Penny stocks have always fascinated investors. Indeed, the higher risk, lower priced penny stocks to buy can be a game-changer for the portfolio. While it’s never a good idea to overweight penny stocks, investors can still safely allocate 10-20% to these stocks.
It should also be noted that penny stocks are not purely speculative. In fact, some emerging companies may become important in the long term. Often, exposure to these penny stocks can be rewarding over a three to five year period.
To be sure, today’s markets are in uncertain times. All thanks to inflation, rising interest rates and GDP growth. Still, it’s not hard to spot deeply undervalued penny stocks to buy. Some allocation to these stocks is useful for creating a diversified portfolio. Let’s take a closer look at which penny stocks to buy.
Heron Therapeutics (HRTX)
Heron Therapeutics is one of the best penny stocks to buy. Any good or bad news related to clinical trials can send the stock skyrocketing or plunging. With a short-interest of 35%, I believe that Therapeutic Heron (NASDAQ:HRTX) is ready for a big rally in the near term.
With a high level of operating losses, research and development funding is a concern. However, Heron recently raised $76.5 million through a stock and warrant offering. With a total cash reserve of $158.7 million, Heron has a cash trail through 2024. At the same time, Heron has focused on cost reduction and operating margin is expected to s improve over the coming quarters.
Recently, Heron received US FDA approval for a postoperative agent to treat nausea and vomiting. This is the company’s fourth drug approval.
I expect revenue growth to accelerate in the coming quarters. Overall, I would bet the stock would double from current levels over the next 12 months.
MINISO Group (MNSO)
Shares of MINISO Group (NYSE:MNSO) have declined by nearly 65% over the past 12 months. Reasons include slowing growth thanks to the pandemic and dilution of equity.
However, retail store operations with a growing global presence appear poised for a comeback. During the last financial year, MINISO recorded a growth of its turnover of 21% in China. However, international turnover increased by 49%. Additionally, for the fourth quarter of 2022, the company also recorded the highest adjusted operating margin in the last 10 quarters.
It should also be noted that year-over-year, the number of MINISO stores worldwide increased by 450. If this growth continues, the company could accelerate revenue growth as the Headwinds related to the pandemic are fading.
In July 2022, The Blue Orc Capital short report contained allegations regarding the company’s franchise model and land deals involving the president. Recently, Miniso completed an independent investigation, which concluded that Blue Orca’s allegations were unfounded.
Going forward, investors will likely focus on growth and improving margins. I am bullish on this front and MNSO stock is likely to trend higher.
Bitcoin (BTC-USD) mining stocks plunged with the correction in cryptocurrencies. Bit Farms (NASDAQ:BITF) traded at 52-week highs of $9.40 and is currently at $1.04. Assuming a scenario where Bitcoin gradually trending higher over the next 12-24 months, BITF stock could generate multiple returns.
As Bitcoin struggles, business development has always been positive for Bitfarms. By September 2022, the company had reached a hash capacity of 4.1EH/s. The company’s hash capacity jumped 82% from December 2021.
Another reason to love Bitfarms is the fact that the company generates positive cash from mining operations, even at $20,000 Bitcoin. For the second quarter of 2022, the company reported an adjusted EBITDA margin of 45%. With higher mining capacity, BITF stock is likely to skyrocket if Bitcoin rises and margins increase significantly.
Bitfarms also reported cash and cash equivalents of $46 million in Q2 2022. For the same period, the company reported $62 million in digital assets. Additionally, with a $38 million credit facility, Bitfarms is well positioned to continue aggressive growth.
Cronos Group (CRON)
In 2019, Chronos (NASDAQ:CRON) the stock hit highs of $22. After a sharp correction to around $5, CRON stock tripled again in early 2021 on hopes of accelerated cannabis legalization. These days, if the regulatory headwinds ease, CRON could be a big winner again.
At the current level of $2.82, the stock is significantly undervalued. It is therefore among the best penny stocks to buy.
From a growth perspective, the outlook looks optimistic. For the second quarter of 2022, Cronos reported revenue growth of 48% on an annual basis to $23.1 million. For the same period, Israel’s revenue jumped 212% to $7.2 million. Medicinal cannabis has the potential to be a game-changer for business.
For the first half of 2022, Cronos also reduced EBITDA losses. The company reported cash and cash equivalents of $790 million in the second quarter of 2022. As a result, there is ample financial flexibility to make large investments to accelerate growth.
On Penny Stocks and Low Volume Stocks:With rare exceptions, InvestorPlace does not publish reviews of companies with a market cap of less than $100 million or trading fewer than 100,000 shares per day. This is because these “penny stocks” are often the playground of scammers and market manipulators. If we ever post commentary on a low-volume stock that could be affected by our commentary, we require the editors of InvestorPlace.com to disclose that fact and warn readers of the risks.
Read more: Penny Stocks – How To Profit Without Getting Scammed
As of the date of publication, Faisal Humayun does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.