Many investors are currently fearful of the stock market downtrend and aren’t as active in the market. Moreover, the risk of a recession has also discouraged any investments in the stock market. However, penny stocks with excellent growth prospects offer a unique opportunity for long-term profits, especially in the current dip.
Nonetheless, penny stocks can be risky in the short term due to their low market capitalization and trading volume. However, companies with sound financials in a lucrative industry can deliver robust profits in the long term. Thus, I believe putting a small portion of your portfolio into promising penny stocks outweighs its short-term risks as these companies can grow significantly in the future. Therefore, I have identified the following five penny stocks to buy on the dip:
|PANL||Pangaea Logistics Solutions, Ltd.||$4.61|
|DSX||Diana Shipping Inc.||$5.02|
|TRVI||Trevi Therapeutics, Inc.||$3.93|
|RMO||Romeo Power, Inc.||$0.61|
Penny Stocks: Pangaea Logistics Solutions (PANL)
Pangaea Logistics Solutions (NASDAQ:PANL) is a maritime logistics and transportation company. Pangea Logistics provides transportation services to a broad range of industrial customers and is likely to expand due to high consumer demand and global supply chain issues. Further lockdowns in China and a lingering energy problem will likely drive up the demand for logistics services even more.
In addition, Pangaea Logistics has robust financials. The company reported a year-over-year (YOY) quarterly 53.44% increase in revenue to $191.76 million and a 244.51% increase in net income to $20.17 million. Moreover, the price-to-earnings (P/E) ratio of PANL stock is just 2.52 and the stock has a market capitalization of $212 million. Thus, I believe Pangaea Logistics Solutions offers excellent long-term potential due to its undervaluation.
Diana Shipping (DSX)
Diana Shipping (NYSE:DSX) provides shipping and transportation services, like Pangaea Logistics. However, DSX stock offers more stability and has a higher net profit margin of 39.5%. The company also possesses a slightly larger fleet of 41 dry bulk vessels.
Although DSX stock is not as undervalued as PANL stock, the company pays higher dividends and is significantly less risky. Diana Shipping has also reported slightly better growth than Pangaea Logistics with YOY quarterly revenue growth of 60.61% to $65.93 million. In addition, DSX has recently been performing better in the stock market. It had a 9.32% price increase this year compared to PANL’s decline of 1.49%.
Penny Stocks: Trevi Therapeutics(TRVI)
Trevi Therapeutics (NASDAQ:TRVI) is a clinical-stage biopharmaceutical company. It is developing a promising oral investigational drug for treating prurigo nodularis and chronic cough in adults with idiopathic pulmonary fibrosis. The stock has surged more than 612% since February of this year after the company announced positive results from the clinical trials of its drug Haduvio™ (Nalbuphine ER).
Nalbuphine ER currently has a fast-track designation from the U.S Food and Drug Administration and can make TRVI highly profitable if the company succeeds. However, I do not recommend putting a significant part of your portfolio into TRVI stock for now, as a short-term cool-off looks pretty likely.
Eltek (NASDAQ:ELTK) develops and markets high-efficiency power conversion systems. It is a global corporation with customers in more than 100 countries and is likely to expand due to electrification. The company is still relatively small, with a market capitalization of just $22.23 million.
Nonetheless, ELTK has been surprisingly stable despite its small size and a bear market. The stock has been trading sideways for all of 2022 after a 48% decline from its peak in 2021. In addition, the company has reported strong financials this quarter, with YOY revenue growth of 35.39% and net income growth of 183.41%. Eltek’s P/E ratio of 4.09 also indicates that the stock is undervalued.
Penny Stocks: Romeo Power (RMO)
Romeo Power (NYSE:RMO) is a battery technology company providing electrification solutions for the commercial vehicle industry. This small company already has some significant customers, such as Lion Electric (NYSE:LEV). Romeo Power has signed a $234 million contract with the company.
I believe Romeo Power can be highly profitable long-term due to the boom in electronic vehicles (EVs). The company already has a niche product and could dominate the battery manufacturing sector for commercial EVs. In addition, RMO stock seems to have found support at 50 cents and is now trading sideways. However, it could go down more in the short term. Still, despite the short-term losses, I believe Romeo Power is a great long-term hold due to its prospects.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
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.