It’s not easy finding promising penny stocks for solid returns right now. Putting aside their low price tag, many penny stocks have small market capitalizations. Any investor in small-cap stocks knows how tough that has been for the last two years.
The iShares Russell 2000 ETF (NYSEARCA:IWM) is up approximately 8% in the last 12 months and about 2% in 2024. That’s alright; it’s far below the double-digit returns that the major indexes have been generating.
That’s because small-cap stocks are more tied to the domestic economy. For example, many of these companies have ongoing capital needs. That’s tougher to manage in a rising interest rate environment. Also, it’s fair to say that the economic indicators have been largely inconclusive. If the market dislikes uncertainty, small-cap companies loathe it.
However, with recession fears subsiding and anticipation for at least one interest rate cut coming (perhaps as early as June), it could be time to take a closer look at penny stocks. Here are three promising penny stocks for solid returns
SoundHound AI (SOUN)
With a closing price on March 6, 2024, of $5.04, SoundHound AI (NASDAQ:SOUN) may not be considered a penny stock for much longer. However, that’s only because SOUN stock is up a whopping 197% in the last month alone. Despite that gain, SoundHound is still a small-cap company with a $1.24 billion market cap.
As the company’s name suggests, artificial intelligence (AI) is the story behind this company. Jeremy Flint boldly claimed that SoundHound could be the “Palantir of voice recognition software.” That’s a big claim to back up, but it was recently revealed that SoundHound has received backing from none other than Nvidia (NASDAQ:NVDA).
That disclosure by Nvidia was the key reason for the large gain in SOUN stock. The company is growing in revenue. However, the company has a way to go before it reaches profitability. Nevertheless, if you’re looking for promising penny stocks for solid returns, SoundHound is a safe choice.
Archer Aviation (ACHR)
One of the most intriguing sectors for speculative growth is the flying car sector. Many analysts are bullish on Joby Aviation (NYSE:JOBY). The company will be the first to get an FAA certification. However, analysts may be clearly saying that Archer Aviation (NYSE:ACHR) may present investors with a better opportunity.
Neither Joby Aviation nor Archer Aviation are profitable or will be in 2024. That’s why it’s telling that analysts give JOBY stock an upside of 45% but give ACHR stock an upside of more than 120%. What makes those numbers more interesting is that ACHR stock is up almost double that of JOBY in the last 12 months. Momentum is on the side of Archer.
Plus, unlike some competitors, Archer is already in the FAA certification process and easily passed the Phase 1 testing. The company is also building a solid book of preorders for its flagship vehicle, the Midnight EVTOL.
Endeavour Silver (EXK)
Many investors are paying attention to what appears to be stabilizing commodity prices. That’s been bullish for gold, but many analysts believe that industrial demand gives silver the largest upside. That’s why speculative investors looking at promising penny stocks for solid returns should look at Endeavour Silver (NYSE:EXK).
The spot price of gold is up about 4% in 2024. Silver is lagging with about 1% growth. While that’s not inconsistent with the one-year and five-year charts, it does present an opportunity for growth-hungry investors.
EKX stock is down 39.37% in the last 12 months. However, through the first three quarters of the company’s 2023 fiscal year, revenue is up 20% year-over-year. Without any other reason that jumps out, it seems this is about small caps in general and not something unique to Endeavor.
Adding to the bullish narrative, the company expects to start production at its Terronera mine later this year.
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, Chris Markoch 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.
