After a rocky 2023, many solid small-cap companies are still struggling to get the market’s attention despite strong financial recoveries coming out of the pandemic. I believe 2024 could finally be the year these unloved penny stocks get some appreciation. With looser monetary policies on the horizon, faster growth may return for smaller businesses, making now a smart time to buy before prices reflect true value.
Of course, penny stocks come with higher risks. But with higher risk can also come higher rewards. I’ve dug through the bargain bin to identify three millionaire-maker penny stocks I believe are positioned for a breakout once market sentiment improves. Before the crowd catches on, buying them now could set you up for life-changing returns in 2024 and beyond. Let’s start!
Lesaka Technologies (LSAK)
Lesaka Technologies (NASDAQ:LSAK) offers a compelling risk-to-reward proposition in the long run. This South African banking and fintech company has struggled amidst the country’s economic and infrastructure issues. Load shedding and power outages have hampered growth, while a contracting economy in the third quarter presents near-term headwinds.
However, South Africa’s outlook is improving. Export industries like precious materials and commodities stand to gain as global prices recover. Fixing long-standing problems will take time, but the building blocks seem to be falling into place. As the external environment improves, Lesaka’s strong execution and growth potential should shine through.
The business has more than doubled its revenue from fiscal 2022 to 2023. While top-line growth has moderated recently, it still reached double digits this past quarter. Lesaka also delivered a positive free cash flow of $3.4 million alongside improving profitability. If execution continues, positive earnings could arrive soon.
Looking ahead, analysts forecast double-digit revenue growth in fiscal 2024 and beyond. Valuations also appear reasonable, with forward P/E of just 11x earnings expected in 2028. As profits ramp up, Lesaka offers substantial upside from today’s levels over the long term.
Smart Sand (SND)
Smart Sand (NASDAQ:SND) offers niche sand production and supply chain solutions to energy companies. Despite recent volatility, I believe Wall Street underestimates its stability and growth potential looking ahead.
Last quarter, Smart Sand grew revenue by 7.4% year-over-year to $77 million. More importantly, net income increased 150% to $6.7 million. While analysts expect some profit regression, remember that SND exceeded EPS estimates by about 1,600% last quarter! Thus, I am optimistic profits can remain resilient moving forward.
Trailing P/E sits at just 6x, while 2024 revenue estimates of $325 million give a P/S ratio of only 0.25x. As long as business execution remains steady, Smart Sand appears positioned for strong share price appreciation.
Zoo Digital (ZDGGF)
Zoo Digital (OTCMKTS:ZDGGF) provides cloud-based dubbing, editing, subtitling and other solutions for content creators and media companies. Despite recent financial struggles, its services are becoming more necessary as digital media and streaming continue growing.
Admittedly, near-term financials look bleak. Revenue is projected to decline nearly 50% in fiscal 2024, ending next March. However, analysts expect a sharp rebound after, with 2026 revenue potentially surpassing Zoo’s entire current market capitalization.
Long-term growth forecasts sit around 25% per year through 2026. Valuations also seem attractive, with its EV/forward revenue multiple of 0.71x beating 83% of software peers. As profits eventually inflect, Zoo Digital could deliver outsized returns.
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On the date of publication, Omor Ibne Ehsan 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.