There are several cheap penny stocks that investors can consider, even as major market indices like the S&P 500 and Nasdaq continue to rise. The performance of these stocks can be influenced by the overall economic environment, potentially leading to significant returns for investors.
The three penny stocks discussed in this article are highly recommended based on their strong fundamentals and potential for further growth and capital appreciation. However, it is crucial to acknowledge that penny stocks are inherently high-risk investments and are most suitable for investors with a high risk tolerance.
The following are seven penny stocks that investors may want to explore further. I chose these companies due to their mix of strong fundamentals and attractive growth prospects. Choosing a strong penny stock could improve one’s overall risk adjusted returns for their portfolios, so here are some of the best companies for investors to consider.
Canopy Growth (CGC)
Canopy Growth (NASDAQ:CGC) is a prominent player in the cannabis industry, leveraging its strong market position and expanding legalization trends for potential growth.
CGC has outlined its strategic priorities for 2024, emphasizing cost reduction and financial improvement. The company aims to shift towards an “asset light” model, targeting a reduction in SG&A and COGS by $270 to $300 million. CGC also plans to achieve positive Adjusted EBITDA across its business units by the end of FY2024.
In its Q2 FY2024 results, CGC reported net revenue of $39 million from its Canadian cannabis business, with a 6% increase in Canadian medical cannabis revenue. The company’s adjusted gross margins improved to 36%, reflecting better operational efficiencies. However, CGC continues to face challenges, including a significant net income loss of $2.48 billion in FY2023, driven by market conditions.
Still, CGC could be one of those cheap penny stocks to consider if one is bullish on the cannabis market in general, judged by its growth prospects.
New Gold (NGD)
New Gold (NYSE:NGD) focuses on gold mining operations in Canada, with key projects like Rainy River and New Afton expected to drive production increases.
NGD has provided a detailed outlook for 2024, focusing on key projects and production targets. The company expects to achieve consolidated production guidance of 310,000 to 350,000 ounces of gold and 50 to 60 million pounds of copper, with all-in sustaining costs (AISC) of approximately $1,240 per gold ounce. The Rainy River and New Afton mines are central to these projections, with Rainy River’s gold production expected to drive significant contributions.
For 2023, New Gold reported annual revenue of $786.50 million, a 30.13% increase from the previous year. The company achieved the top end of its 2023 consolidated production guidance with 423,517 gold equivalent ounces. Notably, New Afton produced 18,179 ounces of gold and 13.3 million pounds of copper in Q1 2024.
Mullen Automotive (MULN)
Mullen Automotive (NASDAQ:MULN) is an electric vehicle manufacturer gaining traction in the market with its innovative EV designs.
The company plans to ramp up deliveries of its Class 1 and Class 3 EV cargo vans, with over $263 million in purchase orders already secured from Randy Marion Automotive Group. Mullen is also advancing its solid-state polymer battery technology, aiming for road testing of Class 1 EV cargo vans equipped with this technology by Q4 2024.
In 2023, Mullen faced significant financial challenges, reporting a net loss of over $1 billion, primarily due to non-cash write-downs and impairment charges. Despite these setbacks, the company generated $366,000 in vehicle sales and maintained a positive stockholders’ equity of $263 million as of the latest reports.
MULN would then be one of those cheap penny stocks for investors who are interested in entering into very high risk, high return situations.
The Metals Company (TMC)
The Metals Company (NASDAQ:TMC) is focused on deep-sea mining for valuable metals necessary for modern technology.
The company aims to supply metals for the clean energy transition with minimal environmental and social impact. TMC holds exploration and commercial rights to three polymetallic nodule areas in the Clarion Clipperton Zone of the Pacific Ocean.
Analysts have a positive outlook on TMC, with a consensus price target of $4.10, indicating a potential upside of 171.8% from the current price. The company is expected to see its earnings per share (EPS) improve from a loss of $0.20 in 2023 to a loss of $0.09 in 2024.
The world’s transition to renewables and deep sea mining is expected to continue into the future, and I feel that TMC is at the forefront of this trend despite being a new company into the arena. It could then be considered cheap with EPS improvements on the horizon.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) operates in the cannabis and pharmaceutical sectors. The company has expanded its market presence through acquisitions and stands to benefit from the growing global cannabis market.
Tilray’s pharmaceutical division is involved in the distribution of medical cannabis products to patients worldwide. The company supports clinical trials and research initiatives to advance the medical use of cannabis.
The company achieved record net revenue of $188.3 million in Q3 FY2024, marking a 30% increase compared to the previous year. Gross profit was $49.4 million, and adjusted gross margin improved to 27%. Tilray continues to hold the largest cannabis market share in Canada, bolstered by the acquisition of HEXO Corp. and the launch of new products across various brands.
In addition to CGC, I feel that TLRY could be one of those stocks for investors to consider if they are bullish on the cannabis market. This also makes it one of those cheap penny stocks to consider given its growth prospects.
Ardelyx (ARDX)
Ardelyx (NASDAQ:ARDX) is a biotech company focused on developing treatments for gastrointestinal and renal diseases.
The company’s outlook for 2024 includes strong sales growth and strategic expansion. ARDX expects U.S. net product sales for IBSRELA to be between $140 million and $150 million. The company launched XPHOZAH in November 2023, with initial net product sales of $2.5 million for the first quarter of commercialization.
Analysts have a positive outlook on ARDX, with a consensus price target of $12.81, indicating a potential upside of 66.8%. The stock is rated as a strong buy by multiple analysts. Key financial metrics include a debt-to-equity ratio of 0.66 and a current ratio of 4.53. ARDX’s market cap stands at $1.87 billion.
ARDX could therefore be one of those cheap penny stocks for investors to consider. The fact that it is in the biotech industry also gives it a strong upside potential, which is also a huge positive.
Ultralife Corporation (ULBI)
Ultralife Corporation (NASDAQ:ULBI) provides high-performance lithium battery solutions for various applications, including military and aerospace. The company has a strong financial position and diversified customer base.
In Q4 2023, the company reported sales of $44.5 million, a 23.4% increase year-over-year, and adjusted EBITDA of $4.8 million, up from $2 million the previous year. The company’s cash position was $10.3 million as of December 31, 2023.
In 2023, ULBI’s total annual revenue reached $158.6 million, marking a 20.3% year-over-year increase. The company continues to benefit from its expanded product portfolio and strategic acquisitions.
Analysts have a favorable outlook on ULBI, with a consensus rating of “buy” and a projected price target suggesting significant upside potential. ULBI could therefore be one of those cheap penny stocks for investors to buy, as the lithium market continues to expand at a rapid pace.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.