7 Most Undervalued Penny Stocks to Buy Now
It’s an ideal time to pounce on undervalued penny stocks for gains over the long haul.
The Federal Reserve’s battle against inflation has lifted interest rates to multi-year highs. It has forced a repricing of risky assets, effectively wiping out millions in value from U.S. stocks.
There are undervalued penny stocks representing many high-quality businesses. These stocks will likely rebound in the future and could provide impressive returns for patient investors.
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Jeremy Siegel, a finance professor at the University of Pennsylvania, recently said U.S. stocks are still incredible bets for long-term investors despite the Fed’s hawkish stance. He also said he wouldn’t be surprised if undervalued U.S. stocks could grow by 20% to 30% next year.
Therefore buy-and-hold investors willing to stomach the volatility will be rewarded with tremendous long-term gains. That said, here are seven of the best undervalued penny stocks poised for robust gains in the not-so-distant future.
Kinross Gold | $3.52 | |
Mullen Automotive | $0.52 | |
Entravision Communications | $4.44 | |
Borr Drilling | $3.98 | |
Ideanomics | $0.27 | |
McEwen Mining | $17.42 | |
Gannett | $1.40 |
Kinross Gold (KGC)
Source: T. Schneider / Shutterstock.com
Kinross Gold (NYSE:KGC) is a quality gold miner that has seen its stock price plummet from its peak in 2020. It trades at a highly attractive valuation as it looks to deleverage this year and focus on rewarding its shareholders.
In September, it announced an aggressive buyback plan where it plans to buy back $300 million worth of shares this year. Moreover, it plans to use roughly 75% of excess cash for buybacks in the next couple of years. Layer that up with a remarkable 3.7% dividend yield, and you have an incredible income stock for investors to wager on at current prices.
Also, at current gold prices, it is likely to generate strong cash flows that will be used to reward its shareholders. Investing in KGC stock at current prices offers plenty of upside, making this one of the undervalued penny stocks to buy right now.
Mullen Automotive (MULN)
Source: Ringo Chiu / Shutterstock.com
Mullen Automotive (NASDAQ:MULN) is an up-and-coming electric vehicle upstart with multiple initiatives that could change the EV landscape.
Perhaps the biggest catalyst that makes it one of the best undervalued penny stocks to buy is its impressive solid-state battery technology which could deliver 600 miles of range on a full charge.
Mullen reported extraordinary test results for its batteries, conducted at the Battery Innovation Center in Indiana, a prominent world-class institution supported by universities and commercial firms.
Furthermore, Mullen is also developing an EV line that is already gaining market traction. Its flagship Mullen Five and cargo van orders have attracted multiple orders, and its battery deals with original equipment manufacturers (OEMs) make it an exciting prospect at current prices.
Entravision Communications (EVC)
Source: radioshoot/ShutterStock.com
Entravision Communications (NYSE:EVC) is a leading player in U.S. Hispanic TV and radio. It owns more than 40 Spanish-language radio and TV stations in major markets.
Interestingly, its core business is now digital advertising, generating over 70% of its sales for the company. Hence, EVC’s future isn’t linked to its traditional TV and radio businesses which bode incredibly well over the long term.
Its revenue and EBITDA growth have been spectacular, with its 5-year average at 41.8% and 16.1%, respectively.
As with other names in the broadcasting realm, EVC stock trades at a remarkably low valuation. It trades at a forward multiple of 0.4 times forward sales, more than 50% lower than its historical five-year average, adding to its long-term attractiveness.
Also, the stock could rebound once digital ad demand bounces back from its current downturn.
Borr Drilling (BORR)
Source: Oil and Gas Photographer / Shutterstock.com
Borr Drilling (NYSE:BORR) is a junior offshore drilling contractor in the oil and gas sector. It owns and operates modern jack-up rigs for operations, a market that is expected to grow by 5.2% from 2021 to 2026.
BORR has successfully addressed its long-standing debt and liquidity problems at the cost of substantial dilution to common stockholders.
The company expects to initiate a dividend by 2024, and the firm has sold a few of its jack-up rigs to free-up capital. Consequently, it is expected to end with more than $80 million in cash in the third quarter, up from $29.7 billion at the end of the second quarter.
Also, the stock trading at just 1.7 times trailing twelve-month sales could be an interesting long-term play.
Ideanomics (IDEX)
Source: Matthew Troke / Shutterstock.com
Ideanomics (NASDAQ:IDEX) is a fascinating speculative play in the EV market, with its tentacles in multiple profitable verticals in the EV sphere.
It was one of the most popular meme stocks last year but has tanked over the past 12 months. Though the EV market is competitive, Ideaonomics has an innovative business model that could potentially generate massive revenues down the road.
Its largest business is mobility which provides trucking and bus fleets electrification services. It has attracted multiple high-value clients in the segment generating the bulk of its sales.
It also operates in the fintech space focusing on multiple areas, including commodities, real estate, and others. Also, IDEX has been making acquisitions to expand its presence in the EV space further.
With its stock trading for a few cents and a humongous addressable market, it is worth investing in at this time.
McEwen Mining (MUX)
Source: Shutterstock
McEwen Mining (NYSE:MUX) is a small-scale gold and silver miner that has witnessed its stock price plummet over the past several months.
Mining stocks are cyclical, but the current economic challenges have exasperated problems for miners such as McEwen.
The Federal Reserve has been raising interest rates rapidly to combat inflation, which continues to weigh down the price of gold and other precious metals. However, the inverse relationship of gold to interest rates should result in a bump in price in the stock market.
If MUX can lower the costs of production, it can create further upside for investors. The situation isn’t going to change in the short term; therefore, it’s best to invest in MUX stock for the long haul at a depressed valuation.
Gannett (GCI)
Source: 3d_man / Shutterstock.com
Gannett (NYSE:GCI) is an evolving media company that has been transforming its traditional print-media business into a subscription-based digital business.
It is the largest owner of newspapers in the U.S. and aims to use its experience in the sector to scale its efforts in the digital realm. Moreover, with its cost-cutting program underway and a colossal distribution network, its new strategy will likely pay many dividends.
GCI’s operations have improved substantially over the past couple of years with cost reductions and increased digital sales. Its share of digital revenues has increased to over 34% resulting in stronger margins and cash flows. However, GCI stock continues to trade lower despite the improvements in its business.
The results of Gannett’s subscription-based model will likely show in the coming years when its digital business forms a much larger part of its overall business. Recent results have shown incredible progress for the company as it looks to push forward with its objectives.
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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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