With the rise of the Reddit military and meme inventory buying and selling, penny shares have been in focus. There are some penny shares which might be purely speculative. Nevertheless, there are others with first rate fundamentals.
Given the present funding state of affairs and methods, I’d not hesitate to allocate some funds to those penny shares. It’s price noting that American Leisure (NYSE:AMC) inventory was buying and selling at $2 firstly of the yr. Presently, the inventory is increased by over 2,422%.
After all, I’m not suggesting that every one penny shares can ship comparable returns. Nevertheless, even when one or two shares from the penny inventory portfolio fireplace, it’s sufficient to spice up portfolio returns. AMC inventory is an effective instance. The poster baby of meme inventory buying and selling, GameStop (NYSE:GME) is one other good instance.
This column will concentrate on seven penny shares which might be buying and selling beneath $1. I imagine that these firms have fundamentals price speaking about. If market sentiment stays constructive, these penny shares can ship wholesome returns.
Let’s take a deeper look into the next names:
- Borr Drilling (NYSE:BORR)
- Nexe Improvements (OTCMKTS:NEXNF)
- Gold Customary Ventures (NYSE:GSV)
- Zomedica (NYSE:ZOM)
- Bare Model Group (NASDAQ:NAKD)
- Bombardier (OTCMKTS:BDRBF)
- Pyxis Tankers (NASDAQ:PXS)
Penny Shares Beneath a Penny: Borr Drilling (BORR)
BORR inventory is among the many prime penny shares from the vitality area. Presently, the inventory trades at 90 cents and appears enticing for a breakout on the upside.
Brent oil is already above $70 per barrel and option traders are betting on oil returning to $100 per barrel. With accelerating world GDP (gross home product) development and expansionary financial insurance policies, this appears seemingly.
As a supplier of contemporary offshore drilling rigs, Borr appears nicely positioned to profit from constructive business tailwinds. For the primary quarter of 2021, the corporate was awarded 17 new contracts with a complete backlog of $458 million in potential income.
Because the order backlog swells together with a rise in day-rates, Borr Drilling is positioned to generate wholesome EBITDA (earnings earlier than curiosity, taxes, depreciation and amortization) and money flows. Presently, the corporate has 10 heat stacked rigs and 5 rigs below development. Even at a day-rate of $80,000, these rigs can ship an annual EBITDA of $150 million.
Clearly, with increased order consumption, BORR inventory appears positioned for a surge within the subsequent few quarters. If oil does maintain above $70 per barrel, offshore rig contracts will probably be more and more extra long-term than short-term in nature. This can considerably enhance the order backlog and cash-flow visibility.
Nexe Improvements (NEXNF)
Nexe Improvements is a Canadian firm that’s centered on lowering using plastic pods. Particularly, amongst espresso customers globally. The corporate believes that greater than 56 billion single-use espresso pods are discarded in landfills yearly.
To beat this problem, the corporate has a patented NEXE pod, which is plant-based and absolutely compostable. By Q3 2021, the corporate expects to have a production of 25 million coffee pods. Manufacturing is more likely to be ramped as much as 220 million by Q1 2022. Due to this fact, the corporate is at a development inflection level. Nexe can be taking a look at licensing out know-how to giant manufacturers.
Moreover the espresso pods, Nexe Innovation has additionally launched the XOMA superfood model. The corporate’s present merchandise embrace mushroom and keto espresso. Within the coming quarters, extra merchandise are more likely to be launched. This additionally serves as a income upside issue.
In February 2021, Nexe additionally introduced the development and prototyping of single-use disposable facemasks. The plant-based face masks might be one other potential gamechanger for the corporate within the coming quarters.
NEXNF inventory has declined within the latest previous due to equity dilution. Nevertheless, with a robust money buffer, the corporate is positioned for development and funding in innovation. It’s seemingly that the inventory will get away on the upside after some consolidation.
Gold Customary Ventures (GSV)
Increased inflation has been a serious concern within the latest previous. Nevertheless, central banks have maintained that expansionary financial insurance policies will maintain. Gold presently trades at $1,880 an oz. If the rise in inflation is sustained, an enormous rally in gold is impending.
It’s a good suggestion to personal some giant caps and a few penny shares from the gold mining sector. GSV inventory seems to be attention-grabbing at present ranges of 59 cents.
As an summary, Gold Customary has 20,000 hectares of land package on the Carlin Trend. The corporate is the biggest land holder on Carlin Pattern behind Nevada Gold Mines. In accordance with the corporate’s pre-feasibility research, the asset has eight years of life. Additional, the all-in-sustaining-cost is anticipated at simply over $700 an oz.
Even when gold is at $1,600 an oz, the corporate estimates an after-tax web current worth (NPV) (5%) of $387 million. GSV inventory presently trades at a market capitalization of $207.4 million. Clearly, valuations appear enticing with gold close to $1,900 an oz.
The corporate’s program for the present yr goals at growing potential reserves by means of exploration at Pinion & Darkish Star. If there’s an upside in useful resource evaluation, it should translate into re-valuation.
General, GSV inventory is an effective guess amongst penny shares, with increased valuable steel costs being the important thing constructive issue.
Earlier this yr, ZOM inventory touched a excessive of $2.91. Nevertheless, after fairness dilution and a capital elevate of $173.5 million, the inventory has corrected and presently trades at 90 cents. This seems to be like a superb alternative to build up the inventory.
As an summary, Zomedica is an animal well being firm. The corporate’s first product TRUFORMA is already within the markets. The product is a biosensor platform for the detection of thyroid problems in canine and cats. TRUFORMA can be for the detection of adrenal problems in canine.
Just lately, the corporate additionally employed Greg Blair for acquisition and licensing efforts. Greg has previously been associated with companies like Elanco Animal Well being (NYSE:ELAN) and Johnson & Johnson (NYSE:JNJ).
As of March 2021, Zomedica reported $276.6 million in cash and equivalents. The corporate appears nicely positioned for product portfolio growth within the subsequent few years. That is seemingly by means of inside product growth in addition to acquisitions.
By way of near-term catalysts, the corporate expects to speed up income from TRUFORMA gross sales within the subsequent few quarters. Wholesome development on a quarter-on-quarter foundation is more likely to take the inventory increased.
Bare Model Group (NAKD)
NAKD inventory has corrected from January 2021 highs of $3.40 to present ranges of 68 cents. I imagine that it’s among the many enticing penny shares to contemplate.
As an summary, Bare Manufacturers is within the enterprise of intimate attire and swimwear merchandise. With the pandemic accelerating the shift to e-commerce, the corporate introduced a enterprise transformation plan in January 2021. Bare Manufacturers intends to focus solely on the e-commerce platform, and the corporate is within the means of divesting its brick-and-mortar phase.
An apparent benefit for Bare Manufacturers is low capital investments. To speed up the enterprise transformation, the corporate has raised funds by means of fairness dilution. That’s one of many key causes for a pointy correction within the inventory.
As of Q1 2021, the corporate reported money and equivalents of $270 million. This provides the corporate ample scope for investing within the on-line platform. On the similar time, Bare Manufacturers is in search of acquisitions. Progress on these fronts can lead to renewed inventory upside.
General, NAKD inventory looks as if a speculative guess. Nevertheless, if the corporate can speed up development by means of the net channel, the inventory has scope for ample upside.
BDRBF inventory has trended increased by 135% within the final six months. Nevertheless, with the financial restoration, the constructive momentum is more likely to maintain.
As an summary, Bombardier is within the enterprise of producing enterprise jets and business plane. For Q1 2021, the corporate reported income of $1.3 billion with 80% of the income coming from the sale of 26 plane. For a similar interval, the corporate reported EBITDA of $123 million, which suggests an EBITDA margin of 9.2%.
It’s additionally price noting that as of March 2021, the corporate reported an order backlog of $10.4 billion. This supplies income visibility for the approaching quarters. On the flip facet, the corporate reported money utilized in operations of $372 million for Q1 2021. If the corporate can cut back the money burn, BDRBF inventory is more likely to pattern increased.
Bombardier additionally has some debt maturities over the subsequent few years. Nevertheless, I don’t see debt refinancing as a priority. Just lately, the corporate initiated a debt offering of $1.2 billion. The first goal of the providing was to refinance debt due in 2021 and 2022.
Additional, the corporate additionally had a money place of $2.6 billion as of March 2021. This provides the corporate buffer to cowl the near-term money burn. General, if the order e book swells and if the EBITDA margin improves, BDRBF inventory is nicely positioned for additional upside.
Pyxis Tankers (PXS)
PXS inventory has been in a decent vary within the latest previous. A breakout on the upside appears imminent for this small-cap inventory. Pyxis has a fleet of 5 tankers that transport refined petroleum merchandise. One other tanker is anticipated to affix the fleet in July 2021.
With the financial downturn and manufacturing cuts in america, the time-charter price for the corporate’s fleet was negatively impacted. Nevertheless, as oil traits increased on gradual financial restoration, the worst appears to be over for the business. For Q1 2021, U.S. refining utilization was at 87%, which was the very best since March 2020.
For Q1 2021, the corporate reported income of $4.3 million at a time-charter equal price of $10,865. Nevertheless, the corporate was at a loss on the working stage. That is more likely to change within the coming quarters as TCE charges enhance. As a matter of truth, 100% of the corporate’s obtainable days for Q2 2021 have been booked at a mean price of $13,330 per day.
Pyxis Tankers can be nicely positioned from a monetary perspective to pursue vessel acquisition as soon as restoration in time constitution charges maintain. With potential business tailwinds, PXS inventory seems to be enticing at present ranges of 88 cents.
On the date of publication, Faisal Humayun was lengthy Borr Drilling (NYSE:BORR) inventory. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior analysis analyst with 12 years of business expertise within the area of credit score analysis, fairness analysis and monetary modelling. Faisal has authored over 1,500 inventory particular articles with concentrate on the know-how, vitality and commodities sector.