In most circumstances, you should avoid extremely speculative ideas, especially those billed as cheap penny stocks. It’s difficult to find hard statistics regarding the odds of success in this arena, in large part because of the diversity of enterprises and industries involved. However, to put it colloquially, the odds aren’t good at all.
We know this because if it the odds were favorable, everybody would bet on cheap penny stocks. But it’s not that easy and most times, the underlying entities lose considerable value. Many simply go out of business.
Nevertheless, the sector will always attract new generations of speculators because of the promise of quick riches. Thanks to the typically small float along with rock-bottom pricing, one piece of good news could send shares flying. Sometimes, the target equities can pop for no reason whatsoever.
That’s the allure but that’s also the risk because let’s face it – the opposite is true as well. If you can handle the heat, below are possibly cheap penny stocks to consider.
Red Cat (RCAT)
I’m starting this list of cheap penny stocks with Red Cat (NASDAQ:RCAT) primarily for its core drone business. Per its public profile, Red Cat builds infrastructure to manage drone fleets. It also provides services for drones, which include empowering them to fly in confined industrial interior spaces. Most importantly for this discussion, the business carries significant military implications.
Fundamentally, the nature of warfare may be changing before our eyes. At first, Russia’s invasion of Ukraine seemed like an easy affair for the belligerent nation: it’s so much bigger than its neighbor. However, Ukrainian forces managed to better even the odds thanks to its use of drones as weapons. That caught the eye of the military industrial complex and could give RCAT stock a nice pop.
Interestingly, RCAT trades at 3.59X trailing-year sales. In the past year, this metric averaged about 5.3X. So, in that sense, it’s undervalued. For fiscal 2024, experts see a mitigation of red ink to 35 cents per share. However, the big item is revenue, which could jump to $18.14 million. That’s up 83% from last year, making RCAT one of the cheap penny stocks to consider.
Innoviz (INVZ)
Based in Israel, Innoviz (NASDAQ:INVZ) falls under the consumer cyclical sector, specifically the auto parts industry. Per its corporate profile, Innoviz manufactures and sells automotive-grade lidar sensors and perception software. Ultimately, the company aims to enable safe autonomous driving at scale. Currently, the company offers InnoivzOne, which is a lidar sensor for auto manufacturers and robotaxi specialists.
To be fair, what makes INVZ stock rather risky is that we’re still far off from the vision of fully autonomous vehicles. However, as we’re seeing with artificial intelligence, innovation can move at breakneck speeds. During the trailing 12 months (TTM), the company incurred a net loss of nearly $119 million. However, revenue came out to $26.92 million and is growing at a blistering pace.
Even with the growth, shares trade at 5.46X trailing-year sales. In the past year, however, the metric averaged over 52X. Of course, that gives you an idea of how volatile INVZ stock has been in the market. Nevertheless, analysts project that sales will hit $32.45 million by year’s end. If so, that would imply a 55.4% leap from last year’s tally of $20.88 million.
If you like big wagers, INVZ could be one of the cheap penny stocks to consider.
Quantum-Si (QSI)
Headquartered in Branford, Connecticut, Quantum-Si (NASDAQ:QSI) falls under the broader healthcare sector, specifically medical devices. According to its corporate profile, Quantum-Si engages in the development of single-molecule detection platforms to enable next-generation protein sequencing (or NGPS). It offers instruments, software and reagent kits for the purposes of forwarding NGPS.
As you might imagine, the company isn’t yet profitable. In the past four quarters, its average loss per share came out to 16.3 cents. That said, analysts anticipated that the red ink would amount to 19.3 cents. Technically speaking, then, QSI stock enjoys an “earnings” surprise of 15.4%.
In the TTM period, Quantum-Si incurred a net loss of $91.82 million or 65 cents per share. Revenue during the cycle hit $1.28 million. However, the growth trend is incredibly robust. For fiscal 2024, covering experts believe that sales could hit $4.02 million. If so, we’re talking an expansion of 271.5%.
Not only that, in the following year, sales could soar to $12.4 million. That would be up another 208.5%. If you believe in these projections, QSI could be one of the cheap penny stocks to consider.
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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.com Publishing Guidelines.