Millionaire-maker penny stocks, as you might guess from the title does not represent a universally accessible sector. While these ideas can possibly make you rich, they can just as easily make you poor. You really don’t want to enter this arena with any naïve thoughts. High-potential penny stocks are all about exchanging any semblance of predictability for massive (but hardly guaranteed) rewards.
With that caveat out of the way, it’s not impossible for undervalued penny stocks to perform well. While this market subsegment is akin to a lottery ticket, winning the Powerball comes down to one in 292.2 million. It’s almost impossible for you to win such a jackpot. It’s not quite impossible – but not probable – to win with undervalued penny stocks.
Perhaps this arena is analogous to alcohol. If you do drink, drink responsibly. With that, below are penny stocks to watch.
Chimerix (CMRX)
A biotechnology firm, Chimerix (NASDAQ:CMRX) seeks to develop medicines that meaningfully improve and extend the lives of patients facing deadly diseases. While the company carries significant risks, it also enjoys meaningful successes. Late last year, Chimerix launched a Phase III study of ONC201, an oral, investigational drug for treating glioma.
Now, that’s all wonderful and all. However, investors will almost surely look at the price chart of CMRX. Since the beginning of the year, shares slipped 39%. In the trailing one-year period, CMRX gave up almost 53% of equity value. And it’s one of the millionaire-maker penny stocks?
Well, it’s fair to point out that despite its heavy risks, shares appear to have stabilized since possibly hitting a bottom in May of this year. If so, CMRX might enjoy blue-sky potential, especially if the underlying firm delivers on the clinical front. That’s not guarantee, of course, but it’s worth keeping CMRX on your radar of high-potential penny stocks.
Flexible Solutions (FSI)
An enticing and relevant example of millionaire-maker penny stocks, Flexible Solutions (NYSEAMERICAN:FSI) claims to specialize in researching, innovating and manufacturing products that empower the world. Through its various products – such as evaporation control systems – Flexible delivers real results. These include increasing crop yields to reductions in water usage.
Frankly, the company’s word salad is incredibly annoying. Despite management’s best efforts in obfuscating its own business – investors really shouldn’t dig through the ends of the earth to find what an enterprise does exactly – the focus on green and sustainable solutions is much appreciated.
Moving forward, the company isn’t half-bad when it comes to printing attractive financial stats. For example, Flexible posts a three-year revenue growth rate (per-share basis) of 17.4%, above 71.89% of its peers. It’s also consistently profitable, year in and year out. The kicker? Right now, FSI trades at 7x forward earnings, lower than 92% of its peers in the chemicals industry. Therefore, it’s one of the undervalued penny stocks to consider.
Optex Systems (OPXS)
Based in Richardson, Texas, Optex Systems (NASDAQ:OPXS) specializes in optical equipment for both the retail and defense markets. For the former segment, Optex offers products such as monoculars and binoculars. Regarding the defense industry, the company focuses on various optics-related devices that help servicemembers identify and address threats.
On a geopolitical note, Optex ranks among the millionaire maker penny stocks because of its relevance. It’s a cynical argument to be sure. However, the world appears to have only gotten more violent and irrational. As such, the possibility of another armed conflict sprouting is hardly a fairy tale. Perhaps not surprisingly, OPXS has performed quite well.
Since the start of the year, shares gained over 14% of equity value. In the trailing one-year period, OPXS gained almost 81%. Still, it’s a worthwhile idea for penny stocks to watch because of its relatively decent financials. For example, OPXS features an equity-to-asset ratio of 0.64x, better than 73.22% of its peers.
Glory Star New Media (GSMG)
A true name for millionaire-maker penny stocks, Glory Star New Media (NASDAQ:GSMG) shares trade at 52 cents per share. As well, it’s a nano-capitalization play, printing a diminutive market cap of only $35.4 million. Generally, the cutoff between a nano-cap and microcap is approximately $50 million. And it’s a risky you-know-what, with shares falling over 64% since the start of the year.
Still, it’s an interesting idea for penny stocks ready to explode if you have loose change burning a hole in your pocket. According to its website, Glory Star pioneered a new business model integrating e-commerce services with premium video content. Management claims Glory Star became a leading online digital media and entertainment firm in China.
Now, the thing is, if you’re only partially feeding the Chinese market, that’s a massive market. In a tempting manner, Glory Star commands excellent strengths in the balance sheet, particularly a cash-to-debt ratio of 13.82x. Again, if we’re only talking about spending pocket change, there are worse ideas for high-potential penny stocks.
Yiren Digital (YRD)
Another China-based market idea for millionaire-maker penny stocks, Yiren Digital (NYSE:YRD) is a leading digital personal financial management platform. It provides both credit and wealth management solutions. For its credit business, Yiren focuses on providing solutions for underserved borrowers. Interestingly, the company deploys a proprietary risk management system to effectively assess prospective borrowers’ creditworthiness.
As for its wealth management business, Yiren provides customized solutions, combining both long term and short-term targets. As well, it offers a diverse range of investment categories, such as cash management and mutual funds. While I’m not the biggest fan of the U.S. financial sector right now, China was not as accommodative to its citizens regarding the Covid-19 crisis. Therefore, some growth opportunities might exist in the nation’s financial realm. Also worth pointing out is that Yiren also commands excellent strengths in the balance sheet, especially with its cash balance. Thus, it’s one of the penny stocks to watch.
X Financial (XYF)
A leading online personal finance company in China, X Financial (NYSE:XYF) is committed to connecting borrowers on its platform with its institutional funding partners, per its website. In addition, with its proprietary big data-driven technology, X Financial has established strategic partnerships with financial institutions across several areas of its business operations.
On one hand, XYF brings some credibility to the table regarding millionaire-maker penny stocks. Listed in the top-tier exchange, XYF carries a market cap of $209.45 million. Since the start of the year, shares gained 46% of equity value, which seems impressive. However, this is also an enterprise that lost almost 85% of value since its public market debut in 2018.
Financially, the company offers a decent three-year revenue growth rate of 6.3%, above 57.2% of its peers. Also, its trailing-year net margin stands at 63.11%. And for what it’s worth, XYF trades at 1.06x trailing sales, much lower than the credit service industry’s median stat of 3.31x. Thus, XYF might be one of the undervalued penny stocks.
Aptevo Therapeutics (APVO)
An extremely risky idea for millionaire-maker penny stocks, Aptevo Therapeutics (NASDAQ:APVO) on paper sounds like a promising idea. Headquartered in Seattle, Washington, Aptevo specializes in advanced immuno-oncology. Leveraging a modular bispecific platform technology, the biotech’s lead candidate is called APVO436, which has an indication for acute myeloid leukemia. Further, Aptevo’s platform features the potential to address other cancers.
While the science compels, the market performance does not. Since the beginning of this year, APVO lost almost 55% of equity value. In the trailing one-year period, shares fell nearly 75%. Since its public market debut, APVO fell just a hair over 99%. Aside from sharp swings higher, APVO has been a money loser.
Still, the most extreme of speculators may end up taking a potshot with Aptevo stock. To be fair, the narrative isn’t entirely without merit. For example, almost a year ago, Piper Sandler analysts lowered their price target of APVO to $13 from $20. But even at the lowered forecast, we’re still talking about a 1,150% return. So, it could be one of the penny stocks to explode. Figuring out when is another story, though.
Penny Stocks
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On the date of publication, Josh Enomoto 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.