7 Penny Stocks Nearing Super Attractive Entry Points
Bottom-fishers, take note: there are scores of penny stock opportunities out there. While major stocks have been on a year so far this year, penny stocks (or stocks trading for $5 per share or less) have delivered a more mixed performance.
Near-term macro uncertainties continue to weigh no them more heavily than on, say, big tech, which has been boosted by the AI mega-trend.
However, despite not firing on all cylinders, there are two reasons why now is the time to consider penny stocks nearing attractive entry points.
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For starters, although market commentators are bullish a recovery for major stocks may continue in 2023. It’s hardly a lock that this will happen.
An unexpected additional round of market volatility may hit stronger-performing popular stocks much harder than under-the-radar names that have not gained so much in recent months.
Second, when comparing their respective long-term upside potential against their current stock prices, penny stock opportunities, such as these seven, may have a strong chance of delivering outsized returns to your portfolio over a multi-year time frame.
B2Gold (BTG)
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When it comes to the top penny stock picks for “gold bugs” B2Gold (NYSEAMERICAN:BTG) is one such opportunity. The Canada-based miner has interests in projects located throughout the world, including Mali, Namibia, and the Philippines.
There is a degree of jurisdictional risk with gold mining assets in such locations, but it’s accounted for in the valuation of BTG stock, shares trade for only 11 times forward earnings.
A recent acquisition, and B2Gold’s plans to pursue more deals, suggests such risks could be mitigated in the future.
If you believe that gold is in the early stages of a long-term bull market, B2Gold could take off in the years ahead. Thanks to the high degree of operating leverage in the gold mining business, even a moderate increase in spot gold price could have a dramatic opportunity on the company’s profitability and stock price.
Butler National (BUKS)
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If you’ve read my prior coverage of Butler National (OTCMKTS:BUKS), you know full well why I consider it one of the stronger penny stock opportunities out there.
Shares in this diversified holding company, which owns a slew of aerospace business, as well as owns/operates a casino in Kansas, have actually held up well this year, rising by 25.4%.
However, even as BUKS stock has been trending up, it’s still a bargain, changing hands at a “can’t-miss” price. Based on its current valuation (around 9 times earnings), the stock continues to trade at a sharp discount to the likely underlying value of its assets.
Better yet, it may not take too much longer for Butler National to escape deep value territory. As I pointed out back in June, a recent management change may mean a greater chance that the company will work to close this valuation gap.
Globalstar (GSAT)
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Last year, shares in satellite communications operator Globalstar (NYSEAMERICAN:GSAT) surged in price, thanks to the formation of a potentially-lucrative partnership with Apple (NASDAQ:AAPL), to provide satellite connectivity to the iPhone 14.
Unfortunately, GSAT stock has since coughed back these Apple-related gains. Trading for prices north of $2 per share following the deal news, you can buy this penny stock today for just over $1 per share. Yet while near-term speculators have abandoned the Globalstar in droves, this may work in the favor of those with a longer investing time horizon.
It will take years to take shape, but the Apple partnership stands to significantly improve Globalstar’s revenue and earnings numbers, as I argued last December.
In addition, Globalstar earlier this year entered another promising strategic partnership, with mobile/internet of things chip maker Qualcomm (NASDAQ:QCOM). Following its pullback in price, GSAT appears worthy of a speculative buy.
Gee Group (JOB)
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You may be wondering why I think Gee Group (NYSEAMERICAN:JOB) is one of the stronger penny stock opportunities out there. Per recent commentary about this staffing services stock published on Seeking Alpha, JOB is a potential value trap.
Namely, because of the risk that Gee’s management once again makes acquisitions that cannot pay off for JOB stock investors. So, why am I bullish? Two things. First, those skeptical about JOB stock may be overestimating how likely management will back into old bad habits.
Second, these same skeptics may be underestimating the potential impact of Gee’s repurchase program. This program enables the company to buy back as much as $20 million worth of shares.
That represents around 37% of the company’s shares outstanding. Over time, this could produce big upside, for those snapping up JOB today, after its big drop in price since late last year.
Jerash Holdings (JRSH)
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Jerash Holdings (NASDAQ:JRSH), has appeared to be one stock nearing attractive entry points many times in the past year, only for shares in the apparel manufacturer to continue underperforming relative to the overall stock market.
But following the return of JRSH stock to penny stock territory in recent months, you may want to buy despite its continued weakness.
Right off the bat, thanks to a high dividend (forward yield of 5.14%), shares offer investors the opportunity for a steady return, as the company rides out the current industry downturn.
As the apparel industry bounces back, so too will profitability. Yes, sell-side analysts are currently conservative in their earnings forecasts several years out.
Still, keep in mind this company has previously reported earnings well above 50 cents per share in prior years. Re-hitting this level of earnings could propel the stock back to high single-digit prices.
Paysign (PAYS)
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Paysign (NASDAQ:PAYS) may be one of the best penny stock opportunities, for investors looking for growth at a more-than-reasonable price.
As my InvestorPlace colleague Muslim Farooque pointed out back in June, the company has reported strong growth, thanks to its leading position in a unique niche within the payments space.
That would be the handling of payments made by plasma donation centers. Paysign holds a 40% share of this market. In the past, investors priced PAYS stock at too high of a valuation.
However, between the stock’s extended decline in price, all while the company’s business has grown, PAYS has gone from being way overvalued, to becoming arguably undervalued.
While sporting a forward earnings multiple of 36,PAYS trades for only 21.3 times estimated 2024 earnings. If Paysign can sustain high-growth, a big rebound may be in store for this currently out-of-favor healthcare payments stock.
Procaps Group (PROC)
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Procaps Group (NASDAQ:PROC) is an under-the-radar penny stock in the healthcare space.
Domiciled in Luxembourg, Procaps owns several pharmaceutical and contract drug development and manufacturing services businesses. These businesses are located primarily in Latin America.
PROC stock has fallen considerably since going public in 2021. One of many companies that went public via the special purchase acquisition company (or SPAC) route, it went public at around $10 per share.
Since then, the stock has tumbled to just under $4 per share. However, after their big drop, shares trade at a low valuation of just 11.6 times earnings.
Although a planned acquisition fell through earlier this year, based on its holding company structure, Procaps is likely pursuing other merger opportunities. These could result in revenue/cost synergies.
Coupled with growth across its existing businesses, this could result in a gradual rebound for this hard-hit healthcare stock.
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.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
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