Penny stocks can offer outsized returns for patient investors but are risky. Some stocks reach this status because of a few bad years, while others are penny stocks because they are undiscovered. Some corporations turn it around in a big way, while others collapse.
The penny stock category comprises corporations whose stock prices are under $5 per share. This distinction makes it easier for investors to accumulate over 100 shares of a single company. Some investors like the feeling of having more than 100 company shares, but this shouldn’t be the main motivation behind buying penny stocks.
These penny stocks have the potential to deliver impressive returns for long-term investors.
Vaalco Energy (EGY)
Vaalco Energy (NYSE:EGY) is valued at under $5/share. Unlike most penny stocks, EGY is a profitable enterprise. The corporation trades at a 13 P/E ratio and offers a dividend yield approaching 6%. Vaalco Energy’s market cap is currently $450 million.
The company recently made another acquisition to expand its global presence. This was an all-cash acquisition, which increased the company’s exposure to West Africa. The firm did not have to borrow any debt or dilute shareholders to make this acquisition happen. The company can now produce an additional 4,500 working interest barrels of oil per day.
Vaalco Energy closed the third quarter of 2023 with $103.4 million in unrestricted cash. The recent acquisition cost the company $66.5 million, so the firm still has plenty of cash on the sidelines. Net revenue increased by 48.9% year-over-year, while net income took a 10.6% year-over-year dip. The company recently announced a quarterly dividend of $0.0625 per share. It comes to an annualized dividend of $0.25 per share.
Nerdy (NRDY)
Nerdy (NYSE:NRDY) is a high-risk, high-reward penny stock that isn’t for everyone. The company’s market is just under $500 million, and shares have lost a lot of value over the years. The stock is down by 21% over the past year and has lost 72% of its value over the past five years. Shares are even down by 16% year-to-date.
The educational tech company can’t seem to get a break, but fortunes can quickly change. The company has posted revenue acceleration over several quarters. This gradual process picked up momentum and resulted in a 32% year-over-year revenue increase in Q4 2023. Net losses narrowed to $5.7 million, which indicates the company may be on its way to profitability.
The number of active members doubled year-over-year to reach roughly 40,700 students. Rising revenue and a growing user base can help the company post a profit and reward long-term investors.
Rekor Systems (REKR)
Rekor Systems (NASDAQ:REKR) develops roadway intelligence technology and contracts with states and governments. The company posts high revenue and net income growth, which include narrowing net losses. Rekor Systems’ growth rates have helped the company reward investors. Shares are up by 52% over the past year and have gained 250% over the past five years.
Rekor Systems is well removed from its all-time high of over $23/share. News is slower for penny stocks, but REKR got a new fan. The stock recently received an upgrade and an “Outperform” rating. The stock is down to start the year, but investors have noticed the dip. Shares are up by more than 10% from their 2024 lows.
The firm achieved record-breaking revenue in the third quarter of 2023. Lengthy contracts and an impressive 268% compounded annual growth rate from 2018 to 2022 for the company’s AI and technology-related revenue bode well for long-term prospects.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Marc Guberti 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.
