Penny stocks in the technology and biotech sectors have seen limited price movement in 2023 due to rate hikes and funding issues. However, with cooling inflation and potential interest rate cuts, these penny stocks could offer significant upside potential.
While not all penny stocks are created equal, many are unprofitable companies aiming to achieve breakeven and earnings growth. These stocks come with higher risk and the potential for higher returns, appealing to investors who embrace this tradeoff.
Read on to consider three penny stocks that could potentially rebound over the next year.
The Metals Company (TMC)
After reaching a 52-week high, The Metals Company (NASDAQ:TMC) experienced a significant 15.4% drop in its stock price. This downward trend has continued into the current trading session.
The market is concerned about the company’s prospects due to increasing skepticism from various nations regarding deep-sea mining. This political opposition is seen as a potential obstacle to the growth of The Metals Company’s ambition to extract battery metals from seafloor mineral formations.
TMC is a small-cap mining stock that specializes in deep-sea exploration for minerals crucial to industries like electric vehicles. With untapped resources in the world’s oceans, TMC has the potential to become a major supplier of these minerals. Analysts forecast the company to reach breakeven soon, with a projected loss in 2024 and an expected profit of $43 million in 2025, according to American Metals and Mining analysts.
Based on evaluations from 8 stock analysts, the consensus rating for TMC, The Metals Company Inc. stock, is “sell.” This indicates an expectation of lower returns compared to the overall market. However, for those with a long-term perspective, TMC presents an intriguing opportunity as it currently trades at significantly reduced levels. This makes it a potentially attractive penny stock investment.
Nikola (NKLA)
Nikola (NASDAQ:NKLA) shares were down 6.2% July 17th following a recent rally. The decline could be attributed to profit-taking after a 43% gain over the past five sessions. The stock’s strength is partly due to its popularity among short-interest stocks.
Last week, Nikola announced an agreement with BayoTech to acquire up to 50 fuel-cell electric vehicles over five years, with the initial delivery scheduled for 2023 and 2024. Additionally, Nikola will access hydrogen through BayoTech’s network and utilize transport trailers for efficient distribution.
Investors should remain cautious despite the positive development of Nikola’s deal with BayoTech. The company still faces financial challenges, with a significant decrease in its cash position. It would be wise for growth investors to wait for the annual shareholder meeting and Q2 2023 financial results before considering investing in Nikola.
SurgePay (SURG)
SurgePays (NASDAQ:SURG) has the potential for a significant turnaround after a period of sideways trading.
As a fintech company, SurgePays offers wireless services, payment processing, and e-commerce solutions for underbanked customers and businesses. It is often compared to successful companies like Upstart (NASDAQ:UPST) in the fintech industry.
One reason for optimism is that SurgePays’ retail partners utilize tablets to provide various services and products, but the cost of these tablets has impacted the company’s cash flow. However, SurgePays recently secured a new line of credit, allowing for the acquisition of cheaper tablets and future expansion.
SurgePays is a small-cap stock that analysts find intriguing, making it suitable for high-risk speculators. With a market cap approaching $100 million, the stock’s performance has been volatile but has shown overall gains. Despite its potential, investing in SurgePays requires a willingness to take risks.
On the date of publication, Chris MacDonald has a LONG position in TMC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.