In this market, many penny stocks continue to remain beaten down. That said, while I don’t expect each and every speculative penny stock to surge higher like they did in 2021, select penny stocks still offer tremendous upside. Of course, I wouldn’t suggest betting the farm on most penny stocks. However, a small position in the right companies could quickly multiply your money.
In my experience, having patience and discipline is critical when investing in more speculative corners of the market. With strong fundamentals, some cheap stocks have all the ingredients for delivering big-time, long-term gains. Here are three investors should consider right now.
Blade Air Mobility (BLDE)
Blade Air Mobility (NASDAQ:BLDE) runs an “air taxi” service utilizing helicopters, seaplanes, and small jets. The company flies people directly between congested cities and airports for a fee. Blade wants to eventually switch to electric vertical takeoff planes that are quiet and emission-free.
One of the reasons why I’m so bullish on this business is that it has a track record of delivering hefty beats on its top line. The company posted positive revenue surprises of 11.74% in Q1 and 13.26% in Q2. Even with these surprises out of the equation, analysts expect 57% top-line growth this year, which should settle around 18% through 2025 before moderating further. The company’s recent Q2 earnings showed revenue grew 71% year-over-year, driven by strong growth in both passenger and medical transport segments.
Blade’s market cap is now below estimated 2023 sales, and I expect the recent top-line beats to stack up in the long-run. Over time, BLDE stock should display a much healthier valuation, assuming the market catches on. Indeed, you’d be paying around 5-times 2030 earnings at today’s prices and expectations.
Air taxis and similar companies operate in a speculative industry, so patience is certainly required. Additionally, Blade has taken some hits in the near-term, with BLDE stock down over 4% as of Thursday’s close. However, we’re talking about long-term returns in this article. And given BLDE stock is trading near trough levels right now, I wouldn’t hesitate to put this on the list.
Wall Street analysts see the stock moving higher considerably. The consensus one-year price target is $8.67, implying 182% upside from here. Even if it were to satisfy the lowest price target, that’s still double its current price.
PaySign (PAYS)
PaySign (NASDAQ:PAYS) is a company that provides payment solutions for various industries and markets. It offers digital banking, corporate rewards and incentives, corporate disbursements, and pharmaceutical solutions. PaySign uses its proprietary battery management system and in-house engineering and product designs to create customized and cost-effective payment programs.
The company’s recent Q2 earnings showed steady growth, with revenue up 28% year-over-year. Plasma compensation revenues grew at a healthy pace, while the newer patient affordability segment jumped 133%. PaySign continues adding new payment programs, with a robust pipeline anticipated to approach 40-50 total by year-end.
PAYS stock seems to be making a turnaround after bottoming out near $1.80 per share a month ago. The company is expected to post profits this year and then grow those profits 137% next year. This puts the 2024 forward price-to-earnings ratio at 34-times. I expect this price-earnings ratio to drop much lower for 2025 and onwards. As for the company’s revenue growth, it is expected to be 19% this year and then stay near 15% for the next two years.
Flux Power Holdings (FLUX)
Flux Power (NASDAQ:FLUX) designs and makes advanced lithium-ion batteries for industrial equipment like forklifts, airport ground support vehicles, and solar energy storage. Their batteries outperform and simplify lead-acid alternatives, with longer lifespans and lower overall costs.
With a healthy project pipeline, including recent wins with large enterprise customers like Procter & Gamble (NYSE:PG), Flux appears well-positioned to capitalize on the accelerating global trend toward lithium battery adoption. The company posted strong revenue growth, with Q3 2023 sales up 14.5% year-over-year. Meanwhile, gross margins expanded sharply to 31% from just 15% last year.
Like Blade, Flux’s top line is expected to grow at around 57% this year to $66.5 million, which is essentially its market capitalization. This growth is expected to settle around 25% for the foreseeable future, meaning the price-to-sales ratio drops below 0.5-times by the end of 2026.
Penny Stocks
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Omor Ibne Ehsan 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.
