Penny stocks could be your ticket to striking it rich. But don’t expect easy money! While these thinly traded sub-$5 stocks offer the tantalizing prospect of turning pocket change into a small fortune, finding the diamonds in the rough is easier said than done. This has led to this list of penny stocks to buy.
For every penny stock that skyrockets, there are dozens that fizzle out and leave investors holding the bag. It takes a keen eye and a high-risk tolerance to separate the winners from the losers in this ultra-volatile space. But for those daring enough to try, the potential rewards can be life-changing.
You should steer clear of the cash-burning biotechs and unproven startups that litter this space. Instead, focus on quality businesses with solid fundamentals and a clear path to profitability. These hidden gems may not grab headlines yet, but their underlying growth could soon propel them into the stratosphere once Wall Street catches on.
Now, can you realistically expect a 5X gain by year’s end? Probably not – that would be an exceptional outcome even for a penny stock. But with the right picks, doubling or tripling your money is certainly within the realm of possibility as these undervalued businesses start driving gains. And who knows, you may just uncover the next big multi-bagger that turns your modest stake into a small fortune over the next few years. Let’s dive into penny stocks to buy.
CAB Payments (CABPF)
CAB Payments (OTCMKTS:CABPF) is a U.K.-based company specializing in business-to-business cross-border payments and foreign exchange, particularly in hard-to-reach markets. It operates through Crown Agents Bank, offering products like EMpower FX, EMpower Payments, EMpower Connect, and EMpower Pensions. I believe it’s a smart move to buy into this stock as cross-border payments have been rising significantly. International immigration is one major driving force here, coupled with fintech’s meteoric rise in popularity. People from remote or obscure countries often struggle to send money back through traditional channels to emerging nations. CABPF specializes in bridging that gap, and as immigration and remittance outflows swell, it seems poised for growth.
While the stock is still down 53% from its highs, it has gained over 150% since October and continues climbing aggressively. Q4 revenue surged 71%, and analysts expect CABPF to rake in $183 million in revenue for all of 2024 – with that figure projected to climb to nearly $250 million by 2026. Their scalable, transparent, and cost-effective products boast an impressive 96% customer retention rate and 150% net revenue retention. Yet despite this torrid growth trajectory, you’re paying just 12 times earnings for the stock. That’s an absolute steal among penny stocks to buy.
Stereotaxis (STXS)
As I’ve said many times before, I typically avoid biotech and pharma companies like the plague. However, this healthcare company doesn’t really fall into that category, despite appearances. What Stereotaxis (NYSEMKT:STXS) does is get involved with robotics – an area I find far more intriguing. Stereotaxis designs, manufactures, and markets robotic systems and instruments for treating abnormal heart rhythms. Its product lineup includes the Niobe ES Robotic Magnetic Navigation System, the Odyssey solution for information management, and the Vdrive Robotic Navigation System for remotely controlling navigation devices.
More specifically though, I’m interested in the penny stocks’ MAGiC Catheter potentially gaining approval. The MAGiC catheter is a robotically navigated magnetic interventional ablation catheter designed for minimally invasive cardiac ablation procedures. Its human trial was a resounding success, with all 20 patients achieving acute success and zero adverse events reported. This makes it one of those penny stocks to buy.
Stereotaxis has submitted the MAGiC catheter to regulators in the E.U. and U.S., with expectations of CE Mark approval in May or June. It also plans to submit the semi-mobile robot to regulators in Q2, anticipating European approval by mid-2024 and the U.S. green light in Q3. I believe the stock could continue its bullish tear, having already rallied nearly 63% year-to-date. There’s no cash crunch here either, with ample reserves to guide Stereotaxis to profitability. If that MAGiC Catheter gets the regulatory stamp of approval, it could catalyze the next leg higher.
Creative Realities (CREX)
Creative Realities (NASDAQ:CREX) is a digital marketing tech company offering digital signage and media solutions to enhance communications across a wide range of out-of-home environments. The company’s solutions encompass digital merchandising systems and omni-channel customer engagement systems. It’s growing at a blistering pace, and I believe landing major corporate contracts could propel it to the upper echelons of its niche.
In Q4, revenue soared 38% to $14.5 million, and the company is profitable with $1.4 million in net income. Yet it sports a mere $35 million market cap – peanuts compared to its growth runway. Software and marketing firms routinely fetch 10-20x sales valuations these days, so CREX trading at just 0.5x forward sales looks like an absolute bargain to me. We’re also eyeing the potential for EPS to triple from 10 cents in 2024 to 32 cents next year. Do the math, and you’re paying a measly 10x the 2025 EPS estimate.
Creative Realities guided to hit between $60-80 million in revenue for 2024. That could generate anywhere from 27% to 70% annual growth. Even at the lower end of guidance, we’re still talking about torrid top-line expansion for a company valued at a mere 0.5x sales. To me, that spells a bargain with multi-bagger potential once Wall Street wakes up to penny stocks like this one.
FLYHT Aerospace Solutions (FLYLF)
The aerospace industry has been soaring over the past few years, with private flying in particular experiencing a boom – excluding that brief COVID-induced turbulence, of course. As travel normalizes, we’re looking at new heights for penny stocks in this sector, fueled in part by Trump’s tax cuts allowing jet-setters to write off their winged chariots as business expenses. FLYHT Aerospace Solutions (OTCMKTS:FLYLF) provides real-time aircraft intelligence and cockpit communications for this high-flying industry. While the company’s current operations are in the red, the valuation appears attractively priced for takeoff.
Despite deriving 50% of revenue from high-margin, incredibly sticky, and consistently expanding SaaS offerings, FLYLF’s price-to-sales ratio hovers around just 1x. As I’ve mentioned before, SaaS firms typically command far richer multiples, making this look like an absolute steal. Sure, profitability remains elusive for now. But we’re eyeing near-breakeven EPS levels in 2024, and if that growth trajectory sustains, significant profits could soon follow – potentially fueling multibagger returns. Revenue is also projected for 26% growth this year, giving FLYLF a lengthy runway to spread its wings. This makes it one of those penny stocks to buy.
Pioneer Power Solutions (PPSI)
Pioneer Power Solutions (NASDAQ:PPSI) designs and manufactures electrical equipment through its Transmission and Distribution Solutions (T&D) and Critical Power segments. Fair warning: this stock isn’t for the faint of heart, exhibiting long-term volatility and swings that would make a pirate envious. But such choppiness is par for the course, and PPSI is now returning to bargain-basement levels – nearly back to where it traded a year ago. I believe this could represent an attractive entry point with limited downside and significant upside potential.
In Q3, revenue nearly doubled year-over-year to $12.4 million, and analysts expect the infrastructure revolution to drive robust demand for PPSI’s electrical offerings. EV and AI adoption loom as additional catalysts playing out over the next few years. Earnings are forecast to soar from 21 cents per share in 2024 to nearly $3 by 2033, with revenue climbing from $53 million to $220 million over that span. Yet, you’re paying just 7 times 2025’s estimated earnings – an absolute steal for penny stocks like PPSI positioned at the intersection of multiple powerful trends.
Braemar Hotels (BHR)
Braemar Hotels & Resorts (NYSE:BHR) is a real estate investment trust focused on investing in luxury hotels and resorts through acquisitions or new development. I’ve ranked this one lower given its higher risk profile, but for those chasing outsized gains, it could be worth a look. The company likely won’t see much stock appreciation driven by growth, as it’s expanding in the low single digits. Instead, my focus is on earnings growth potential. BHR trades at just 4 times forward earnings – a bargain valuation reflecting its hefty $1.2 billion debt load, massive compared to its $140 million market cap at the time of writing.
However, I believe the stock could still deliver multibagger returns. With interest rate cuts on the horizon, that should relieve pressure from interest expenses. Moreover, BHR is generating hefty profits despite those payments, sporting a lofty 9.4% dividend yield. If management can continue deleveraging while capitalizing on the recovery in travel and tourism, this high-risk, high-reward play could have further room to run. It’s also one of those penny stocks to buy.
American Resources (AREC)
American Resources Corporation (NASDAQ:AREC) supplies raw materials to the infrastructure and electrification markets, producing inputs for steel, alloys, magnets, lithium-ion batteries, and metals. Its offerings are already witnessing elevated demand from onshoring trends in up-and-coming U.S. industries. However, I see even greater potential demand for domestically produced rare earth elements going forward as the nation aims to reduce its dependence on China.
AREC has acquired mining rights to several large areas, with potential deals that could significantly increase shareholder value. The company also boasts a promising processing business that could disrupt China’s dominance in rare earth metals and strategically important minerals markets. With revenue expected to surge 88% in 2024, AREC could easily transform into a multibagger investment once its operations start firing on all cylinders.
The raw materials sector is notoriously cyclical, but AREC seems well-positioned to ride multiple secular tailwinds – from electrification and domestic manufacturing to national security priorities around critical mineral supply chains. If management can deftly execute on its ambitious growth plans, this under-the-radar play could emerge as a surprising winner in the years ahead.
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.