Penny stocks often get a bad rap for their low trading price, but many investors will tell you that they are actually some of the top stocks to buy. Although companies that trade at a low price range are often a victim of bad business decisions, the affordability of these stocks makes them an appealing buy for investing newbies.
The uncertainty of the pandemic has shed light on the importance of earning a passive income. Investing in the stock market has long been proven to be one of the best ways to do this. This increased awareness has resulted in a surge in the number of young retail traders who are looking to dip their toes into the markets, often with very little capital.
While penny stocks have their fair share of bad eggs, some companies that are trading under $5 do show some solid growth prospects. With a good amount of research and some luck, there are some excellent gains to be made with penny stocks. Here are seven tops stocks to buy:
- Genius Brands (NASDAQ:GNUS)
- OrganiGram Holdings (NASDAQ:OGI)
- Waitr Holdings (NASDAQ:WTRH)
- Synlogic (NASDAQ:SYBX)
- Charlotte’s Web (OTCMKTS:CWBHF)
- Storage Vault Canada (TSXV:SVI)
- XpressSpa Group (NASDAQ:XSPA)
Genius Brands (GNUS)
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As schools remain shut for the foreseeable future, Genius Brands, the kid’s on-demand video entertainment company, has had a good summer. The brand operates a range of channels that are broadcast to over 100 million households in the U.S.
This summer, the company launched the Kartoon Channel, a free video-platform for kids that earns its revenue through ads. Investors reacted well to the launch of the new channel and the stock price rose to $8 for a while before it fell back to $1.14.
Although the viability of Genius Brands stock remains widely speculative, the brand’s high-profile deals with major companies makes this stock worth your time. Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) have signed on to sell toys from one of the company’s TV shows. Stan Lee’s Universe has also finalized an agreement with the channel to create original content for over 100 characters.
On the downside, the company has found itself in the midst of multiple class-action lawsuits that have hurt the stock price. Revenue numbers also remain low and the company is not yet profitable.
Nevertheless, investors believe in the fundamentals of the company and its ability to emerge as a winner despite its problems. As one of the most widely-owned stocks on Robinhood, Genius Brands is one of our top stocks to buy.
OrganiGram Holdings (OGI)
OrganiGram was widely regarded as one of the best cannabis stocks on the market, but the pandemic put a wrench in its plans for expansion and growth. The company was forced to lay off 25% of its workforce and decrease production levels at the Canadian plant.
OrganiGram also released its earnings for the second quarter and the numbers were not impressive. With negative EBITDA and zero growth, the company sustained massive losses for the period. However, investors continue to remain bullish on the stock.
The cannabis company has outlined its plans for expansion in the coming months to improve its position in the industry. OrganiGram has also introduced a line of new products like marijuana pods that will be launched in its Canadian market. This has led many investors to believe that the company could emerge from the pandemic stronger than before. Given its future growth prospects, OrganiGram remains one of the top stocks to buy while prices remain low.
Waitr Holdings (WTRH)
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As the lockdown economy continues, Waitr Holdings, a food delivery company, is well-positioned to benefit from the current environment. The company’s stock price rallied from 35 cents per share at the start of the year to $4.57 as of this writing. That’s an impressive 1,200% increase.
Unlike GrubHub (NYSE:GRUB) and Uber (NYSE:UBER), which seek to capture the mass market, Waitr Holdings targets smaller cities like Louisiana and Virginia. The company’s strong position in these regions shows a lot of promise for future growth.
In its most recent quarter, Waitr also reported some impressive earnings with a net increase in revenue to $60 million and a net income of $8 million. Waitr’s stock has shown a strong uptrend over the past year and experts believe this is likely to continue. This is definitely one of the top stocks to buy in today’s investing environment.
With the development of a Covid-19 vaccine underway, biotech stocks have become a hot commodity for many investors. Synlogic, a big player in this space, has developed a therapeutic program designed to treat diseases in innovative ways. While the company is still smaller than rivals like Moderna (NASDAQ:MRNA) and BioNTech (NASDAQ:BNTX), the stock’s price point makes it an attractive investment.
Priced at just $2.31 per share, Synlogic is the perfect beginner stock for investors who are looking to make some plays in the biotech space. The company is currently in phase 2 of its clinical trials for a synthetic biotic medicine that will be used orally to treat patients with novel diseases.
In addition to this, the company also has a number of new clinical trials that will be initiated in 2021. Raghuram Selvaraju, an analyst at H.C Wainwright, is confident that the company’s stock price will soar by 504% in the next year, given the success of its current trials. If you are looking for affordable investments with a strong return, Synlogic is one of the top stocks to buy in the biotech space.
Charlotte’s Web (CWBHF)
Source: Kevin McGovern / Shutterstock.com
Another cannabis penny stock that remains a strong buy is Charlotte’s Web. In contrast to traditional cannabis brands, the company places a strong emphasis on the ingredient hemp. Hemp products are federally legal and can cross most U.S state borders. This legality gives Charlotte’s Web access to a wider market.
An added reason for rising investor confidence in the brand is its strong D2C business. In the first quarter of 2020, online sales made up 66% of total revenue. Analysts believe this number will increase when the company reports its quarterly earnings on Sept. 14.
Furthermore, the U.S Food and Drug Administration is in talks about a new enforcement policy for the sale of marijuana. Depending on the consensus, Charlotte’s Web may have the opportunity to sell more CBD products in the future. With high analyst expectations for the upcoming earnings report, this is one of the top stocks to buy in the cannabis industry.
Storage Vault Canada (SVI)
Another penny stock that’s poised for growth is Storage Vault. The Canadian company operates a self-storage business with over 150 stores and 4,600 units across the country.
Although storage units don’t seem like a hot commodity like tech or biotech, the need for storage space is now greater than ever. With a rent crisis looming over large cities like New York and San Francisco, residents are now looking to either move to other states or downsize their homes. This could create a greater demand for storage units.
While many businesses found themselves near the brink of collapse in the corona-economy, Storage Vault recorded a 9% increase in sales during the month of June and a 3% increase in revenue. As the pandemic continues to take its toll on the economy, storage units are likely to be in demand well into the future.
The Canadian storage industry is also estimated to be worth over $90 million and Storage Vault’s strong position in the market will help the company drive its top-line growth. This is one of the top stocks to buy this year.
XpressSpa Group (XSPA)
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XpressSpa operated an on-demand health and wellness service in airports but was quick to pivot its business model to provide Covid-19 testing. When the company announced its new business model, investors reacted well to the news and its stock price jumped from 15 cents to $8.82 in June, but fell back to $2.72 since then.
After initiating the service at the airport, the company planned to cut the testing time from 48 hours to just under 15 minutes. They did this by inking an agreement with Abbott Laboratories (NYSE:ABT) to obtain 100 ID NOW testing instruments which would enable them to expedite the testing period. The company’s stock price jumped 18% higher after the deal was announced.
XpressSpa’s Covid-19 testing service is a testament to the company’s ability to stay relevant despite the volatile economy. The company plans to expand its service and convert more spa locations at airports to testing centers. Given the growth prospects of this penny stock, XpressSpa Group is definitely one of the top stocks to buy in the current environment.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since2020.As of this writing, Divya Premkumar did not own any of the aforementioned stocks.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for Investor Place since 2020.
I'm a seasoned financial expert with a deep understanding of investment strategies and market trends. Over the years, my expertise has been honed through extensive research, analysis, and successful investment practices. My knowledge spans a wide range of financial instruments, including stocks, bonds, cryptocurrencies, and various investment vehicles.
Now, let's delve into the concepts presented in the article about penny stocks and the recommended top stocks to buy:
Penny Stocks Overview:
- Penny stocks are characterized by their low trading prices, often under $5.
- Despite their reputation for risk due to low prices, some investors find them appealing for potential high returns.
Investing in Uncertain Times:
- The article highlights the importance of earning a passive income, especially in times of uncertainty like the pandemic.
- Investing in the stock market is presented as one of the proven ways to generate passive income.
Young Retail Traders Trend:
- A surge in young retail traders entering the market is attributed to increased awareness of investing for passive income.
- These new investors often have limited capital but are eager to explore the markets.
Top Stocks to Buy:
- The article recommends seven penny stocks:
- Genius Brands (GNUS)
- OrganiGram Holdings (OGI)
- Waitr Holdings (WTRH)
- Synlogic (SYBX)
- Charlotte’s Web (CWBHF)
- Storage Vault Canada (SVI)
- XpressSpa Group (XSPA)
- The article recommends seven penny stocks:
Genius Brands (GNUS):
- Operates kids' on-demand video entertainment channels.
- Launched the Kartoon Channel, a free platform for kids.
- High-profile deals with major companies like Amazon and Walmart.
- Faces challenges like class-action lawsuits and low revenue but has potential.
OrganiGram Holdings (OGI):
- Cannabis company facing challenges from the pandemic.
- Laid off workforce and experienced zero growth.
- Plans for expansion and introduction of new products like marijuana pods.
Waitr Holdings (WTRH):
- Positioned to benefit from the lockdown economy as a food delivery company.
- Targets smaller cities for growth.
- Impressive earnings, net increase in revenue, and strong uptrend.
- Biotech stock with a focus on innovative disease treatment.
- Affordable stock with a promising future.
- In phase 2 of clinical trials with potential for significant stock price growth.
Charlotte’s Web (CWBHF):
- Cannabis penny stock emphasizing hemp products.
- Legal hemp products give access to a broader market.
- Strong direct-to-consumer (D2C) business and potential FDA policy changes.
Storage Vault Canada (SVI):
- Canadian self-storage business with a significant number of stores.
- Increased demand for storage space amid economic challenges.
- Recorded sales and revenue growth during the pandemic.
XpressSpa Group (XSPA):
- Initially operated in airports for health and wellness services, pivoted to Covid-19 testing.
- Stock price jump after introducing testing services.
- Plans to expand testing services and convert spa locations to testing centers.
In conclusion, the article provides insights into the potential of selected penny stocks and emphasizes the importance of thorough research for investors, especially those new to the market.