Top Penny Stocks

ADMA, BORR, and NAT are soaring while the Russell 1000 is falling

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This month's top Penny stocks include ADMA Biologics Inc., Borr Drilling Ltd., and Nordic American Tankers Ltd., which roughly doubled in the past year as the small-cap Russell 2000 Index lost almost a fifth of its value. Penny stocks are defined as equities that typically trade at $5 per share or less.

ADMA Biologics surged after revenue doubled in the latest quarter due to rising sales of its treatments for immune-compromised and immune-suppressed individuals. Contractor Borr Drilling and Nordic American Tankers are benefitting from high crude oil prices and freight rates compared with a year ago.

Investing in penny stocks can be risky because the performance of individual companies varies widely. Moreover, they trade mostly via over-the-counter (OTC) transactions, incurring higher trading costs. The small-cap Russell 2000 Index, a rough benchmark for penny stocks, has fallen 19% in the past year compared with the 15% drop in the Russell 1000.

Here are the top penny stocks in three categories: best value, fastest growth, and most momentum, respectively. The performance figures above and all of those below are as of Nov. 22, 2022.

Best Value Penny Stocks

These are the penny stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you're paying less for each dollar of profit generated.

Best Value Penny Stocks
  Price ($) Market Cap ($M) 12-Month Trailing P/E Ratio
Safe Bulkers Inc. (SB) 2.90 344.7 1.8
Ring Energy Inc. (REI) 2.89 504.1 2.7
Altice USA Inc. (ATUS) 4.42 2,010 3.1

Source: YCharts

  • Safe Bulkers Inc.: Safe Bulkers transports cargo including coal, grain, and iron ore across global shipping routes. The company's reported in November that third-quarter net income declined year-over-year as results were impacted by operational delays related to the COVID-19, including crew repatriation.
  • Ring Energy Inc.: Ring Energy develops, produces, and explores for oil and natural gas in Texas and New Mexico. Net income surged more than five-fold as revenues nearly doubled in the third-quarter, driven by rising sales volumes and the acquisition of Stronghold Energy.
  • Altice USA Inc.: Altice is a holding company that, through subsidiaries, offers broadband communications and video services primarily under brands including Optimum and SuddenLink.

Fastest Growing Penny Stocks

These are the top penny stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax laws or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Fastest Growing Penny Stocks
  Price ($) Market Cap ($M) EPS Growth (%) Revenue Growth (%)
Ring Energy Inc. (REI) 2.89 504.1 308.3 91.2
Conduent Inc. (CNDT) 3.92 846.4 50.0 -5.9
Rocket Lab USA Inc. (RKLB) 4.36 2,063 N/A (see company description) 1,090

Source: YCharts

  • Ring Energy Inc.: See company description above.
  • Conduent Inc.: Conduent sells human resources and other business services to customers in the industrial, transportation, and government sector, including more than 500 government entities. The company recently launched a cloud-based service named BenePath Suite, which is aimed at accelerating the eligibility and enrollment process for government social services and aid programs.
  • Rocket Lab USA Inc.: Rocket Lab provides space launch services, satellite manufacturing, and spacecraft components. The company in November reported a net loss as revenue rose more than 12-fold, bolstered by a $14 million order for one of its satellite separation systems. Note that Rocket Lab does not have an EPS growth figure in the table above because it reported losses per share for the most recent quarter.

Penny Stocks With the Most Momentum

These are the penny stocks that had the highest total return over the past 12 months.

Penny Stocks With the Most Momentum
  Price ($) Market Cap ($M) 12-Month Trailing Total Return (%)
ADMA Biologics Inc. (ADMA) 3.23 635.6 122.8
Borr Drilling Ltd. (BORR) 4.98 1,119 120.3
Nordic American Tankers Ltd. (NAT) 3.51 711.4 94.3
Russell 1000 Index N/A N/A  -14.7
Russell 2000 Index N/A  N/A -19.1

Source: YCharts

  • ADMA Biologics Inc.: ADMA is a bioptech company that manufactures, develops, and markets biologics for the treatment of immunodeficient patients. Its treatments target individuals with immune-compromised or immune-suppressed systems.
  • Borr Drilling Ltd.: Borr Drilling is a Bermudian international drilling contractor. It owns and operates jack-up rigs to serve the oil and gas exploration and production industry worldwide.
  • Nordic American Tankers Ltd.: Nordic American Tankers is a Bermuda-based international tanker company with a fleet of about two dozen tankers. Nordic American recently announced a dividend of $0.05 per share, which will be paid on Dec. 20.

Advantages of Investing in Penny Stocks

Potential for High Returns: Most penny stocks have tiny market capitalizations, meaning it takes a small amount of money to move their share price substantially. Therefore, positive news, such as signing on a major customer or forming a new strategic alliance, can lead to sizeable returns before the mainstream investing world discovers the stock. Conversely, negative news can lead to significant losses.

Leverage: Penny stocks attract investors with a small amount of trading capital as their lower share prices allow them to buy thousands of shares. For example, if an investor has $500 to invest, they can purchase 2,000 shares of a penny stock trading at 25 cents. If that stock doubles over a month, the investor makes a quick 100% return on their investment. However, with the same starting capital, the investor could afford only a small number of shares in most S&P 500 stocks, making it almost impossible to achieve those gains over the same period.

Risks of Investing in Penny Stocks 

Low Liquidity: Penny stocks often trade on thin volume, meaning it can be difficult for investors to enter and exit their positions. Moreover, these stocks typically have a wide spread between the bid and ask, which increases trading costs. For example, if a penny stock has a bid price of $1.00 and an ask price of $1.50, a trader wanting to buy at market gets caught paying a 50 cent per share premium. Therefore, investors should use limit orders to minimize trading costs when buying and selling penny stocks.

Extreme Valuations: Penny stocks that start moving rapidly higher in price show up on stock screeners and may even get media attention. This often attracts more speculators who push prices up even higher, leading to unstainable valuations. For instance, during the dotcom bubble in the late 1990s, many penny technology stocks doubled and tripled in price despite not generating any earnings. However, when the market turned bearish a few years later, many Nasdaq-listed penny stocks with unsustainable valuations fell substantially or were delisted.

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  1. Yahoo! Finance. "ADMA Biologics Announces Third Quarter 2022 Financial Results and Provides Business Update."

  2. Nordic American Tankers. "Nordic American Tankers Ltd (NYSE: NAT) – Report September 30, 2022 (Third quarter 2022) – Good times for our Suezmax tankers. Increased dividends expected."

  3. Yahoo! Finance. "Borr Drilling Limited Announces Third Quarter and Nine Months 2022 Preliminary Results."

  4. YCharts. "Financial Data."

  5. Safe Bulkers Inc. "Safe Bulkers, Inc. Reports Third Quarter and Nine Months 2022 Results and Declares Dividend on Common Stock," Pages 1-2.

  6. Ring Energy Inc. "Closed Transformational Acquisition and Increased Production, Revenue, Net Income, Adjusted EBITDA and Free Cash Flow."

  7. Conduent Inc. "Conduent Introduces BenePath® Suite of Solutions to Assist States with Eligibility and Enrollment for Medicaid, SNAP and Other Benefit Programs."

  8. Rocket Lab USA Inc. "Rocket Lab Announces Third Quarter 2022 Results and Guidance for Fourth Quarter 2022."

  9. Nordic American Tankers Ltd. "Nordic American Tankers Ltd (NYSE: NAT) – 3Q 2022 dividend announcement."

  10. TheBalance. "The Pros and Cons of Penny Stocks."

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