Penny stocks are risky yet highly lucrative if selected correctly. Moreover, penny stocks are often idiosyncratically driven, meaning they possess diversification potential.
Considering the above, I delved into the penny stock landscape to pick three best-in-class penny stocks for my readers. Methodologically, I focused on fundamental aspects, quantitative valuation multiples and technical analysis. Moreover, I overlayed the analysis with market-based variables to ensure alignment.
As mentioned before, investing in penny stocks is risky unless your portfolio is well-diversified. Nevertheless, they can create millionaires. As such, I decided to recommend the following assets to my reader base.
Without further ado, let’s traverse into the main analysis.
Jaguar Mining (JAGGF)
Jaguar Mining (OTCMKTS:JAGGF) is a Canadian junior gold miner. The firm primarily mines in Brazil, focusing on low-cost mines. Moreover, the firm’s strategy emphasizes long-life mines situated in areas with conducive infrastructure.
Although Jaguar Mining has a market capitalization of around $200 million, it has the potential to scale. In fact, I believe its vertically integrated business model provides it with the necessary ability to evolve into a large-capitalization company one day.
Furthermore, Jaguar Mining released its first-quarter results last month, revealing compelling results. The firm achieved $2.8 million in net income and an earnings-per-share figure of 4 cents. These figures settled higher than a year before, illustrating robust execution and a favorable pricing environment.
I believe promising gold prices, continued execution and Jaguar Mining’s alluring price-to-book ratio of 0.62x sets JAGGF stock up for tremendous success in the coming years.
RADCOM (RDCM)
RADCOM (NASDAQ:RDCM) operates a niche business model that caters to 4G and 5G network operators. The company offers assistance in various facets of the 4G- and 5G-related value chain, including analytics, troubleshooting and AI-driven insights.
Many might wonder whether it is time to cash in on RDCM stock. RADCOM’s stock has surged by approximately 17% since the turn of the year and faces an unstable stock market environment. However, I believe its best is yet to come; here’s why.
RADCOM’s niche exposure has allowed it to lock in a sustainable presence in its end market, as reflected in its five-year compound annual growth rate of 12.96%. Sure, RADCOM’s return on common equity ratio of 4.82% is sub-optimal. However, it has yet to consolidate its business model and remains focused on scalability. As such, I believe its shareholder value prospects are well-aligned.
Furthermore, RADCOM’s short-term variables are intact. For example, the company recently communicated a robust first-quarter earnings report. RADCOM’s revenue settled at $14.12 million, surpassing estimates by $760,000 and amounting to 17.5% year-over-year growth.
Lastly, RADCOM’s market-based variables are promising. For instance, it has a price-to-sales ratio of 2.68x, which I deem low for a hypergrowth company. Additionally, RDCM recently crossed its 10-day moving average while remaining below its 50- and 100-day moving averages, indicating a momentum pattern has been shaped.
I’m bullish here!
Ultralife Corporation (ULBI)
Ultralife Corporation (NASDAQ:ULBI) designs and manufactures power solutions, communications and electronics systems.
The firm has existed for over 30 years, but its current upside potential is promising as its offerings align with modern business. This is reflected in Ultralife’s five-year compound annual growth rate of 15.23%. Moreover, Ultralife’s return on common equity ratio of 8.51% is commendable. It is 67.77% higher than the ULBI five-year average.
Ultralife’s latest financial results echoed its fundamental potential. The company delivered $41.9 million in revenue, presenting 31.3% year-over-year growth. Moreover, Ultralife’s first-quarter earnings-per-share settled at 21 cents, 11 cents above estimates.
I believe ULBI stock is a great buy at its current price-to-earnings ratio of 18.21x, which is 24.72% lower than the sector median, especially considering the abovementioned fundamentals.
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.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Steve Booyens did not hold (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.