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The light market cap weight of penny stocks makes them attractive for investors looking for sharp, accelerated gains in a short-time frame.
Penny stocks are inherently volatile with a high likelihood of going down just as easily. Yet, such a cheap exposure is still attractive if fundamentals are present. Investors have already placed their hooks, as the U.S. Small Cap 2000 Index outperformed S&P 500 at 7.5% vs 3.7%, respectively, over the last 30 days.
Let’s delve into three penny stocks with considerable outcome potential this year and into the future.
Presto Automation, Inc. (PRST)
Source: Andrey Suslov/Shutterstock
Presto Automation (NASDAQ:PRST) goes hand-in-hand with the growing AI hype. Because intelligent software needs hardware, Presto leverages both to provide automation solutions for businesses. Specifically, drive-thru type locals need voice such as Presto Voice and orders automation.
PRST’s solutions could just be the answer to medium sized enterprises amid nationwide pressure to increase minimum wages. Restaurants reducing labor costs without negatively affecting customers would be a tight but feasible balance.
Further, the company published its Q2 FY24 earnings on March 5th. In the prior quarter, Presto’s revenue aligned with its guidance at $4.9 million. Compared to the year-ago quarter, three months ending September, Presto’s total net income has been reduced by 62% to $18.6 million.This came despite reducing operating expenses by 8.4% to $13.5 million.
On the further positive side, the company managed to reduce total liabilities by 23.6% to $70.2 million against $34.1 million worth of total assets. And, the average PRST price target is $1.31 compared to its current $0.35. Year to date (YTD), PRST shares lost 31% of value.
Rigetti Computing, Inc. (RGTI)
Source: Shutterstock
In stark contrast to Presto Automation, Rigetti Computing (NASDAQ:RGTI) is up 82% YTD. The basis of this speculative drive is the company’s pioneering of full-stack quantum computing. Rigetti Computing believes it is the way forward to “decouple computing power from energy consumption.”
This is particularly relevant in the age of rising demand of GPUs for generative AI, which is set to outpace Bitcoin’s mining network. Founded in 2013, Rigetti Computing deployed a commercially available Aspen-M 80-qubit system in 2022 on Amazon Web Services (AWS). A year later, RGTI provided select customers with Ankaa-1 84-qubit system.
Still in the experimental stage, Rigetti Computing’s primary focus aims to bring error rates under 0.5% and scale between 100s to 1000s of qubits (unit of quantum information akin to bits in a classic binary computer). The company is scheduled to release its full-year 2023 earnings on March 25th.
In the Q3 2023 report, the company reported $3.1 million revenue with a $22.2 million net income loss. This was offset by selling $12.7 million worth of stocks. Rigetti Computing announced that the Ankaa-2 84-qubit system will be available to external customers in Q4 FY23.
LM Funding America (LMFA)
Source: shutterstock.com/Monster Ztudio
Following the Great Financial Crisis in 2008, LM Funding America (NASDAQ:LMFA) was established as a way to finance community associations in order to cover attorney fees for debt collection events. With each transaction, LM gets a cut.
Although financial woes have subsided since, the Federal Reserve Bank’s delinquency rate on credit card loans shows an upward trend. As of February 23rd, the 3.10% delinquency rate levels with Q1 2012. The company is scheduled to release full-year 2023 earnings on March 29th.
In the prior Q3 report, LM Funding reported 1,720% year-over-year (YOY) revenue growth to $3.4 million. Although still involved in debt collection, the company now focuses on Bitcoin mining across 5,549 mining rigs. Having mined 117.1 BTC in Q3, LM generated $17.4 million net loss, ending up with $469k in cash.
However, with BTC price going up 50% YTD, LM’s total assets of $38.4 million are significantly boosted against $2.6 million worth of total liabilities. At -8% YTD loss, LMFA stock gained nearly 9% value over the last month, entering the first round of Bitcoin’s bull run.
On Penny Stocks and Low-Volume Stocks:With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand thatInvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More:Penny Stocks —How to Profit Without Getting Scammed
On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.
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