While most market experts advise their clients away from penny stocks to buy (for good reason, let’s be honest), many folks can’t resist scratching that itch. I get it. Having speculated myself in the wild cryptocurrency sector, I own firsthand experience of the pain and rare joys of gambling.
Therefore, I’m not going to provide any moral lectures about penny stocks, other than to say you must know what you’re getting yourself into. Beyond that, you should only leverage the money you can afford to lose. Anything more than pocket change in this sector and you may be signing divorce papers soon. If I haven’t scared you away, you might be ready to dip into the Wild West of the equities sector. If so, below are seven potentially must-have penny stocks to include in the speculation side of your portfolio.
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Penny Stocks to Buy: Flexible Solutions (FSI)
Based out of Canada, Flexible Solutions (NYSEAMERICAN:FSI) specializes in the development of biodegradable polymers. Through this key business, the company is able to increase crop yield, improve oil and gas operations, reduce the environmental footprint in cleaning and water treatment, save water and save energy, according to its website. Therefore, on relevance alone, FSI warrants closer inspection despite ranking among the penny stocks.
Currently, Flexible features a market capitalization of $38.3 million. The market prices shares at $3.09 each. On a year-to-date basis, FSI gave up 20% of equity value. However, in the trailing five days, the stock gained over 3%, possibly indicating a recovery trek.
On the financials, Flexible brings plenty of intrigues. As of this writing, the market prices FSI at 10 times trailing-12-month (TTM) earnings, making it modestly undervalued. In addition, FSI trades at 5.7 times forward earnings. In contrast, the median forward price-earnings ratio is 14.5 times, suggesting that FSI delivers great value.
Penny Stocks to Buy: Alkane Resources (ALKEF)
One of the penny stocks that I’ve discussed rather frequently over the past few months, Alkane Resources (OTCMKTS:ALKEF) calls Australia home. Per its website, the company aims to be its nation’s next multi-mine gold producer. Predominantly, Alkane commands a presence in the central region of New South Wales. However, it features projects throughout the land Down Under.
Fundamentally, gold doesn’t perform well during a deflationary cycle. However, with the Federal Reserve committed to shrinking liquidity in the monetary system, relative deflation is very much on tap. Presumably, then, gold should underperform. However, in recent sessions, the yellow metal has been lively. It’s possible that the fear trade could be a cynically positive contributor.
Another factor that could bolster ALKEF as one of the penny stocks to gamble on centers on the financials. Per Gurufocus.com, Alkane represents a significantly undervalued business. Against traditional metrics, the market prices ALKEF at 5.12 times trailing earnings. In contrast, the industry median PE ratio is 12 times.
Penny Stocks to Buy: Vitreous Glass (VCIGF)
Headquartered in Alberta, Canada, Vitreous Glass (OTCMKTS:VCIGF) may appeal to those with sensibilities toward environmental, social, and governance (ESG) initiatives. Specifically, Vitreous focuses on recycling western Canada’s glass products. Notably, the global glass recycling market may hit a valuation of $4.57 billion by 2028 (compared to $3.44 billion in 2022).
At the time of writing, Vitreous commands a market cap of 24.1 million CAD (translating to roughly $18 million). Since the start of the year, VCIGF dropped nearly 25% in equity value. As well, in the trailing month, shares slipped more than 12%. Therefore, VCIGF represents one of the riskier names among penny stocks to consider.
However, it also intrigues because of its valuation, featuring a Shiller PE ratio of 9.5 times. In contrast, the median level is nearly 20 times. Further, Vitreous features a cash-to-debt ratio of 16.5 times, ranking above 91% of the competition.
Penny Stocks to Buy: Western Capital Resources (WCRS)
Headquartered in Nebraska, Western Capital Resources (OTCMKTS:WCRS) is a holding company seeking diversified growth through acquisitions of stable businesses. Primarily, management focuses on established lower-middle market businesses with up to $100 million in sales. At the moment, the company carries a market cap of $41.8 million.
To be fair, WCRS ranks among the more speculative names among penny stocks to consider. Since the January opener, WCRS dropped over 39% of its equity value. In the trailing month, it’s also down more than 8%. Nevertheless, it’s also possible that its footprint of diverse business acquisitions could lend Western Capital relevance during these uncertain times.
What’s also very attractive about the company is its balance sheet. Per Gurufocus.com, its cash-to-debt ratio stands at 2.8 times, beating out more than 78% of the competition. As well, WCRS trades at 4 times TTM earnings and 0.25 times sales. Both stats rate as significantly undervalued for the sector.
Man Group (MNGPF)
Natively listed on the London Stock Exchange, Man Group (OTCMKTS:MNGPF) is an active investment management business. Per its public profile, the company provides a range of funds across liquid and private markets for institutional and private investors globally. It also claims to be the world’s largest publicly traded hedge fund company, reporting $151.4 billion in funds under management as of March 2022.
Fundamentally, Man Group appears to suffer a relevancy challenge due to broader market volatility. Interestingly, though, MNGPF lost less than 4% for the year at the time of writing. This performance compares very favorably to the double-digit losses seen in some major U.S. indices. Moving forward, Man Group can distinguish itself through professional guidance. After all, in a bull market, anyone can appear insightful, with a rising tide conflating luck with genius. However, fund managers really gain their reputation during bear markets.
As a final selling point, MNGPF shares trade at 6.3 times trailing earnings. In contrast, the median PE ratio for the underlying industry is 11.3 times.
Pacific Basin Shipping (PCFBF)
Headquartered in Hong Kong, Pacific Basin Shipping (OTMCKTS:PCFBF) is a maritime transport company engaged in international dry bulk shipping. Per its corporate profile, Pacific Basin operates a fleet of vessels to carry diverse cargoes for many of the world’s leading commodity groups. Fundamentally, the company enjoys a relevant narrative if the global economy normalizes.
Still, that’s a big “if,” making PCFBF one of the riskier names among penny stocks to speculate on. Nevertheless, it appears that investors are feeling feisty about Pacific Basin’s prospects. In the trailing month, for example, PCFBF jumped over 29% in market value. Then again, with a share price of only 31 cents at the time of writing, you might expect this magnitude of mobility.
However, it would also be unfair to dismiss PCFBF as one of the hopeless penny stocks to buy. The company commands a strong balance sheet, featuring an equity-to-asset ratio of 0.71 times, beating out nearly 86% of the competition. Also, shares trade at only 2.5 times forward earnings, making Pacific Basin an undervalued proposition.
Puregold Price Club (PGCMF)
Based out of the Philippines, Puregold Price Club (OTCMKTS:PGCMF) frankly represents pure risk – even compared to other penny stocks. Featuring a relatively unknown business (at least for Americans) and extremely low trading volume, PGCMF is not for the faint of heart. If that wasn’t enough of a warning, perhaps its loss of 46% YTD will sober you up.
Still, the fundamentals provide food for thought. As a chain of low-cost supermarkets, Puregold commands everyday relevancies. However, during this particular rough stretch in the global economy, the company can rise to the forefront. While consumers may cut discretionary purchases, they can’t afford to avoid the essentials unless circumstances truly become dire.
So long as we avoid apocalyptic scenarios, PGCMF could make for an interesting wager among speculative penny stocks. For instance, shares trade at only 8 times forward earnings (compared to the sector median of 13.6 times). As well, Puregold enjoys a relatively stable balance sheet.
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, 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.