Estimated read time: 4 minutes
Publication date: 18th Oct 2021 11:56 GMT+1
A lot of traders and investors are huge fans of penny stocks. These stocks cost very little and if they break out upwards, there is a lot of profit for the taking. While it is true that penny stocks come with their own share of risks, the lure of exponential gains is a temptation many find hard to resist.
However, smart analysis and proper risk evaluation can see investors make good profits in these stocks. Here are three penny stocks that I have analyzed and think are decent buys:
Elevate Credit (NYSE: ELVT) is an America-based company that provides innovative and responsible online credit solutions to the non-prime consumers of the country and helps them in securing a brighter financial future. Besides that, this fintech company is also known for rewarding those borrowers who have good financial behaviour with many benefits such as lower interest rates, free financial training, and free credit monitoring.
Elevate Credit’s business is risky because it offers credit to people that are ignored by large financial institutions. That’s why most investors often shy away from investing in it. However, it is also true that the ongoing economic scenario in the country and government interventions have made it favourable for the lenders by reducing their loan losses and giving them plentiful profits.
At present Elevate Credit is trading just 5.6 times its earnings which is much lower when compared to the valuations of similar fin-tech companies. Moreover, compared to most of its peers Elevate Credit is much more profitable and therefore seems more reliable. The stock is currently trading at $3.71 and the average analyst target for the stock is $4.75, a potential upside of over 28%.
Electrameccanica Vehicles Corp
Electrameccanica Vehicles (NASDAQ: SOLO) is a Canada-based company that designs and makes electric vehicles and is famous for its EV Solo, which is an all-electric single-seat three-wheeled vehicle. This revolutionary concept of Solo distinguishes the company from most other EV manufacturers in the market.
The company markets Solo to urban residents as a solution for short-distance driving. Additionally, like most other EV manufacturers, this company also has its own cargo version of EV that consists of an enlarged trunk and targets last-mile delivery. The company wishes to ship Solo by the end of this year and has been taking reservations on the car for $250.
Electrameccanica also intends to expand its production line with two additional all-electric vehicles called Electric Roadster and sporty Tofino that would be styled like traditional cars. Moreover, recently it has partnered with Robert Bosch LLC to set up a service network of independent automotive repair shops for the servicing and maintenance of its upcoming Solo EVs. The stock is trading at $3.37 and has an average target price of $9.06, a potential upside of 169%.
Express Inc (NYSE: EXPR) is an America-based speciality fashion retail network that mainly caters to young men and women. The company operates retail outlets in high-traffic shopping malls, lifestyle centers, and street locations across the United States and has a chain of 635 stores across the United States and Puerto Rico.
In the last year, while the retail sector was struggling with the effects of the COVID-19 pandemic, this company stood out and performed much better than its peers with its shares surging by more than 480% during the one-year period. Also, as per its last quarter results, the company has been profitable and expects its earnings to grow at the rate of 95.9% by the year-end. As a result, Express can be an intriguing choice for investors right now. Express Inc closed last week at $4.36 and has an average target price of $6, a potential upside of almost 37%.
The above-mentioned stocks despite being in the penny stocks category are performing quite well and can potentially provide valuable returns to their investors in the days to come. However, these stocks are not for every kind of investor due to their inherent risky nature and should be considered only by those investors who have thorough knowledge about the market and have a substantial risk appetite.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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