The 7 Best Penny Stocks to Buy Now
As stocks remain in a bear market, even the best penny stocks continue to trade at depressed price levels.
With macro uncertainties like inflation, rising interest rates, and a possible recession still looming, investors are reluctant to dive into these names, which are typically more risky and volatile than large-cap stocks.
While that’s bad news in terms of short-term opportunities, for investors with a longer time horizon, today’s climate of fear, uncertainty and doubt works to your advantage. Oversold due to current market conditions, these high-quality low-priced stocks (trading under $5 per share) could make outsized recoveries when stocks overall begin to recover.
These seven best penny stocks mostly are bona fide value plays, but a few aren’t “value stocks” in the traditional sense. Rather, they are cheap relative to future prospects. Nevertheless, consider all of them to be bargains, each worthy of making a speculative buy at present price levels.
|FRBK||Republic First Bancorp||$3.06|
|GTE||Gran Tierra Energy’s||$1.26|
Assertio Therapeutics (ASRT)
After making a four-fold move higher between late 2021 and mid-2022, the past few months have been brutal for investors in Assertio Therapeutics (NASDAQ:ASRT). Shares in the pharmaceutical firm have fallen from $4 to $2.50 per share, making this one of the best penny stocks with rebound chances.
ASRT stock plunged back in August, on news of the company’s $70 million convertible note offering. This transaction will be dilutive to shareholders, yet the near-term pain of slicing the pie into many more slices could pay off in the end.
Furthermore, even when accounting for next year’s expected earnings drop (from 51 cents to 34 cents), Assertio trades at a low earnings multiple (7.3) for a pharmaceutical company. As earnings normalize, ASRT’s valuation could move back to levels more in-line with peers (around 10x earnings).
Republic First Bancorp (FRBK)
Republic First Bancorp (NASDAQ:FRBK) shares have performed poorly so far this year, falling around 20%, mainly due to company-specific factors.
Delays in Republic’s quarterly filings have gotten it in hot water with the Nasdaq exchange. Nasdaq wants to delist FRBK stock due to this non-compliance. This bank has also been battling two separate activist investor groups. While making peace with one of these groups, the drama continues with the other activist faction.
So, with all this going on, what makes this one of the best penny stocks to buy? Shares trade at a more than 45% discount to FRBK’s last reported tangible book value, and just 7.5 times estimated 2022 earnings.
Uncertainties about its current performance may be more than accounted for at current prices. You may want to consider this risky-yet-interesting situation.
Using traditional metrics, Globalstar (NYSEAMERICAN:GSAT) doesn’t look like one of the best penny stocks to buy right now. Shares in the satellite communications provider trade at a high prices-to-sales multiple (23.8), and the company is currently unprofitable.
Still, GSAT stock may offer good value, given how its key catalyst is playing out. After years of rumors, Apple (NASDAQ:AAPL) has finally entered a deal with Globalstar, to provide satellite connectivity for the iPhone 14.
As Globalstar’s management disclosed in a filing with the Securities and Exchange Commission, this deal could rocket revenue from $129.4 million this year, to as much as $230 million in 2023.
From there, revenues could jump another 35% by 2026, with much of this increased revenue falling straight to the bottom line (based on projections of 55% EBITDA margins). Even as GSAT has soared nearly 59% this year, it could keep climbing in tandem with improving results.
Gran Tierra Energy (GTE)
Based in Canada, Gran Tierra Energy’s (NYSEAMERICAN:GTE) operations are located entirely in Latin America. The oil and gas firm operates projects in Colombia and Ecuador.
Like other oil and gas exploration stocks, GTE stock has zoomed higher so far in 2022. However, the election of Gustavo Petro as the President of Colombia in June has since been a drag on GTE’s performance.
As Louis Navellier discussed back in July, Petro is an opponent of oil exploration. Still, it’s possible that the market has overreacted to this political news.
Shortly after the election, one Canadian oil stock analyst (Eight Capital’s Phil Skolnick) argued that a divided legislature in Colombia will curtail Petro’s ability to implement unfavorable changes to Colombia’s exploration policies.
As these political worries clear up, and as oil prices remain high, Gran Tierra Energy, heavily discounted at just three times earnings, could make a major leap higher.
GEE Group (JOB)
Admittedly, it’s a bit misleading to say GEE Group (NYSEAMERICAN:JOB) is super-cheap because it trades for three times expected 2022 earnings. Thanks to the hot post-pandemic jobs market, this staffing firm is set to have a banner year.
As rising interest rates and the resultant economic slowdown affect the labor market, GEE will likely experience a big drop in its profitability. Even so, JOB stock is another situation where, even when accounting for a future slowdown, its shares are a great opportunity for value investors.
If GEE’s earnings per share drop from 20 cents to 9 cents next year, this stock still sports a fairly low earnings multiple of around 7. As a Seeking Alpha commentator has argued, the company has used its recent windfall to de-lever its balance sheet. This leaves the company well-positioned to thrive post-recession, good news in the long term for JOB stock.
Nano Dimension (NNDM)
A popular play among the meme crowd in 2021, Nano Dimension (NASDAQ:NNDM) has since tumbled to rock-bottom prices. Shares in the Israel-based additive manufacturing (aka 3D printing) company now trade for just over $2.50 per share.
Yet unlike most other meme stocks, which despite taking high double-digit dives remain undervalued, NNDM stock is arguably in deep value territory. Due to its still-large cash and short-term investment position ($1.28 billion), Nano has a tangible book value of around $4.88 per share, nearly double its current stock price.
Sure, with this early-stage company’s high cash burn, this discount to book may be fleeting. Or is it?
If the company can make significant progress narrowing cash burn, and continues to repurchase shares, NNDM could make an outsized move higher in the coming years. Just a partial recovery could mean big upside for investors buying this hard-hit stock today.
Ring Energy (REI)
Leverage is a double-edged sword, as they say. From 2018 through 2020, the slump in energy prices was bad news for highly-levered oil and gas explorer Ring Energy (NYSE:REI).
Ring’s shares fell from double-digits to sub-$1 per share prices, during this downturn.
But with oil’s incredible comeback during 2021 and 2022, REI stock has made an incredible comeback as well. Trading for prices nearing 50 cents per share in 2020, the stock briefly traded for over $5 per share earlier this year. Although REI has slid back to around $3 per share, another big run may be possible.
If energy prices remain high, management plans to accelerate de-leveraging next year. High debt is a big reason why Ring trades at a low multiple (3.1). Further efforts to de-lever could lead to a re-rating more in line with its peers, which trade for 5 to 10 times earnings.
On the date of publication, Thomas Niel did not hold (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.