Entering the second quarter, most investors are focused on the blue-chip stocks of the world. And they should be – that’s where most of the gains have been, at least for most of recent history.
However, allocating a small amount of one’s portfolio to penny stocks can help amplify returns over the long-run. This market has been conducive for certain penny stocks, though many continue to fall by the wayside. That’s the nature of investing in these higher-risk, higher-return assets. But, finding the right small-cap players that have the potential to grow meaningfully can reap outsized returns.
With that in mind, let’s consider three penny stocks I’m watching closely right now. These are companies I think certainly have plenty of outsized potential, I just wouldn’t bet the farm on these ones.
Let’s dive in!
Grab Holding Ltd (GRAB)
Grab Holdings (NASDAQ:GRAB), a specialist in ride-hailing and delivery in Southeast Asia, aims for full-year profitability through organic growth and AI investments. CFO Peter Oey highlighted plans for product expansion, looking to integrate AI into its operations to improve efficiency (who isn’t doing that right now?). This has led to some interest in the sub-$5 per share stock, which is up nicely over the past month, but still down on the year.
Notably, Grab reported excellent Q4 earnings. The company’s profit came in at $11 million, making this the first quarter of profitability for investors. Thanks to the company’s AI integrations, Grab also saw improvements in marketing, menu translation, and customer services. That’s likely to bode well for future earnings, at least according to the market’s recent reaction to this report.
A short time ago, the company integrated an AI translation tool for its Help Center articles, emphasizing continued technology-driven growth. During a recent earnings call, CEO Anthony Tan highlighted plans to enhance products with generative AI. Also, Grab’s first quarterly profit was attributed to accounting adjustments and reductions, including lowered employee costs and incentives.
The board approved a $500 million share repurchase program, with analysts rating this a strong buy. The consensus price target on GRAB stock sits at $4 per share, implying roughly 25% upside from here.
Asensu Surgical Inc. (ASXC)
Asensus Surgical (NYSEMKT:ASXC) released Q4 2023 results, with earnings per share at -7 cents, surpassing the -8 cent analyst estimate. Revenue stood at $5.43 million, exceeding the $5.30 million analyst estimate by 2.47%.
Certainly, this surgical robotics company has plenty of upside for investors looking at this sector. After most elective surgeries were shut down during the pandemic, this space has seen impressive growth over the past two years. These secular tailwinds are likely to continue moving forward, and ASXC is one of the unique penny stocks worth consideration in this space.
The company presents a risky yet promising investment opportunity in surgical robotics and devices. Despite poor 2023 performance and penny stock status, analysts foresee potential with a projected $7.42 billion market size by 2030. Also, analysts predict shares could reach $1.50, offering significant returns for patient investors.
The Metals Company (TMC)
Like the consumer products segment, mining stocks have been overshadowed by most high-profile tech companies in the market. The Metals Company (NASDAQ:TMC) seeks to redefine this trend by pioneering deep-sea mining for polymetallic nodules, potentially valuable for electric vehicles.
While a speculative bet, this is the sort of long-term investment that could yield significant gains. With slow progress and no sales, shares trade at low levels. But analysts project up to $1 billion in revenue by 2027. Though risky, potential rewards make TMC an intriguing option for risk-tolerant investors.
The congressional bill bolstered The Metals Company on March 13, increasing U.S. support for deep-sea mining. Named “The Responsible Use of Seafloor Resources Act,” the bill aims to refine polymetallic nodules. This will facilitate broader infrastructure development and analyses on environmental impact.
If you’re a believer that deep-sea mineral exploration is going to be in the cards moving forward, this is a speculative bet worth making. I’d consider adding a position at around $1 per share.
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 affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris MacDonald 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.
