Whenever a discussion of penny stocks to buy materializes, chances are, you are better off staying away than staying not-away. Here’s the deal. I’m not entirely sure if anybody quantified the average risk of this sector, considering how many such “opportunities” exist. Suffice to say, though, that most of these trades end up losing money. It’s the nature of the beast.
That said, every once in a while, you may come across penny stocks to buy that align with a few positive attributes. These could include an undervalued fiscal profile or relevant business or even sentiment based on technical analysis indicators. To be 100% clear, speculative assets commanding these characteristics don’t provide any guarantees. They just might improve your odds slightly – maybe.
To further guide the speculative portion of your portfolio toward the best course possible (relatively speaking of course), I have one major ground rule: none of these market ideas trade over the counter (yet). So, if you’re ready to roll the dice on penny stocks to buy for January, read on.
|WAFU||Wah Fu Education||$2.43|
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To be upfront from the get-go, Ambev (NYSE:ABEV) only ranks among penny stocks to buy because of its current share price. At $2.61 at time of writing, ABEV appears to be a wildly speculative asset. However, you must look at the bigger picture. Commanding a market capitalization of slightly over $41 billion, this Brazilian brewery actually represents a large-cap enterprise.
However, I’m grateful that the per-share price allows me to put ABEV on this list of penny stocks to buy. At least, we can start this discussion with a reasonable market idea. For starters, ABEV outperformed countless securities in 2022. During the trailing year, Ambev shares lost less than 1% of equity value. In contrast, the U.S. equities benchmark S&P 500 fell 18% during the same period.
Currently, no analyst covers ABEV, which isn’t completely surprising given its non-U.S. background. However, hedge fund sentiment for Ambev pings as “strong” according to TipRanks. In part, that’s probably because since the fourth quarter of 2020, the company mostly beat its per-share profitability target.
Flexible Solutions (FSI)
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Based in Victoria, British Columbia, Flexible Solutions (NYSEAMERICAN:FSI) develops, manufactures and markets specialty chemicals which slow the evaporation of water. At time of writing, Flexible Solutions commands a market capitalization of $39 million, a more emblematic valuation for penny stocks to buy. In the trailing year, FSI lost nearly 18% of equity value.
If that didn’t scare you off, perhaps you might have the stomach for wagering on Flexible Solutions. To be fair, the company enjoys surprisingly robust financial metrics. For instance, Simplywall.st reports that FSI’s price-earnings ratio of 9.5 times sits below the U.S. market PE (14.3 times). Also, in terms of profitability, earnings grew 21.7% annually over the past five years.
Adding onto that note, the investment resource projects that earnings may grow 36.73% per year. That’s not necessarily a figure that’s pulled out of somewhere dark and cavernous. Per TipRanks’ data, in the last three quarters, Flexible Solutions conspicuously beat its per-share earnings estimates. Thus, it’s one of the penny stocks to buy or at least worth considering.
Source: John Brueske / Shutterstock.com
A relatively unknown enterprise for many investors, Jerash (NASDAQ:JRSH) manufactures and exports custom, ready-made sport and outerwear from Jordan. Interestingly, Jerash underlines the manufacturing of the products that most people would know such as New Balance. Unfortunately, consumer sentiment fell badly in 2022 because of skyrocketing inflation. In the trailing year, JRSH shed over 40% of market value.
For conservative investors, that might be the end of the discussion. And to be sure, weakness in the consumer economy – particularly record-breaking credit card debt – might keep shoppers on the sidelines. Nevertheless, if you want to go contrarian, JRSH may be an intriguing idea among penny stocks to buy. Objectively, Wall Street prices shares at 0.35-times sales. In contrast, the underlying industry median is 0.83 times.
Notably, of the one analyst that covers Jerash, it enjoys a moderate buy rating. The price target stands at $8, representing upside potential of 104.6% at time of writing. Also, Jerash beat earnings-per-share targets on several occasions in the past two years.
An Indian multinational corporation, Wipro (NYSE:WIT) provides information technology, consulting and business process services. Per its public profile, the company’s capabilities cover cloud computing, cyber security, digital transformation, artificial intelligence, robotics, data analytics and other technology consulting services. Currently, Wipro features a value of $26.2 billion, another big cap with a price tag ($4.69) emblematic of penny stocks to buy.
Still, its massive footprint failed to spare the enterprise from volatility. In the trailing year, WIT hemorrhaged almost 51% of market value. Still, those with the mindset of owning penny stocks to buy might want to roll the dice here. I’ve said this before but fundamentally, Wipro entices because of its exposure to India’s tech market. Notably, India’s IT market contributes a little over 9% to its national GDP.
Financially, prospective investors may also appreciate the underlying discount. At the moment, Wall Street prices WIT at 15.6-times forward earnings. For comparison, the industry median forward PE pings at nearly 24 times.
Source: InvestorPlace unless otherwise noted
Headquartered in Sao Paolo, Brazil, Ultrapar (NYSE:UGP) focuses mainly on the energy and chemicals market. Through its various subsidiaries, Ultrapar operates businesses involved in fuel distribution, specialty chemical production, bulk liquid storage and also pharmacies. Perhaps not surprisingly because of its wide and diverse footprint, UGP lost only 4.3% in the trailing year.
As a larger-sized enterprise, investors enjoy more room to work with than its $2.24 price tag would imply. For one thing, UGP enjoys decent (though not great) stability in the balance sheet. In particular, Ultrapar’s Altman Z-Score stands at just under 5, reflecting low bankruptcy risk.
In terms of value, Gurufocus.com rates UGP as significantly undervalued based on its proprietary calculations. Objectively, Ultrapar offers a discount based on its price-sales ratio of 0.09 times. In contrast, the sector median value stands at a lofty 1.05 times.
Finally, the company put on a decent showing since Q4 2020, mostly beating EPS estimates. Only two glaring bum notes appear on Q1 and Q2 of 2021. Thus, UGP may be worth a shot among penny stocks to buy.
A Canadian mining firm, B2Gold (NYSEAMERICAN:BTG) owns and operates gold mines in Mali, Namibia and the Philippines. Currently, the Federal Reserve’s efforts to unwind the monetary excesses of the coronavirus pandemic theoretically poses deflationary pressures on B2Gold. However, the market now smiles on BTG. In the trailing year, shares gained over 2%.
Granted, it’s a tricky situation. The unexpectedly robust November jobs report suggests that the Fed may tighten money supply more aggressively. But that raises the specter of global recession risks, which then would bolster the fear trade angle.
While penny stocks to buy always present risks, both analysts and the smart money love BTG. Per TipRanks, B2Gold commands a consensus view of strong buy. This breaks down to six individual buy ratings and one hold.
Regarding the smart money (i.e. hedge funds), these institutional investors have been bidding up shares since Q3 2021. According to TipRanks, hedge fund sentiment pings as “very positive.”
Wah Fu Education (WAFU)
One of the less-appreciated penny stocks to buy listed on a major exchange, Wah Fu Education (NASDAQ:WAFU) is a China-based holding company principally engaged in the provision of online education services and technology research. It also specializes in development services. While relevant, vagaries of China’s economy based on its government’s draconian zero-Covid policy hurt Chinese securities.
As evidence, WAFU itself gave up over 35% of equity value in the trailing year. As a less-discussed enterprise (no analyst covers WAFU), the underlying investment carries significant risks, even compared to other penny stocks to buy. However, the company does enjoy some redeeming qualities.
Perhaps most notably, Wah Fu commands a solid balance sheet, particularly with a cash-to-debt ratio of nearly 83 times. In comparison, the sector median value sits at a lowly 1.29 times. As well, its return on asset is 4.17%, ranking above nearly 61% of the competition.
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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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.