Finding the best penny stocks to buy now is a process that is characterized by one main word — risk. Penny stocks are considered riskier than mid-capitalization or large-cap stocks. Penny stocks trade at a price under $5 a share but in this article, I’ll focus on the best penny stocks under $1.
Unlike cryptocurrencies that have a very low price but are often literally worthless, these very cheap penny stocks have several qualitative features that make them a buy.
I used the Yahoo! Finance stock screener with parameters such as return on equity greater than 10%, price/earnings to growth (PEG) less than 1, price/book value (P/B) less than 1, price/sales (P/S) less than 1 and net income margin greater than 20%.
From the list the stock screener provided, I picked what I think are the best penny stocks under $1 that are undervalued.
|SHIP||Seanergy Maritime Holdings||$0.70|
|LTRPA||Liberty TripAdvisor Holdings||$0.71|
|ROYTL||Pacific Coast Oil Trust||$0.30|
Seanergy Maritime Holdings (SHIP)
The firm has “17 Capesize vessels with an average age of 12 years and aggregate cargo carrying capacity of approximately 3,020,012 dwt.” The stock closed at 69 cents a share on July 14 and trades at a P/E Ratio (TTM) of 2.5 offering a very high forward dividend yield of 14%.
The one-year target estimate is $1.72 or an upside potential of 146%. This penny stock is a hedge against the high inflation rate in the U.S., and the business looks good with an sales growth of 141.7% to $153.11 million in 2021 and a net income growth of 325.26% to $41.35 million.
The stock has a price/book of 0.55X, which is very cheap.
Triterras (OTCMKTS:TRIRF) is a fintech company with a special focus on trade and trade finance providing finance solutions to micro, small and medium enterprises.
The stock closed at 90 cents July 14 trading at a very low P/E ratio of 1.91.
The losses of nearly 62% year-to-date are heavy but this is also an interesting investment opportunity to consider now, especially as the one-year target is $4, a massive upside potential of approximately 344%.
There is not much financial data to analyze, but the company has a stable sales growth over the past two fiscal years and is profitable too. In FY 2019, the firm generated a net income of $1.27 million, but in fiscal 2022 the net income grew to $33.42 million.
The profitability is very strong, with a trailing gross profit margin of 62.65% and a net income margin of 58.98%.
ImageWare Systems (IWSY)
ImageWare Systems (OTCMKTS:IWSY) is a technology firm that provides cloud-based and on-premises biometric cybersecurity solutions to make data safer and protect from potentially costly ransomware attacks.
This is a very cheap stock trading at 0.7 cents with a P/E ratio of 0.64x. The company has a very low market capitalization of $2.6 million.
Two things are notable about this firm. First, in 2021 it generated revenue of $3.47 million, which is more than its current capitalization and at the same time, it generated a net income of $9.29 million, more than three times its latest market capitalization.
Second, ImageWare Systems could become a takeover target, as it has a very low value now. However, use caution. This is a very risky play.
Liberty TripAdvisor Holdings (LTRPA)
Liberty TripAdvisor Holdings (NASDAQ:LTRPA) is an advertising and commerce company. “It operates through the following segments: Hotels, Media and Platform, Experiences and Dining, and Corporate and Other.”
The stock has lost nearly 67% of its value in 2022. It is a very volatile stock, as it has a five-year monthly beta of 2.52 and is trading at a P/E ratio (TTM) of only 0.23.
In 2021 the firm returned to profitability reporting a net income of $179 million. Interestingly, the free cash flow trend is mostly positive, except for 2020. The net income margin of 58.79% is very bullish.
The trailing price/cash flow ratio of 0.29X makes the stock too cheap and worth further due diligence analysis as a buy.
Pacific Coast Oil Trust (ROYTL)
Pacific Coast Oil Trust (OTCMKTS:ROYTL) “is a statutory trust. The company owns net profit interests in the underlying properties, which consist of producing and non-producing interests in oil units, wells and lands.”
This business model has been working very well, as the stock has gained approximately 67% in 2022. The company has stopped its cash distributions, which is not good news, but on the other hand, the stock trades at a P/E ratio of 0.28 which makes a very bullish case.
The Energy sector is the best-performing sector in 2022 and this stock is a play on the continuation of high energy prices in 2022. It is also a momentum play, as the stock has a one-year price performance of 157.51% and a nine-month price performance of 500%.
Do be aware that this stock has very low volume.
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, Stavros Georgiadis, CFA 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.