Penny stocks are those priced under $10 but are considered high-risk investments due to the volatility associated with these tickers. However, ever the world’s largest companies such as Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL) were once penny stocks and now command trillion-dollar valuations.
While investing in penny stocks you need to analyze the company’s business model and its ability to gain traction in the market where they operate. Let’s take a look at three penny stocks investors can consider buying right now.
Valued at $5 billion by market cap, shares of SoFi Technologies (NASDAQ: SOFI) are priced at $6.33 at the time of writing. The fintech company went public last year and is currently trading 75% below all-time highs.
SoFi offers customers a wide range of financial products that include refinancing of student and auto loans. It also provides mortgages, credit cards, personal loans, and investing services on its platform.
The company’s sales grew by 63% year over year to $1.01 billion in 2021. SoFi ended the last year with a customer base of 3.5 million, indicating year-over-year growth of 87%. But similar to most other growth stocks, SoFi also reports an adjusted loss.
In 2021, its loss per share stood at $1 and is forecast to narrow to $0.45 in 2022 and $0.24 in 2023. Comparatively, its revenue is estimated to rise by 45% to $1.47 billion in 2022 and by 42.4% to $2.1 billion in 2023.
SoFi’s widening product portfolio allowed the company to onboard 523,000 customers in Q4. It also added 900,000 product accounts bringing its total to 5.2 million, compared to 2.5 million in 2020.
SoFi is valued at an attractive forward price to 2022 sales multiple of 3.4x and continues to grow at an aggressive pace. Compared to Wall Street estimates, SoFi stock is trading at a discount of 120% right now.
GreenPower Motor Company
A Canada-based company, operating in the electric vehicle space, GreenPower Motor (NASDAQ: GP) is valued at $150 million by market cap. It designs, manufactures, and distributed electric vehicles for commercial markets in the U.S. and Canada. GreenPower offers a suite of electric medium and heavy-duty vehicles as well as transit buses, school buses, and cargo vans. It sells and leases these vehicles to customers directly and via distributors.
Some of GreenPower’s most popular vehicles include the EV Star Light truck and the BEAST school bus. In the fiscal Q3 of 2022 (ended in December), the company delivered 15 Star Light vehicles and 8 BEAST buses.
GreenPower reported sales of $5.3 million in Q3, an increase of 121% year over year. Its gross margins also rose to 27.8% from 21.5% in this period. GreenPower ended the year with $28.6 million in inventory which includes $10.7 million in ready-to-ship vehicles.
Further, it also signed a four-year agreement with Workhorse to deliver 1,500 EV Star cab and chassis which will be a key revenue driver for the company.
The penny final stock on my list is Niu Technologies (NASDAQ: NIU) which is a China-based electric vehicle manufacturer. Valued at a market cap of $726 million, Niu designs, manufactures, and sells smart electric scooters.
In Q4 of 2021, Niu’s e-scooter sales rose by 58.3% year over year while sales were up 46.7% at $149.2 million. Its net income stood at $7.2 million in Q4. The company’s total e-scooter sales shot up by 72.5% year over year in 2021 while revenue stood at $576 million, an increase of 51.6% compared to 2020. Niu also managed to increase its net income to $34 million in 2021, up from $25.5 million in 2020.
Analysts tracking Niu stock expect sales to rise by 61% to $904 million in 2022 and by 29.5% to $1.17 billion in 2023. Its adjusted earnings are also forecast to rise from $0.51 in 2021 to $0.71 in 2022 and $1 in 2023.
Niu stock is valued at an attractive price to sales multiple of less than 1x and a price to earnings ratio of 13.3x, making it one of the cheapest electric stocks on the planet.