Full stop, penny stocks are incredibly risky. Though they’re enticing because of their relatively low nominal share price, that’s not the only characteristic to consider. You have to look at the matter somewhat cynically. If a security is priced low, there’s probably a good reason for it.
On the other hand, you can occasionally find some compelling hidden gems. Most penny stocks will end up as complete money pits, let’s just get it out there. However, with thousands of publicly traded opportunities available, it’s inevitable that some will deliver the goods.
You’ve got to be able to handle extreme volatility and know when to quit. If that’s an accurate description of your mental state, these are possible penny stocks to consider.
Gold Royalty (GROY)
Based in Vancouver, British Columbia (Canada), Gold Royalty (NYSEAMERICAN:GROY) falls under the materials sector broadly. As its name implies, Gold Royalty is a precious-metals-focused royalty enterprise, providing financing solutions to the metals and mining industry. Its business model involves offering upfront cash to mining enterprises in exchange for all or part of the sales generated.
Generally speaking, the metal-mining industry is volatile and presents great risk, no matter the business model. However, by incorporating a royalty approach, GROY offers its stakeholders superior pricing predictability. Again, the terms of the deal are arranged upfront, minimizing administrative surprises. Likely as a result of this dynamic, analysts rate GROY a unanimous strong buy. That’s rare for such a speculative enterprise.
Now, what makes GROY compelling as one of the penny stocks to consider is the forecast. For fiscal 2024, experts believe that the company’s loss per share will narrow 50% to 2 cents per share. On the top line, revenue may reach just under $13 million. If so, that would represent a 325.2% leap from the prior year’s print of $3.05 million.
BlackSky Technology (BKSY)
Headquartered in Herndon, Virginia, BlackSky Technology (NYSE:BKSY) falls under the scientific and technical instruments category. Per its public profile, BlackSky provides geospatial intelligence, imagery and related data analytics products and services. It also offers mission systems solutions for government and commercial customers in North America, the Middle East, Asia Pacific and other regions.
As one of the penny stocks, BKSY is going to be risky. We’re talking about a price per share of barely over a buck. Also, the market capitalization sits well under $200 million. At the same time, the enterprise is part of the burgeoning space economy. As McKinsey & Company pointed out, this sector could be worth $1.8 trillion by 2035 (accounting for inflation).
By the way, that’s up from last year’s valuation of $630 billion. Stated differently, it’s possible that BKSY could ride coattails.
Analysts also peg shares as a unanimous strong buy with a $3.17 average price target, implying 188% upside potential. For fiscal 2024, they’re targeting a top line of $109.9 million, up 16.3% against last year’s result of $94.49 million. And fiscal 2025 sales could rise to $142.62 million.
CarParts.com (PRTS)
For those willing to get their hands dirty with an extremely risky idea – even more so compared to traditional penny stocks – then CarParts.com (NASDAQ:PRTS) could be an intriguing candidate. Let’s get the bad news out of the way first. Since the beginning of the year, PRTS slipped more than 67%. That’s just wild, again even for a penny stock.
However, the online provider of aftermarket auto parts does enjoy a potential fundamental catalyst. According to data from S&P Global Mobility, the average age of cars and light trucks on U.S. roadways reached a record 12.5 years in 2023. More than likely, this trend is continuing to rise higher. That’s because inflation and other economic headwinds are taking their toll on the consumer.
In other words, people are incentivized to keep their rides until the wheels fall off. Cynically, that should be a positive for PRTS. It just hasn’t worked out in the market. If you believe that’s wrong and that PRTS is due, you’re not alone.
Analysts rate shares a consensus strong buy with a $2.44 average price target. That implies over 130% upside potential.
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, Josh Enomoto 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.
