It may seem a little crazy to talk about finding cheap penny stocks to buy at this time. The economy is cooling, and even blue-chip stocks are struggling to gain traction. However, there are several reasons for speculative investors to consider investing in penny stocks.
First, investors will want to make note of an obvious fact that penny stocks can be found in the small-cap sector. Accordingly, with history suggesting that small-cap stocks often lead market reversals, this provides a rationale for holding these higher-risk assets over the long-term.
Additionally, investors should take note that valuations matter. Right now, there’s another obvious fact that penny stocks are inexpensive. Thus, a little investor capital goes a long way in terms of the proportion of a penny stock company an investor can buy. Therefore, investors can allocate smaller positions to such stocks, and still keep plenty of cash on the sidelines.
And then there’s the Amazon (NASDAQ:AMZN) effect. Most investors know that before Amazon became one of the FAANG stocks, it was a small-cap online book seller. But if you had bought the stock back in those days, you’d have done very well.
I’m not going to promise you that any of the stocks in this presentation will be the next Amazon. But even the most conservative investor has a desire to find the next big thing while it’s still trading at a cheap price. If that’s you, then here are seven cheap penny stocks to buy while they’re still trading at bargain prices.
| AMRS | Amyris | $2.82 |
| MMAT | Meta Materials | $1.54 |
| BNGO | Bionano Genomics | $2.26 |
| BTG | B2Gold | $3.08 |
| CGC | Canopy Growth | $3.26 |
| FCEL | FuelCell Energy | $3.01 |
| HOFV | Hall of Fame Resort & Entertainment | $0.60 |
Amyris (AMRS)
Amyris (NASDAQ:AMRS) is a specialized biotechnology company that is a pioneer in the nascent field of synthetic biology. It’s not uncommon to find biotech stocks among the hundreds of penny stocks that investors can buy. Many of these companies are not only unprofitable, but are still in the pre-revenue stage.
That’s not the case with Amyris. The company has patented ingredients that come from reusable sources like sugar cane. One of their biggest breakthroughs is based upon a molecule called hemisqualene. This molecule is being used in a number of home beauty products, and happens to resonate with informed consumers looking for natural ingredients.
Accordingly, the popularity of hemisqualene is allowing Amyris to leverage the molecule with enterprise-level customers. Analysts are now forecasting 37% average yearly growth through 2026. However, some analysts now believe the company could double its revenue projections.
That would be welcome news for shareholders. AMRS stock has been cut in half in 2022, but analysts give the stock a consensus price target of $9.50.
Meta Materials (MMAT)
Meta Materials (NASDAQ:MMAT) manufactures and develops “functional materials.” These materials are “composite structures, consisting of conventional materials such as metals and plastics that are engineered by Meta scientists to exhibit new or enhanced properties.”
Functional materials are said to have many applications, and Meta Materials is on the cutting edge of technological breakthroughs in this area. The company is looking to develop intellectual property that the company can sell to the right partners.
To that end, in 2021 Meta Materials formed a scientific advisory board which will allow the company to develop stronger, more diverse products. This move appears to be paying off, based on some recent partnerships announced by the company.
Like many companies that are trading as penny stocks, Meta Materials will not be profitable for many years. That said, revenue is unlikely to be a problem. The company is not heavily covered by analysts, but those that do cover this stock are projecting strong revenue growth over the next five years.
Bionano Genomics (BNGO)
Genomics and gene editing are likely to be one of the most intriguing driving forces of the next decade and beyond. Bionano Genomics (NASDAQ:BNGO) is a pioneer in the field of nanoscale gene imaging and analysis. The company already has a product, the Saphyr system, that is commercially-available today.
And as Josh Enomoto recently wrote, the company “announced landmark research centering on its optical genome mapping (OGM) technology to accurately identify certain rare diseases.”
This may still be a case of the company being ahead of its time. Bionano still seems to be spending a heavily on SG&A in a bid to sell its Saphyr system. This has hurt margins, which has been reflected in the lack of movement in BNGO stock for much of 2022.
That said, finding profitable investments requires getting in on the ground floor. Bionano is years away from turning a profit, but the company’s revenue is expected to grow sharply over the next five years.
B2 Gold (BTG)
B2Gold (NYSE:BTG) combines speculation with diversification. A well-diversified portfolio should have some exposure to precious metals. And there are many reasons why gold deserves a closer look.
Of course, one argument against investing in gold is that gold hasn’t moved much in 2022, despite the fact that inflation soared to 40-year highs. What good is an inflation hedge if it doesn’t move higher against the backdrop of high inflation?
My reason for owning gold is as a measure of insurance against a lot of uncertainty. Accordingly, an inexpensive way to own gold is via owning mining stocks. This brings me full circle back to B2Gold, which operates mines in Mali, Namibia and the Philippines. The company has a healthy balance sheet and is generating both revenue and profit.
Canopy Growth (CGC)
When I think of cheap penny stocks to buy, I can’t help but think of the cannabis sector. The cannabis bubble seems to have been centuries ago, but it really hasn’t been that long. All along the way, Canopy Growth (NASDAQ:CGC) has been one of the stocks with the most potential in the space.
Of course, when the bubble burst, CGC stock fell too. And as a Canadian-based company, it seemed to be ill prepared to enter the U.S. market should marijuana be legalized at the federal level.
But that changed with the company’s acquisition of Acreage Holdings (OTCMKTS:ACRDF) which has operation in 10 U.S. states. This gives Canopy a foothold in the American market.
This news was good enough to give CGC stock a nice 10% bump. Analysts also bumped up their price target on the stock to $7.26. Now, for the company to hit that price target, much will be required in terms of a movement toward legalization in the U.S. With Republicans likely to take control of at least one chamber of Congress, this could be a pipe dream. That said, even if the recreational cannabis market doesn’t open next year, Canopy Growth may be worth buying as a long-term hold for those betting on legalization. To me, it seems that legalization is really a matter of when, not if.
FuelCell Energy (FCEL)
The energy sector is likely to continue to be one of the most appealing sectors for investors in 2023. Unfortunately for renewable energy investors, hydrogen stocks haven’t been participating in the rally. That brings me to Fuelcell Energy (NASDAQ:FCEL).
FuelCell is a company, as it names suggest, that provides hydrogen fuel cells for applications like on-site power generation, carbon capture, and hydrogen-based storage. The company’s customers include utilities, hospitals, and governments.
Investing in hydrogen stocks will require an abundance of patience. The most recognizable companies in this sector continue to burn cash. However, FuelCell does have a backlog of orders that ensures some stability when it comes to revenue generation. Profitability is another story, but that’s where the patience comes in.
The company is on pace to generate over $100 million in revenue in 2022. However, industry research suggests that the hydrogen fuel cell market could be near $12 billion by 2028. That kind of growth should get the attention of speculative investors.
Hall of Fame Resort & Entertainment (HOFV)
The last stock on this list of cheap penny stocks to buy is a true penny stock. Hall of Fame Resort & Entertainment (NASDAQ:HOFV) is developing football-themed content and real estate around the Pro Football Hall of Fame in Canton, Ohio. The two are separate entities, but share a common vision.
HOFV has three verticals: on-site asset creation, media, and gaming. The company already has revenue coming in the door from the attractions that are already built. It generated $11 million in revenue last year and is on pace to surpass those numbers in 2022. By 2026, the company is projecting to bring in $150 million in revenue.
When complete, the company will have a planned hotel and water park in its portfolio of revenue-generating assets. Notably, the company appears to have most of the financing for these investments Lind up. And perhaps more importantly, the company recently received conditional approval from the state of Ohio for mobile and retail sports books.
But a note of caution is warranted. The stock has been trading below $1 for over a year, mostly due to the market sell-off. Additionally, in late September, the board of directors called a special meeting where shareholders approved a reverse stock split. That means the board can declare a split of up to 1:25 sometime between now and May 5, 2023. Thus, with the market failing to gain traction, it may be a necessary move to bring the stock into compliance.
Penny Stocks
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris Markoch had a LONG position in HOFV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.