No doubt, a strong portfolio typically includes stocks with robust fundamentals and solid track records. In a bull market, these investments provide healthy returns and protect against capital erosion. However, we should not overlook the benefits of owning penny stocks, either. The get-rich-quick angle with these picks is a real possibility. That’s why they continue to garner investor interest.
That said, penny stocks can also be a double-edged sword. Naturally, everyone is attracted to the low price tag. But it’s extremely important to understand which stocks are trading at a bargain and which ones are trading cheaply. The former can have real potential to super-charge your portfolio.
With the retail-trading frenzy we’ve seen this year, it seems like it doesn’t take much to move the needle for these low-priced picks. This is due in part to highly active social media forums who closely follow the sector, such as Reddit’s r/WallStreetBets. Ultimately, though, everyone is looking for massive profits from their investments.
So, without further ado, here are seven top penny stocks that have millionaire-maker potential.
- Surgalign Holdings (NASDAQ:SRGA)
- Flexion Therapeutics (NASDAQ:FLXN)
- Seanergy Maritime (NASDAQ:SHIP)
- Ceragon (NASDAQ:CRNT)
- Hive Blockchain (NASDAQ:HVBT)
- Carlotz (NASDAQ:LOTZ)
- Trivago (NASDAQ:TRVG)
Penny Stocks to Buy: Surgalign (SRGA)
First up on this list of penny stocks is Surgalign, a medical-device developer that focuses on spinal ailments and digital surgery. This company markets a variety of devices for both the surgical and non-surgical treatment of spinal issues.
Last year, the reductions and cancellations of in-patient procedures weighed in on its top-line. However, Surgalign’s stellar second-quarter results suggest that the company is now back with a bang and looking to solidify its position in the industry.
In Q2, SRGA reported a healthy 20.9% increase in revenues on a year-over-year (YOY) basis at $24.8 million. Moreover, its gross margin was an incredible 71% (Page 28), which is exceptional for a medical device developer. The total addressable market for lumbar spine procedures stands at $5 billion, according to management. If the company could knock off just 5% of that market, it would be looking at $250 million in revenue. Hence, SRGA stock has a lot of potential to grow exponentially in the coming years.
Flexion Therapeutics (FLXN)
Next up on this list of penny stocks is FLXN stock. Flexion is a biopharma company that specializes in drugs treating local pain relief for patients suffering from musculoskeletal conditions. Specifically, it focuses on pain-relief medications for osteoarthritis.
Flexion’s flagship drug — Zilretta — is currently used as an osteoarthritis pain reliever for the knee. However, the treatment is also being tested for shoulder indications.
Despite the ongoing pandemic, this company’s Q2 results were highly encouraging. For example, revenues shot up to $28.2 million, growing by over 82% from the prior-year period. Additionally, Flexion’s net loss fared better than estimates. The company also had $131.23 million in cash in Q2 as well as expected cash runway into 2023. Finally, in addition to Zilretta, this business has other promising candidates in the early stages of development.
Despite strong forward sales estimates, FLXN stock trades at just 1.9 times forward sales according to Seeking Alpha.
Penny Stocks to Buy: Seanergy Maritime (SHIP)
Based in Greece, this next entry on my list of penny stocks is a dry bulk shipper called Seanergy Maritime Holdings.
Understandably, this company had a rough 2020. However, it has picked up the pace in its past few quarters, posting double-digit revenue growth from the prior-year periods. Moreover, Seaenergy has been aggressively optimizing its fleet, pushing its net asset value (NAV) higher. Still, SHIP stock trades at a significant discount to its NAV and future outlook.
The company’s second-quarter revenues of $22.5 million represented a more than 380% improvement on a YOY basis. Moreover, its earnings per share (EPS) of 1 cent was in line with estimates. Through effective financial management, SHIP has expanded its fleet without compromising flexibility. This is perhaps why it has such impressive forward operating cash flow growth estimates as well.
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Ceragon (CRNT)
Based in Israel, Ceragon is a 5G play that has been in the news recently following an announcement of $35 million worth of follow-on orders from top-tier mobile operators in India. Moreover, the company also announced that it signed a multi-year service agreement with a “leading US service provider.” Now, management believes it’s in a solid position to take advantage of the 5G transition. Despite these positives, though, CRNT stock is trading at just 1.1 times forward sales.
After several rough quarters in 2020, Ceragon has posted some positive revenue growth numbers. In Q2 2021, revenues of $68.6 million were a 9.9% improvement from the same period last year. Moreover, the company’s adjusted gross margin was at a healthy 31.5%, with an operating income of $500,000 compared to a sizeable net loss of $3.5 million in Q2 2020.
This company expects to beat its consensus revenue estimates for the year at $284.2 million. Therefore, with the accelerating growth of the 5G market, expect CRNT stock to make big waves in the coming years. This name is definitely an interesting pick among the penny stocks.
Penny Stocks to Buy: Hive Blockchain (HVBT)
Cryptocurrency miner Hive Blockchain is currently one of the largest publicly traded Ethereum (CCC:ETH-USD) miners on the market. In fact, Hive Blockchain “provides over 5% of Ethereum’s total network hash rate.” Moreover, it also has a substantial hash rate with the industry leader in Bitcoin (CCC:BTC-USD).
However, the transition of Ethereum to a proof-of-stake model could render mining redundant. True, miners stand to indirectly benefit from the price appreciation resulting from the update or any increases in price due to stronger “tokenomics.” Regardless, though, Hive is most likely to take a substantial hit in revenues in the short term. That said, it should also effectively repurpose its GPU fleet to build top-class data centers in the long run.
All in all, this is an intriguing pick among the penny stocks.
Carlotz (LOTZ)
Next on this list of penny stocks is Carlotz, a company that operates a used car consignment and retail remarketing business. Despite recent headwinds, this company has done an excellent job of expanding its top line and executing growth initiatives. For example, it has opened up new locations in the past six months, hired new employees and undertaken major marketing initiatives. Right now, LOTZ stock is trading at just 1.71 times forward sales despite substantial forward revenue growth estimates.
In the six months ended Jun. 30, 2021, Carlotz reported revenues of $107 million, which came in roughly two times revenues in the same period last year. It has, however, struggled with operating expenses. That subsequently led to a large increase in net losses.
However, in the long run, this business model should show resilience. The shortages should be sorted, new car prices will rise and sellers should return as consignment partners.
Penny Stocks to Buy: Trivago (TRVG)
Last up on this list of penny stocks is Trivago. A hotel booking platform, Trivago suffered along with the rest of the travel sector due to the Covid-19 pandemic. This is evidenced in its earnings results from the first quarter of 2020 to 2021, where revenues tanked in a big way. However, in its most recent quarter, revenues rose to 95.5 million euros ($112 million), growing by 493% YOY. Therefore, TRVG stock appears to be back in business and should do well as the pandemic eases.
Currently, management is optimistic about the pent-up demand in the second half of the year with the broader economic reopening across the world. Moreover, the company has done well to control costs, scaling back on marketing expenses. As a result, net loss in its most recent quarter was 3.3 million euros ($3.87 million), significantly lower than previous quarters.
Although it might take a year for the company to recover fully, opportunities are waiting for this one in the post-Covid world. It could blast off soon enough.
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