The U.S. equities market has been incredibly volatile since the beginning of the year. The top market indices have been on historical losing streaks, putting investors in a dilemma. Numerous negative developments have contributed to the carnage in the stock market, and investors are looking toward safer investment options. Penny stocks don’t quite fit the bill, but they could be the needle-movers needed to take your portfolio to the next level.
With rising inflation and interest rates, investors have gravitated towards income-oriented stocks and other low-risk investments. Betting on penny stocks is typically a wager on their long-term potential, but the current volatility has dwarfed many industry stalwarts.
Hence, the current downturn is perhaps an excellent time to build your investment portfolio. Here are seven penny stocks trading under $5 that c a healthy upside.
|LYG||Lloyds Banking Group||$2.045|
|DXLG||Destination XL Group||$4.09|
|PLNHF||Planet 13 Holdings||$1.36|
Penny Stocks: Red Cat (RCAT)
Red Cat (NASDAQ:RCAT) is a drone manufacturer catering to various end-users. Moreover, it also offers data acquisition and storage platform for drone operators. The company went public in April last year, raising roughly $16 million.
It has recently garnered interest for its Golden Eagle reconnaissance drone, where a NATO country placed an order for 15 of those drones. Moreover, it expects strong inbound demand for its Golden Eagle model due to the Ukrainian conflict.
Therefore, its management has decided to double the size of its drone facilities to satisfy the expected bump in consumer demand. If Red Cat can effectively capitalize on its drone system’s interest and resulting orders, its stock can be an enticing long-term play.
Gevo (NASDAQ:GEVO) is a specialist in the production of biofuels. Its shares have shed over 60% of their value in the past year, and the stock has now bottomed out, offering better risk-reward.
Low carbon fuels are the future, and though the science requires more tweaking, traditional oil drilling and refining will fade over time. Hence, companies such as Gevo will spring in to spotlight and offer attractive bets over the long term.
Its already gaining traction with some of the largest companies in the world. It recently partnered with oil and gas giants Chevron (NYSE:CVX) and Archer Daniels Midlands (NYSE:ADM).
Moreover, it also inked contracts for delivering biofuels to high-profile airline businesses, including Delta (NYSE:DAL), Cathay Pacific, and others. Gevo has lost a truckload of value, and I expect the stock to rebound once the market is more conducive.
Nano Dimension (NNDM)
Nano Dimension (NASDAQ: NNDM) is an Israeli-based firm with expertise in additive manufacturing electronics (AME). To put it more simply, the company specializes in 3D printing solutions for various sectors.
Last year, it forayed into additive manufacturing (AM) after picking up NanoFabrica, a company that produces manufacturing parts with nano precision. Moreover, it continues to use its capital to acquire new companies to expand its competencies further.
The company has been posting some incredible numbers of late, which should have its stockholders licking their lips. Revenues for the first quarter were 1,187.7% higher than the prior-year to $10.43 million.
At this pace, it could deliver anywhere between $35 million to $45 million this year, a 10-fold increase over the past couple of years. Moreover, with reports suggesting that the AM market is expected to grow at almost a 30% CAGR from 2020 to 2027, NNDM stock is just starting.
Lloyds Banking Group (LYG)
Lloyds Banking Group (NYSE:LYG) is the largest bank operating in the U.K. It has a highly impressive core deposit franchise and has been one of the most efficient operators in its niche. Moreover, it has an asset base of a whopping £885 billion.
For several years now, LYG has established itself as the leading deposit gatherer in the country. It has a highly attractive core deposit franchise, of which a healthy proportion belongs to sticky retail current accounts. On the income side, its faced plenty of pressure from lower interest rates, especially in the past couple of years.
However, with the continual increase in interest rates by the Bank Of England, it is likely to benefit immensely from higher rates. Moreover, with an eye-catching dividend yield of over 6.34%,
Pitney Bowes (PBI)
Pitney Bowes (NYSE:PBI) is a tech company specializing in its clients’ postage and mailing solutions. These services include digital, physical, and financial solutions providing a holistic offering to its clients.
Its three main business divisions are presorting services, SendTech, and global eCommerce. Out of these divisions, perhaps the one offering the most upside is SendTech, as more than 60% of its revenues are recurring. Moreover, the division has ties with large established partners.
Pitney recently posted its first-quarter results, which breezed past analyst estimates. According to CEO Marc B. Lautenbach. “We saw substantial margin expansion in our Global Ecommerce business and excellent execution in our SendTech and Presort businesses.” Moreover, with over $700 million in cash, it has plenty in the tank to continue on its growth trajectory.
Destination XL Group (DXLG)
Destination XL Group (NASDAQ:DXLG) is a specialty retailer of plus-size clothing throughout Canada and the U.S. The buzz surrounding the stock has all to do with its stellar financial performance in the past couple of years.
It ended 2021 with a bang and expects another solid year in 2022. It expects sales to continue rising at a staggering pace. Moreover, it generated an amazing $505 million in sales last year, representing a 58.4% bump from the $318.9 million it made in 2020.
Naturally, its top-line performance resulted in a higher net income of $56.7 million. Furthermore, in the first quarter of 2022, its sales came in at $127.7 million, a 14.5% increase from the prior-year quarter. Direct sales remain robust while the company benefits from higher prices.
Penny Stocks: Planet 13 Holdings (PLNHF)
Planet 13 Holdings (OTCMKTS:PLNHF) is an integrated cannabis operator involved in the production and distribution of cannabis and cannabis-infused products.
The company has struggled of late due slower-than- anticipated tourism in the Las Vegas strip. However, a meaningful increase in its top and bottom-lines is expected in the final three quarters of 2022.
Moreover, from next year, its operating results will be positively impacted by its Florida expansion, and the benefits of acquisition of Next Green Wave. Also, the expansion of its cultivation capacity in Nevada, and the opening of Illinois operations also impact its upcoming results.
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.