Penny stocks tend to be risky. Most companies end up with a low share price due to some major fundamental problem with the business, such as a bad balance sheet or low levels of profitability.
However, there can be diamonds in the rough. If you’re looking for a low-priced penny stock bargain for January 2024, these three stocks should be at the top of your watchlist.
Planet Labs (PL)
Planet Labs (NYSE:PL) is a company focused on the Earth observability category of the space industry. Specifically, Planet Labs takes detailed images of the planet frequently and sells this information to clients.
Earth observability has a broad range of customers. Originally, the industry took off due to government demand: intelligence agencies and defense departments prize Planet’s detailed satellite imagery. The recent conflicts in Ukraine and the Middle East highlight the importance of this sort of information.
However, Earth observability isn’t just about government clients. Commercial enterprises such as agriculture, energy, shipping and mining sector customers increasingly rely on Planet’s satellite intelligence to make informed decisions about their operations. There are considerable scale benefits here; as Planet gets more imagery capacity, it can lower its price per image, which expands the overall marketplace.
Planet hasn’t yet reached consistent profitability, which is a big reason why shares are still in penny stock territory. However, the company has more than $300 million of cash, and its revenues are hitting new highs, suggesting that Planet has plenty of runway to take flight in coming years.
Ambev (NYSE:ABEV) is Brazil’s largest beer brewing company. It dominates Brazilian beer and has a leading position in several other LatAm countries, including Argentina. Unlike developed countries, beer continues to be a growth opportunity in emerging markets such as Brazil.
Ambev operates as a subsidiary of Anheuser-Busch InBev (NYSE:BUD). While the parent company had its share of problems in 2023, Ambev is much stronger. Craft beer hasn’t had the same negative impact in LatAm as in the North American market. Ambev has wisely avoided the political controversies that have tripped up its corporate parent. Furthermore, Ambev has a net cash position; the lack of debt gives it flexibility within the volatile Brazilian economy.
Profitability is a rare feature among penny stocks. However, ABEV stock bucks the trend. Shares go for 14 times forward earnings and offer a greater than 5% dividend yield.
Traeger (NYSE:COOK) designs, sources and distributes wood pellet barbecue grills. Home grilling has gained popularity as consumers have taken to more unique and interesting culinary experiences. This trend has been particularly true with younger consumers such as millennials.
Traeger debuted with a smoking hot IPO back in 2021. That was the height of the stay-at-home consumer boom. With restaurants closing down and people having more free time, cooking equipment sales such as Traeger grills soared.
However, the company overexpanded based on this temporary success, leading to sizable operating losses once grill sales fell off.
However, it appears that Traeger is through the worst of the downturn. Inventory levels have normalized, and analysts expect a return to profitability later this year. Shares are on sale, with COOK stock still down 90% from its 2021 peak. Furthermore, B. Riley’s Anna Glaessgen upgraded the stock, thinking the company will exceed the market’s muted expectations for the firm.
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On the date of publication, Ian Bezek held a long position in ABEV stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.