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Penny stocks could be carrying a giant neon-pink sign that reads, “Don’t look here!” Invariably, people will not only look but also spend a worrying amount of time “researching” such speculative ideas. Further, with the help of social media spurring you to resources that corroborate your biases, window shopping eventually turns into actual acquisitions.
Before you know it, you’re disseminating frog memes on the internet. As well, you no longer need coffee, now fully sated with the vituperative rage you impose on anyone with a slightly different opinion. Welcome to the wacky world of penny stocks!In fairness, not all penny stocks will fail (but most might). Further, in very few circumstances, they could be sensible – so long as you focus on higher-upside-probability ideas. While I don’t guarantee anything, these sub-$5 trades could rise higher for various fundamental or technical reasons. Read on if you can handle the heat.
BTGB2Gold$4.10ASMAvino Silver & Gold Mines$0.78SVMSilvercorp Metals$3.42PFIEProfire Energy$1.07JFINJiayin Group$3.30TAITTaitron Components$3.78JRSHJerash Holdings$4.22
Historically, precious metals mining firms such as B2Gold (NYSEAMERICAN:BTG) tend to be volatile. Until recently, BTG did nothing to dissuade this negative perception. However, since the January opener, BTG gained nearly 14% of its equity value. And it’s quite possible that shares can continue moving up, making it one of the penny stocks to consider.
Particularly for the domestic front, fears of economic instability ring high. Most notably, as InvestorPlace Financial News Writer Samuel O’Brient mentioned, the Federal Open Markets Committee (FOMC) is prepping for its first meeting of the year. While the rate of inflation slowed, it might not be enough for the Federal Reserve to reverse its hawkish monetary policy.
In other words, plenty of fear still exists. During times of trouble and ambiguity, many investors turn to gold. Therefore, BTG could rise on the fear trade. If that wasn’t a convincing enough argument, BTG represents one of the few penny stocks carrying a strong buy consensus view.
Avino Silver & Gold Mines (ASM)
Another name among penny stocks tied to the precious metals sphere to consider is Avino Silver & Gold Mines (NYSEAMERICAN:ASM). Based in Vancouver, British Columbia, Avino conducts its operations in Mexico, focusing on its namesake commodities along with base metals exploration properties. Although ASM slipped for much of 2022, in the year so far, shares gained 14%.
Technically, demand for precious metals boomed. According to commodities trading experts, this sector could enjoy a continued resurgence. Per data from Google Finance, gold futures gained over 6% since the start of this year. Admittedly, silver lost 1% during the same frame. However, in the trailing half-year period, the white metal gained nearly 31%.
As an easier mechanism to play the precious metals (as opposed to physically holding them), ASM may ride coattails. Additionally, Wall Street analysts rate ASM as a consensus moderate buy. Further, their average price target of $1.63 implies an upside of over 101%.
Silvercorp Metals (SVM)
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A Canada-based, China-focused precious metals firm, Silvercorp Metals (NYSEAMERICAN:SVM) will likely benefit strongly from the reopening of the world’s second-largest economy. Indeed, with Silvercorp representing China’s largest primary silver producer, investors should keep close tabs on SVM. While shares already blossomed over 15% this year, it may have more to go.
Fundamentally, most of the upside narrative centers on the re-emergence of Chinese enterprises. For instance, many experts predict that crude oil prices will rise as China recovers from the coronavirus pandemic. Logically, higher energy prices align with greater economic activity. And that translates to more consumption of critical resources. While precious metals-related penny stocks should rise generally, SVM could see outsized gains due to the core business.
Likely, analysts carry the same assessment. Currently, SVM rates as a consensus moderate buy. Also, analysts’ price target implies an upside of 15.5%, though this could be an understatement. As an added bonus, Silvercorp features a strong balance sheet and robust profitability margins.
Profire Energy (PFIE)
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Moving away from the metals and mining industry, investors seeking viable penny stocks should consider Profire Energy (NASDAQ:PFIE). An oilfield technology company, Profire specializes in the design of burner-management systems and other combustion-management technologies. To be fair, PFIE stock dipped 4.5% in the trailing year. However, since the end of Sept. last year, shares gained nearly 25%.
Fundamentally, two catalysts support a higher-rising share price for Profire Energy. First, as stated above, China’s reopening could lead to a significant spike in critical resources. Thus, Profire could enjoy downwind benefits.Second, normalization in the workplace may inspire remote workers to finally get the clue: out of sight, out of mind. While it wasn’t explicitly stated, a New York Times article mentioned that at-home employees received pink slips in impersonal ways. Reasonable fears of keeping one’s job may lead to greater traffic volume. In turn, this dynamic should lift the energy sector, boding well for PFIE stock.
Jiayin Group (JFIN)
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Probably a lesser-known enterprise for most Americans, China-based Jiayin Group (NASDAQ:JFIN) is a financial technology (fintech) platform. Specifically, it aims to facilitate connections between underserved individual borrowers and financial institutions’ funding partners. If such a business sounds relevant, it is. In the trailing year, JFIN gained almost 63% in the market. Nevertheless, it ranks among the penny stocks to consider because it may still command more upside potential.
Fundamentally, China’s reopening may do wonders for Jiayin’s business. Back during the draconian zero-Covid policy days, both enterprises and consumers suffered from a lack of predictability and transparency. Moving forward, Chinese consumers should feel more confident about their government’s protocols, leading to greater commercial activity.
Financially, Jiayin offers investors an undervalued business. Currently, the market prices JFIN at a trailing multiple of 1.48, far lower than the sector median of 19 times. Also, shares trade hands at 0.43-times sales, lower than the sector median of 2.52 times.
Taitron Components (TAIT)
Another lesser-known enterprise, Taitron Components (NASDAQ:TAIT) could get interesting if global economic recovery trends materialize successfully. Per its website, Taitron is a national distributor of brand-name electronic components and a supplier of originally designed and manufactured (ODM) electronic components. Offering both value-added engineering and turnkey services, TAIT represents one of the penny stocks to keep close tabs on.
Although shares incurred choppy trading throughout 2022, in the year so far, TAIT gained nearly 11% of equity value. With China reopening and global supply chains slowly normalizing, Taitron might benefit from these broader catalysts. Just as importantly, Taitron offers a compelling fiscal profile.
For one thing, the company features zero debt on the books, affording it flexibility during these difficult times. Moreover, Taitron commands excellent profit margins along with a return on equity of nearly 23% which ranks nearly 89% above the competition. As a bonus, the market prices TAIT at a trailing multiple of 6.55, well below the sector median of 17.5 times.
Jerash Holdings (JRSH)
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Fundamentally, Jerash Holdings (NASDAQ:JRSH) presents both an enticing but simultaneously risky narrative. An apparel-manufacturing specialist, Jerash provides custom-branded apparel for some of the world’s top fashion-related companies. Given that Jerash partners with internationally recognized brands, it enjoys upside potential. On the other hand, poor consumer sentiment imposes skepticism on this bullish thesis.
Still, it’s possible that JRSH could be one of the penny stocks to buy for 2023. True, shares fell nearly 37% in the trailing year. However, JRSH may have hit a bottom in late Dec. Notably, for the year, shares moved up over 6% despite the poor implications of the U.S. consumer discretionary market.
Another possible catalyst for Jerash centers on its valuation. Right now, the market prices JRSH at 10.5 timestrailing earnings, below the sector median of 13.8 times. As well, Jerash trades at 0.38 times sales, slipping beneath the sector median of 0.77 times. If you really want to double down with your penny stocks, JRSH could be your ticket.
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 thatInvestorPlace.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, Josh Enomoto 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.comPublishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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