New Tech Penny Stocks to Watch in 2021
Hey Bowtie Nation, Joseph Hogue here with the Let’s Talk Money channel and a special tech penny stocks video for you today!
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Nation, we’re covering some amazing themes in our Ark Invest Big Ideas series. We’re digging into that research on the 15 biggest themes and the stocks to buy. We’ve talked about digital wallets, AI and eCommerce and will be covering bitcoin this Friday…these are the themes and stocks you need to be in over the next 10 years!
But I wanted to incorporate these themes into our penny stock research as well because a lot of those Big Ideas stocks…they’re already billion-dollar monsters! For example, I really like Paypal for digital wallets but it’s already a $300 billion company. For the stock to 10X your money, it’s got to grow to $3 trillion dollars…that’s more than a tenth the size of the entire U.S. economy!
But like we’ve seen on the channel in some of our other penny stocks to buy videos, it takes very little to produce double- and triple-digit returns on these small cap stocks. Shares of Veritone and Tellurian are up as much as 300% since recommending them just last September…and that’s after giving back some returns in the market selloff!
Finding Penny Stocks for Big Returns
So I want to use some of that Big Ideas research to find the tech penny stocks that could be ready to take advantage of these themes for massive returns. In this video, I’ll reveal five tech penny stocks to watch, how they relate to one of those long-term themes and the valuation on each.
5 New Tech Penny Stocks for 2021
Our first penny stock is $189 million Hello Pal, ticker HLLPF in the U.S. and HP on the Canadian exchange.
Hello Pal is a social messaging and livestreaming app that allows users to immediately monetize their livestreams. So unlike YouTube where it can take years to reach that subscriber count to monetize, Hello Pal has tapped into the livestream ecommerce trend in Asia to produce revenue growth of 900% in 2020 and has been cash flow positive since October!
The app has over 5.4 million users and 15,000 active livestreamers across 200 countries. A unique translation feature within the app allows users from all over the world to connect and the company has started to expand outside of China.
I think the app fits well into the virtual worlds theme from the Ark Big Ideas report, that idea that people are going online for gaming, VR and AR experiences to feel more connected with others. Ark estimates the global AR and VR market could produce annualized growth of 59% over the next four years to a $28 billion market opportunity by 2025.
Hello Pal is building on new revenue streams for users and the company including a 1-on-1 matching service, memberships and its moments feature for shareability across social platforms.
Shares trade for 21.7-times trailing sales of $8.1 million which conservatively, I think could double this year considering January revenue was over $2 million. Compare that valuation with something like Snap which trades at 36.3-times trailing sales and is only growing at 62% annually and there’s some real value here. I’ll leave a link to the company’s investor presentation in the video description below so check that out.
Also within that VR/Augmented reality theme is $294 million NexTech AR Solutions, ticher NEXCF, trading since January.
NexTech is positioning itself as a first-mover in AR applications and in some key markets like virtual conferences, eCommerce and advertising. Grandview Research estimates the market for virtual conferences alone could reach $400 billion by 2027 and NextTech offers an advanced augmented reality experience with a built-in translation AI for 64 languages.
The company also has an eCommerce AR platform for an end-to-end solution for online shopping and an ad platform to create 3D assets into AR ads.
NexTech booked 235% revenue growth last year to $20 million and is guiding to more than double that to $50 million this year on the launch of its 3D ad network. Which, even on trailing sales, the shares are priced at 14.7-times revenue but hit that sales target and its 5.8-times forward sales…unheard of in these big theme types of growth stocks.
Now with these penny stock lists, we’ve talked about an investing strategy in the past but I want to cover it quickly again for all you new Bow Tie citizens. Everyone wants to turn these tech penny stocks into thousands overnight but sometimes it doesn’t work that way. This is the kind of startup investing I did as a venture capital analyst and success means investing in a portfolio of five to ten of these and letting them run, giving the stocks the chance over three to five years to grow into billion-dollar companies or more. Some may flop and others may just be market returns but you’ll find enough of those five- and 10X investments for a great portfolio return.
Next here, $145 million Blue Apron, ticker APRN, isn’t a new story but I think could have a new tech opportunity ahead.
The delivery services lets users pick their meals, receive all the ingredients and follow the step-by-step recipes. It’s like a DIY cooking channel with a delivery component.
And while the last few years has seen declining revenue, the company is turning it around with 22% sales growth in the fourth quarter to $115 million with positive growth in average order value, orders per customer and revenue per customer.
Management is expecting double-digit revenue growth this year including as high as 27% in the first quarter to $129 million. The company has a strong balance sheet with $44 million in cash, almost a third of the market cap, against $64 million in long-term debt, so plenty of financial flexibility.
And I think with the advent of drone deliveries, this one increases sales and lowers costs beyond what is forecasted right now. It’s trading at just 0.32-times sales, ridiculously cheap even for a slower growing company but with that opportunity and positioning in delivery, this could be one of the best undiscovered penny stocks in the list.
Remark Holdings, ticker MARK, is a $265 million leader in AI solutions for business applications and that artificial intelligence theme is one of the biggest in the Ark Big Ideas report. Ark estimates the market cap of AI companies could grow to $30 trillion over the next 16 years at a 17% annual growth and contribute more than internet and IT companies combined.
The company makes AI software and solutions in retail, smart city and workplace safety with some real cutting edge ideas. For example in retail, the software produces real-time customer analytics that can actually analyze a customer’s path through a store, combine it with prior data, and use that to guide marketing in-store.
The company won a master contract to transform all 18,000 China Mobile stores into smart stores and its biosafety solution is being used in pandemic response with thermal imaging that can monitor the health of students in real-time.
The company could see huge growth in any of these segments but over the next few years, that push for smart cities could really drive it, being able to analyze road traffic, crime and urban planning.
$146 billion Spark Networks, ticker LOV, is a global online network of dating sites and plays into the theme of an online virtual experience.
The company is positioned as a leader in dating for professionals and thematic groups with more than 12.7 registered users. It’s Zoosk brand alone has 4.5 million monthly users, just under the 5 million users reported by newly listed Bumble.
And as we build out the capabilities for VR and AR experiences, I think this idea of turning the online world into a virtual experience where people are just as comfortable making these types of decisions, I think that really benefits companies like Spark Networks.
The company is well positioned in the $2.3 billion North American market for online dating and expanding into the $7.3 billion global opportunity. Revenue jumped 38% last year to $230 million and a cost savings program helped it drive a record $35 million in EBITDA earnings.
This is another one at an extremely low valuation that I don’t think the market quite realizes the opportunity. Shares trade for just 0.63-times sales and four-times EBITDA. To put that into perspective, Bumble, the newly listed dating site for women is trading at 13.2-times sales…20-times more expensive than shares of Spark.
While growth may slow this year as people get back out, the company is tapped into that idea of online growing into a virtual world and that means strong long-term sales growth.
These five tech penny stocks are on the verge of the biggest trends and have room to grow. One of these small cap companies could be your next 10X investment. Invest in these new tech penny stocks, the earlier the better.
