The Federal Reserve is unlikely to pivot on interest rates anytime soon; hence stocks, particularly the smaller, speculative ones, could be in more volatility. However, that doesn’t mean you should shy away from investing in hot penny stocks.
Best penny stocks can offer potential returns that significantly outperform those offered by larger cap stocks if you can identify quality companies still in their nascency. Naturally, the risks associated with investing in penny stocks are higher than those associated with investing in established blue-chip names. However, investors always remain optimistic about the possibility of making massive gains.
There are multiple names in the penny stock territory following the market correction this year. The list of casualties in the stock market includes many high-quality names, but plenty deserves rock-bottom valuations. That said, let’s look at seven of the hottest penny stocks to wager on at this time.
|ENIC||Enel Chile S.A||$2.16|
Enel Chile S.A. (ENIC)
Enel Chile S.A. (NYSE:ENIC) is one of South America’s largest and most progressive utility companies, providing electricity to the capital city of Santiago, Chile, and its surrounding areas. Its electricity is mainly generated from hydroelectric plants but includes other renewable energy methods, including wind and solar.
The severe drought in Chile significantly impacted hydrology conditions, forcing the firm to cover the shortfall in thermal power. However, its third-quarter results show that hydrology conditions are improving, and the gas price impact is being marginalized. Hence, the company is likely to return to prior profitability levels, promising a return on its dividend. A return to 2019 levels would point to the current yield exceeding 10%.
Satellite communications rose to prominence this year when Maverick entrepreneur Elon Musk provided Starlink internet connections to Ukraine following the Russian invasion. The development sheds light on the utility of satellite communication, providing high-speed and reliable internet access to remote and low socioeconomic regions in ways that previously were either too costly or simply impossible.
Perhaps one of the biggest names in this unique niche is Globalstar (NYSEAMERICAN:GSAT) which has been providing a range of mobile and data services powered by its network of Low Earth Orbit satellites. The firm has built 24 ground stations and a network already used in over 100 countries, transmitting over 1.8 billion messages each year.
The returns could be huge when investing in GSAT stock, especially after its unprecedented partnership with tech giant Apple. In what may prove a groundbreaking move, Apple and Globalstar demonstrated their strategic partnership by announcing that the new iPhone 14 would feature satellite capability enabled by Globalstar services. Having already established relations with one of tech’s biggest names, an existing relationship with Globalstar would put the company at the front of the line for wider adoption.
Alkane Resources (ALKEF)
Alkane Resources (OTCMKTS:ALKEF) is an Australian-based resource company quickly gaining global recognition due to its shrewdly successful gold production projects in the country’s central west region. Many investors find this venture attractive, as it offers a strong financial portfolio amidst uncertain economic times. Alkane Resources has consistently displayed steady growth and reliability that gives its investors good reason to believe it’s the next big thing in the gold mining space in Australia.
ALKEF stock could be an interesting contrarian play on the booming Australian gold industry and its solid financial profile. Over the past five years, the firm has generated double-digit growth across both lines. Moreover, its balance sheet is in strong shape, with a cash balance that comfortably dwarfs its debt load. Hence, ALKEF stock could be a fascinating play for those in a speculative mood.
Top Glove (TGLVY)
From humble beginnings as a glove manufacturer based in Malaysia, Top Glove (OTCMKTS:TGLVY) has since expanded its portfolio and now produces face masks and dental dams, among others. With COVID-driven capacity increases starting to rationalize, the supply will likely come back into balance over time which should drive an upswing in profitability for the business. Additionally, its attractive valuation offers a robust margin of safety at its price. As we advance, the larger players in the sector should benefit from the economies of scale as the excess capacity is shaken out of the industry post-Covid.
The company also has targets set for increasing its sales in the US market and expanding into green products, which could become a future growth catalyst for the business. Moreover, with its stellar track record of growing revenues and earnings, TGLVY stock has the potential to snap back in the upcoming quarters.
Parks! America (PRKA)
Parks! America (OTCMKTS:PRKA) is a unique and dynamic attraction in the heart of Georgia. Established in Pine Mountain, It’s arguably the fastest-growing animal park brand in the country. It primarily attracts visitors through its drive-through business model, enabling people to feed various wildlife. This thriving connection with nature, as opposed to traditional zoo layout, has made Parks! America is one of the most popular animal parks in the region.
From an investment perspective, its stock trades at a hefty discount compared to its peers. Moreover, it’s grown its sales and EBITDA by an impressive 19.8% and 24.6%, respectively, over the past five years. Its business boasts a spectacular margin profile, where virtually every metric has grown by double-digits in recent years. Though it operates in a rough economic environment at this time, it is poised to grow at a healthy pace once the headwinds clear out.
Borr Drilling (BORR)
With the robustness of the crude oil market, many investors are thinking about what companies may offer great returns in the sector. Borr Drilling (NYSE:BORR), a leading junior offshore driller, may be one of the best companies to invest in the niche without breaking the bank. Its fleet includes more than 15 jack-up rigs and drillship types, with activities running across multiple jurisdictions.
Like its peers, Borr generated superb growth this year, driven by the higher oil prices. Moreover, it has enabled the junior offshore driller to address its long-standing debt problems effectively. With its liquidity issues sorted out, its management has plans to initiate a dividend in 2024 and outlined for solid free cash flow generation in the future. Its management expects to generate $290 to $330 million in adjusted EBITDA next year, with an early estimate of doubling that number by 2024.
Arlo Technologies (ARLO)
Arlo Technologies (NYSE:ARLO) is an impressive success story in the security camera industry, having grown significantly over the past few years. The company has grown its subscriptions at a breathtaking pace, reaching a staggering one million paid subscribers this year. Even beyond its subscriber numbers, Arlo has increased gross margins thanks to value-added software that continues optimizing performance for its consumers.
Moving forward, the firm expects its revenue mix shifts into subscriptions to bolster its already-strong momentum and help it expand even further. Arlo estimates that the home security sector stands at a whopping $53 million, expecting the opportunity to grow to $78 billion by 2025. With lower than $500 million in sales, it has plenty of room to expand and innovate in its niche.
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.
On the date of publication, Muslim Farooque 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.