Now is perhaps not the time investors want to be taking speculative risks. The Federal Reserve is intent on raising rates, a move that’s impacted equity valuations across the board. For many penny stocks, this has meant an even more outsized decline revaluation to blue chips than we’ve seen in some time.
That said, at some level, even the worst-looking companies become intriguing to investors looking for value. There are still speculators out there. Accordingly, near-term rallies in various beaten-up stocks are becoming common.
Indeed, high short interest, in penny stocks or large-caps alike, used to be a clear sign to steer clear. Today, these more speculative names have become trading vehicles for seasoned investors to buy.
That said, some penny stocks are starting to look attractive in this environment. Here are three beaten-down names I think may be worth a look. At least, for those with some aggressive growth capital on the sidelines.
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Perhaps the most speculative name on this list is Cineworld (OTCMKTS:CNNWF). A U.K.-based theater chain that recently confirmed it may file for bankruptcy, there’s not a lot to like about this company at first glance.
Indeed, since the Covid-19 pandemic, attendance numbers have been down. And despite a slate of relatively strong movies this year, the owner of Regal theaters in the U.S. has seen its fundamentals deteriorate. Much of this has to do with the company’s debt load, due in part to Covid-related closures.
A reopening play, Cineworld is a stock that’s been volatile of late. While most of that volatility has been to the downside recently, there is hope for a resurgence at some point. Given the success of rival AMC Entertainment (NYSE:AMC) in generating buzz as a meme stock, perhaps the same can happen for Cineworld. After all, short interest has surged of late.
Like the other names on this list, Cineworld is certainly a speculative bet. However, it’s one I think speculators would do well to keep an eye on right now.
Pitney Bowes (PBI)
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Next on the list is global shipping and mailing firm Pitney Bowes (NYSE:PBI). As of the time of writing, this stock is down more than 55% year-to-date. Indeed, trading at sub-$3 per share with a market capitalization of around $500 million, this former multi-billion dollar stock has seen some serious selling pressure of late.
Shares of Pitney Bowers have actually been on a steep decline for a very long time. Its share price has fallen by over 95% since its peak approximately 25 years ago. Accordingly, this is a stock many view as a long-term “value trap,” given its historical performance.
That said, at these levels, Pitney Bowes is starting to look attractive. This company trades at less than 15-times earnings, a reasonable multiple relative to its peers. Additionally, given the company’s revenue increase of 6.5%, there is some growth to look forward to for this company.
Despite a net loss this past year, there’s hope Pitney Bowes could turn things around. Again, for those looking for a more speculative penny stock to focus on, this is one I’ve got on my radar right now.
Finally, we have Pixelworks (NASDAQ:PXLW). A U.S.-based semiconductor company, Pixelworks is one of the players in this industry that many may not have heard of. That’s because this company focuses on providing high-end, power-efficient visual processing solutions. Pixelworks develops software solutions and semiconductors that allow authentic and consistent high-quality viewing experience.
Currently, Pixelworks is aiming to improve performance and functionality, while also saving power.
This stock’s recent earnings appear interesting as well. Its latest earnings report shows a whopping 36% revenue jump to $19.08 million. This beat the analyst consensus by around $0.4 million. The company showed double-digit growth in both the projector and mobile markets.
Thus, for those looking for a more speculative growth stock, this is one I have my eye on. The company trades at a market capitalization of around $100 million. For a company with this much potential, that’s starting to look attractive right now.
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.
On the date of publication, Chris MacDonald 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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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