Penny stocks are listed equities with prices below $5 per share or market capitalizations lower than $300 million. They are highly volatile, thinly traded, not very transparent and often poorly governed. Nevertheless, they can provide investors with scintillating returns as most penny stocks to buy are secured by early-stage growth companies. Moreover, penny stocks are under the radar, meaning they can be “smart money stage” investments at times.
I dialed in on the market and discovered three best-in-class penny stocks to buy that may surge in due course. Let’s get stuck into a discussion about each!
Taseko Mines (TGB)
Taseko Mines (NYSEMKT:TGB) is a Canadian open-pit copper miner. The firm’s flagship assets are the Yellowhead and Gibraltar mines. In addition, Taseko Mines is on the cusp of expansion as it is in the planning phase for three additional mines, namely Harmony, Aley and Prosperity.
Although a risky bet, Taseko’s CapEx roadmap suggests significant value-additivity is in store. Its latest geophysical study showed that its proven and probable reserves total a whopping 2,728 million metric tonnes. Moreover, Taseko runs low-cost open-cast operations. As such, its operating profit margin of 27.26% comes as no surprise.
Taseko released its third-quarter earnings report at the turn of the month. The firm delivered 143.84 CAD in quarterly revenue, amounting to a 60.3% year-over-year increase. In addition, Taseko experienced a 17% decrease in operating costs, concurrently delivering welcoming residual value to shareholders.
I think Taseko stock is a good buy. Its price-to-book ratio of 1.26x is a tad higher than most investors would like to see. However, we could see enhanced book value in 2024 if further reductions in Taseko’s cost base occur.
Greystone Housing Impact Investors (GHI)
Formerly known as America First Multifamily Investors, Greystone Housing Impact Investors (NYSE:GHI) invests, holds and sells mortgage bonds to generate tax-favorable revenue for its shareholders. The entity specializes in affordable multifamily, student and commercial property bonds with conviction as the key to its success.
GHI stock provides excellent potential in today’s market. First, U.S. mortgage rates and credit risk premiums are high, providing the firm with income opportunities. Second, the U.S. yield curve is falling, meaning lower funding rates are en route for GHI, which finances more than a quarter of its asset base with variable-rate debt.
Greystone Housing Impact Investors released its third-quarter earnings report earlier this month. The company delivered $26.47 million in revenue, a 17.1% year-over-year increase. Additionally, Greystone’s earnings settled at 39 cents per share, which I anticipate will increase significantly in the next few quarters due to lower implied funding rates.
GHI stock has a price-to-book ratio of 1.29x, which could realign in 2024 amid a more favorable funding environment for mortgage lenders. In addition, the stock’s forward dividend yield of 8.85% is highly impressive and looks set to build on its momentum.
GHI stock is ready to rumble!
Travelzoo (TZOO)
Travelzoo (NASDAQ:TZOO) is ideally placed to flourish. Catering to more than 30 million members, Travelzoo publishes travel and entertainment deals via its omnichannel media network. In my view, the post-pandemic reopening has yet to end, meaning Travelzoo can benefit from systematic tailwinds for the time being.
Since the start of the year, the stock has surged by nearly 80%, so it is natural to wonder whether a pullback is waiting in the wings. However, I argue momentum will be sustained, and here’s why.
For one, Travelzoo delivered a stellar third-quarter earnings report at the start of the month. The firm’s revenue spiked by 30.4% year-over-year to $20.6 million. Much of its revenue growth stemmed from increasing commissions and advertising. However, the true catalyst was a 39% increase in revenue received from Jack’s Flight Club. Jack’s, which delivered $1.2 million in quarterly revenue, is a travel membership subscription company of which Travelzoo owns 60%. Apart from its scalability, Jack’s is considered a critical diversification play to Travelzoo’s commission and active sales-based revenue mix.
Furthermore, Travelzoo is well-positioned to leverage enhanced travel demand for underserved emerging and frontier markets. Mid-market transportation and resort developers have paved the way for a more holistic and affordable travel industry, providing Travelzoo with renewed growth opportunities.
Lastly, although TZOO stock has surged, it remains grossly undervalued at a PE-growth ratio of merely 0.01x. I am incredibly bullish about TZOO stock’s prospects!
On the date of publication, Steve Booyens 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.
