FGI - 7 Most Undervalued Penny Stocks to Buy Now

Now is the best time to scoop up undervalued penny stocks.

The market’s correction in the first half of 2022 was expected with factors like contractionary monetary policies and an economic slowdown. The consequences were much higher for high-beta penny stocks, which have shed a ton of value this year. Hence, you can grab some undervalued penny stocks for chump change.

Because of their moonshot potential, undervalued penny stocks have a certain allure for investors. Penny stocks can be very rewarding, but an outsized risk with these companies needs to be considered.

Though investors should probably tone down their expectations with penny stocks at this time, investing in the right ones will likely add incredible upside potential to your portfolios.

IDEX Ideanomics $0.51

FGI FGI Industries $2.60

MUX McEwen Mining $3.70

MULN Mullen Automotive $0.58

KGC Kinross Gold $3.56

SHIP Seanergy Maritime Holdings $4.40

BORR Borr Drilling $4.40

Ideanomics (IDEX)

Ideanomics (NASDAQ:IDEX) is an up-and-coming speculative electric vehicle (EV) play that experienced strong momentum in the stock market early last year.

It peaked at $5.53 in 2021, a far cry from its current stock price. However, after the market pullback, IDEX stock trades at just 2.2 time’s forward sales, significantly lower than its five-year average which makes it one of the undervalued penny stocks to put on your watch list.

The company leverages its artificial intelligence capabilities to provide electrification solutions for commercial vehicles. Additionally, it also offers fintech solutions.

IDEX has its tentacles in multiple sectors in the EV space and has found plenty of success so far in gaining orders from its partners. Though it isn’t profitable and is unlikely to be anytime soon, the consistent growth in its top-line results and the massive opportunity in the EV space make it an interesting long-term bet.

FGI Industries (FGI)

FGI Industries (NASDAQ:FGI) operates a home furnishings business originally founded as a private enterprise in 1987. It started as a retailer, dealing in wood cabinets and bathroom fixtures.

However, its business now focuses more on the business-to-business (B2B) side of things, dealing in sanitary ware, shower systems, cabinetry, and other related products.

Though it doesn’t exactly operate in a sexy industry, it has had an excellent track record of growing its top and bottom lines. Additionally, it boasts a remarkable customer base that includes some of the biggest retailers, such as Walmart (NYSE:WMT) and Costco (NASDAQ:COST).

It went public in January this year and has shed over 35% of its value. Its current stock price is highly attractive and allows investors to load up on it on the cheap.

McEwen Mining (MUX)

McEwen Mining (NYSE:MUX)  is a Canadian precious metals miner that has seen its stock price tank to record lows.

In the past year, its stock has shed more than 70% of its value and trades at just 1.2 times its forward sales estimates. Though many would argue that it’s cheap for a reason, a snap back over the next several months could yield healthy gains for its investors.

Mining stocks tend to be cyclical. The current macroeconomic environment is marred by rising interest rates and inflation, which weaken interest in precious metals.

Though the situation isn’t likely to change in the short term, MUX stock might prove to be a wise bet for the long haul. Its business has been relatively solid over the past five years and will likely perform well once the economy improves.

Additionally, InvestorPlace’s Josh Enomoto, pointed out several months ago that the firm’s copper mining business might benefit from strong demand in the EV space.

Mullen Automotive (MULN)

EV manufacturer Mullen Automotive (NASDAQ:MULN) could be a force to be reckoned with. It is working on producing its flagship electric SUV crossover, the Five, which it hopes to deliver to customers by the fourth quarter of 2023.

However, its solid-state battery development has piqued the interest of industry experts. The company recently announced positive results for solid-state battery testing, which could potentially have five times the greater energy density than a lithium-ion battery.

Furthermore, the firm recently disclosed a partnership with a Fortune 500 company specializing in telecommunications. Also, it signed an agreement with Amazon (NASDAQ:AMZN) to deliver its EV cargo vans. Hence, it is quickly gaining traction with some of the top companies in the world, building a healthy backlog.

Kinross Gold (KGC)

Canadian gold miner Kinross Gold (NYSE:KGC) is one of the rare undervalued penny stocks with a fundamentally solid business and a generous dividend.

It’s been a stable performer over the years, with an impeccable margin profile. Additionally, it boasts a spectacular dividend yield of roughly 3.50% while trading at a massive discount across all price metrics.

Its stock has taken quite a hit after revising its production guidance for the year and selling off its Russian assets. Also, the correction in gold prices has played spoilsport.

Nevertheless, its gold production levels were up an impressive 19% on a year-over-year basis during the second quarter. Sales grew by 16% in the quarter, and with greater financial flexibility from asset sales, it’s positioned remarkably well to expand in a more conducive business environment.

Seanergy Maritime Holdings (SHIP)

Greek-based Seanergy Maritime Holdings (NASDAQ:SHIP) is one of the top names in the dry bulk commodity shipping sector.

It wrapped up 2021 with a superb $153 million in sales and a net profit of $41 million compared to an $18 million net loss in 2020. However, with the Baltic Capesize Index down over 70% this year, its results have paled compared to last year.

Seanergy is pushing forward in these challenging times with considerable aplomb. It posted a strong 18% growth in sales from the prior-year period to $32.8 million.

Moreover, its adjusted EBITDA came in at $17.3 million compared to $11.3 million in the second quarter of 2021. Also, the firm announced a quarterly dividend of 25 cents per share and rounded off the quarter with $41.4 million in cash equivalents. Such results are a testament to the depth of its business.

Borr Drilling (BORR)

Borr Drilling (NYSE:BORR) stock shot to new heights following the surge in oil prices. However, it witnessed a strong pullback in its price, which provides a more attractive entry point.

Oil prices have pulled back due to recession fears. Moreover, with concerns surrounding Borr’s refinancing deal, its stock bore the brunt of the uncertainty. Nonetheless, it has refinanced its debt with extended maturity till 2025.

Also, it seems apparent that oil prices won’t be witnessing a massive correction. The offshore drilling rig services business will continue to thrive amidst the current geopolitical backdrop.

Hence, BORR stock remains an interesting bet with greater revenue visibility from its current rigs and a potentially robust upside from rigs under construction.

 On the date of publication, Muslim Farooque did not have (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.com Publishing Guidelines.

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