Penny stocks have a well-deserved reputation for low quality, high risk, and intense volatility. However, by practicing due diligence, you can discover some hidden gems–inexpensive equities with solid fundamentals and strong growth plans–in the most unexpected places.
Below, you’ll find updates on previously discussed penny stocks, followed by a few new intriguing and inexpensive trade ideas that are still flying under most investors’ radars.
Some of the setups described below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds newsletter. Leeds may own shares in some of the investments mentioned, in which case the newsletter will clearly indicate that fact. Please note that penny stocks are notoriously volatile.
Penny Stock Review
ARC Document Solutions, Inc. (ARC)
Since ARC Document Solutions, Inc. (ARC) was featured as a “Penny Stock to Watch” last month, it has soared nearly 19% as positive sentiment continues to grow around the name and its turnaround story.
Upside potential is still abundant here based on the group’s rapidly improving fundamentals, with double-digit earnings per share (EPS) growth and a promising forward P/E ratio of 13.60 suggesting even brighter days ahead for ARC shareholders.
Ceragon Networks Ltd. (CRNT)
5G play Ceragon Networks Ltd. (CRNT) has had a tough six months, to say the least, losing approximately 38% of its value during that time. This is despite numerous contract wins, including a recent $15 million deal with a Tier-1 operator in India.
Like many of its industry peers, Ceragon’s performance has been hurt by supply shortages. Nonetheless, its EPS is expected to grow a stunning 333% next year, and management maintains that the supply issues will likely resolve by the second half of 2022. Once the 5G roll-out resumes, Ceragon Networks stock could be a winner.
New Stocks to Watch
LiqTech International, Inc. (LIQT)
After LiqTech International, Inc. (LIQT) announced some very negative fourth-quarter and full-year 2021 earnings last week (with a sharp drop in revenue as the main focus), shares fell off the proverbial cliff to the tune of around 51%.
A falling knife? Maybe. But the current price may be an interesting entry point on the clean technology stock. LiqTech’s positioning as a “green” company means that it could benefit from the emphasis in the stock market on environmental, social, and governance (ESG) right now, and its EPS is set to climb 125% next year. A very low relative strength index (RSI) of 16.15 may also indicate the stock is highly oversold and due for a rebound.
Wrap Technologies, Inc. (WRAP)
Wrap Technologies, Inc. (WRAP) produces the BolaWrap 150, which it describes as “a hand-held remote restraint device that discharges an eight-foot bola style Kevlar tether to entangle a subject at a range of 10-25 feet.” In contrast to a taser, the BolaWrap promises to restrain “non-compliant” subjects without causing them pain while ensuring a safe space exists between a police officer and the subject.
The stock took a huge hit of 40% after recently announcing the departure of its CEO and CFO, but the reaction may be overdone based on the apparent interest among law enforcement agencies in WRAP’s product line, garnering approximately 70% quarterly growth in revenue as of the most recent quarter.
The net income loss of $24.40 million in the trailing 12 months is certainly worrisome; however, an excellent balance sheet (with current assets outweighing current liabilities by a factor of almost 15x) should hold the company in good stead as it exits the research and development (R&D) stage and accumulates more sales.