ENIC - The 7 Best Penny Stocks to Buy Now

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As there’s a good chance that the Federal Reserve will not soon pivot on interest rates, the recent rally among stocks, on “Fed pivot” hopes, could soon reverse course. Stocks, especially smaller, more speculative stocks, could experience another bout of volatility. However, that doesn’t necessarily mean you need to steer clear of the best penny stocks.

While there are many names in “penny stock territory” that have a ways to go before becoming oversold, there are a few that have become oversold. Trading at rock-bottom valuations, they likely have little more room to fall if there’s another broad market sell-off.

More importantly, these undervalued, under-the-radar stocks have not only good prospects of riding out further volatility, but have strong long-term prospects as well.

Buying them today could prove to be a very profitable move in hindsight, as their key catalysts play out in the coming years.

Across thousands of U.S.-listed stocks trading for under $5 per share, these seven stand out as the best penny stocks. Each one trades either at a sharp discount to either current fundamentals or future prospects.

B2Gold Corp. (BTG)

If you’re looking for a stock that could take off, irrespective of a potential Fed pivot, B2Gold Corp. (NYSEAMERICAN:BTG) is a great choice. There are several potential catalysts that could push shares in this Canada-based gold mining company, with operations in Africa and Asia, higher.

First, as I argued back in September, if the Fed winds up pivoting on interest rates, the resultant weakening of the dollar could push up gold prices. In turn, resulting in an outsized jump in profitability, and a big jump in price for BTG stock.

Even if a rally for gold prices doesn’t pan out, B2Gold’s other catalyst could play out. Management anticipates gold production to increase, and per-unit production costs to decrease, starting this quarter.

This could also result in big earnings growth for this cheap, high-yield stock, trading for just 13.2 times earnings, and currently paying a 4.6% dividend.

Comstock Holding Companies (CHCI)

Comstock Holdings Companies (NASDAQ:CHCI) may also sound like a gold miner, but this micro-cap stock is actually a homebuilder-turned-property asset manager.

Based in the Washington, DC metro area, Comstock manages 4 million square feet of commercial real estate space in the region.

The company is also involved in commercial real estate development and holds equity ownership interests in several commercial properties as well.

Trading for only 4.3 times earnings, it’s possible that the market is erroneously valuing CHCI stock like a homebuilding stock, as one Seeking Alpha commentator argued back in September.

In a business far more resilient than homebuilding, CHCI could in time get re-rated by the market. Even a move to a high single-digit forward earnings multiple would mean big gains from today’s prices.

Comstock’s earnings could also rise substantially, as it continues to expand the size of its asset portfolio, further increasing CHCI’s upside potential.

Enel Chile S.A. (ENIC)

Enel Chile S.A. (NYSE:ENIC) is a utility company that, as you may have guessed, is based in Chile. This utility company provides Chile’s capital (Santiago) with electricity, generated primarily at its hydroelectric plants, but also through other methods such as solar, thermal, and wind.

Unlike with U.S. utility stocks, you can buy ENIC stock at a super-low valuation. Shares sell for only 7 times estimated 2022 earnings.

Granted, there is a reason for this big valuation discount. A severe drought in Chile has had an impact on hydroelectric production,

Enel has had to generate more thermal-derived power (which uses natural gas as fuel) to make up the difference, hurting margins. However, as these headwinds pass, the company will likely return to prior profitability levels.

This could also enable it to bring back its dividend (previously 23 cents annually), which would give this $2 stock a double-digit yield.

 Globalstar (GSAT)

Most of the penny stocks discussed above and below are “cheap” in the traditional sense. In the case of Globalstar (NYSEAMERICAN:GSAT), though, shares in this satellite services provider do not trade at a low price-to-earnings ratio. Nor does this stock offer a high dividend yield, or any yield at all.

Still, GSAT stock is cheap, when you consider the upside potential from its partnership with Apple (NASDAQ:AAPL).

In September, the tech giant, in conjunction with the unveiling of the iPhone 14, announced that its latest phone would offer satellite connectivity, with services provided by Globalstar.

Although this of course has already resulted in big gains for GSAT shares, this penny stock may have more room to run. Beyond just the Apple deal, one analyst (Craig-Hallum’s George Sutton) believes there is even more value to be unlocked from Globalstar’s satellite communications spectrum assets.

GEE Group (JOB)

A tight labor market has resulted in strong operating results for GEE Group (NYSEAMERICAN:JOB).

As a result of massive improvements in profitability for this staffing firm, its shares have performed very well during this tough year for the stock market.

So far in 2022, JOB stock is up more than 25%. However, with the economy slowing down, this company is likely to report far less stellar results in 2023. However, that doesn’t mean it’s no longer one of the best penny stocks.

Even when you take a high expected drop in earnings into account, this stock remains cheap, at just 8.3 times forward earnings.

Furthermore, with a cash position ($17.5 million) that’s high relative to its market cap ($83.3 million), GEE Group appears equipped to ride out a downturn. This cash could also be put to use in making “bolt-on” acquisitions of other staffing firms.

Jerash Holdings (JRSH)

U.S.-based Jerash Holdings (NASDAQ:JRSH) makes apparel, produced at its facilities located in the Middle Eastern country of Jordan. The company experienced a sharp increase in revenue and profitability during its post-pandemic fiscal year (ending March 2022).

But inflation, the supply chain crisis, and the economic slowdown have affected results in recent quarters. In response, investors have pushed JRSH stock down 43% lower in the past year. With the worst likely priced-in, now may be the time to enter a position.

Post-downturn, Jerash’s profitability could bounce back in a big way. Sell-side analysts forecast earnings of 69 cents per share in fiscal year ending March 2024, and $1 per share in fiscal year ending March 2025.

Not bad for a stock trading for around $4.25 per share today. JRSH also currently pays out a 5 cent quarterly dividend, giving the stock a 4.75% yield.

 New Gold (NGD)

To cap off this list of top penny stocks, let’s look at another under-the-radar mining play: New Gold (NYSEAMERICAN:NGD).

Headquartered in Canada, most of the company’s gold, silver, and copper mining operations are located there as well, with another property (the Cerro San Pedro mine) located in Mexico.

NGD stock has fallen around 19% since January, due to underwhelming financial results. Output from its mines has dropped, and the company has reported negative operating income over the past two quarters. However, things may be about to turn a corner.

According to New Gold’s November 2022 investor presentation, management anticipates production to rise 30% in the coming years. If this happens, and if gold prices rise, NGD’s operating results could improve dramatically. This could in turn fuel a rebound for this stock. Currently at $1.20 per share, as recently as last year, it traded for above $2 per share.

On the date of publication, Thomas Niel 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.com Publishing Guidelines.

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