for the combined business.
The merger has essentially catapulted the company dividend, offering a mouth-watering yield of over 5.5%. With OPEC+ tightening oil supplies, demand is expected to outpace expectations, which could lead to significantly higher margins for EGY.
Prior to the acquisition, Vaalco Energy’s growth was irregular, mainly due to the costly nature of offshore projects.
As VAALCO Energy continues to grow and develop more core areas, earnings are expected to stabilize, making it an exciting long-term investment for those looking at the best affordable opportunities in the energy sector.
According to Tiprank’s analysts, EGY stock could grow by a whopping 163% from current price levels, assigning a Moderate Buy rating.
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