Penny stocks are Wall Street’s version of the discount dollar store. Most of the stuff you find is absolute junk, let’s be brutally honest here. However, that’s not 100% of the case.
Allow me a small personal example. I used to buy can openers from major retailers but they would typically break apart quickly. So, I decided to buy one from the dollar store. Even with the savings I would get, if the discount can opener lasted half as long as the brand-name variety, I would be a winner. Turns out, it lasted a lot longer than I expected.
Stated differently, penny stocks represent huge risks because you can get completely creamed. But on occasion, you can also find some hidden gems. On that note, below are possibly intriguing (albeit extremely speculative) ideas to consider.
Rekor Systems (REKR)
Leveraging significant acumen in big data analytics, Rekor Systems (NASDAQ:REKR) focuses on providing real-time roadway intelligence through artificial intelligence. Further, the company bridges the gap between commercial and government sectors by offering actionable insights from vehicle recognition data. Therefore, Rekor may play a key role in the smart city evolution.
According to Statista, the smart cities market worldwide should see significant growth. By the end of this year, the segment could generate revenue of $104.8 billion. Further, analysts believe that the space could expand at a compound annual growth rate (CAGR) of 12.15% from 2024 to 2028. At the forecast’s culmination point, market volume may reach $165.8 billion.
Now, does that mean REKR will fly above other penny stocks because of the underlying relevant market? No guarantees like that exist. At the same time, Rekor offers some surprisingly stout statistics. For instance, its three-year revenue growth rate lands at 13.6%, above the sector median 8.7%.
Looking ahead, analysts rate shares a moderate buy with a $4.50 average price target. That implies over 92% upside potential.
Emcore (EMKR)
Billed as a leading independent provider of advanced inertial navigation and sensing products, Emcore (NASDAQ:EMKR) offers myriad underappreciated relevancies. Of course, it’s difficult to appreciate with EMKR trading hands at only 44 cents per share. However, with the field of aerospace and defense rapidly moving into the autonomous domain, Emcorec could conceivably see increased demand for its critical technologies.
In particular, Emcore’s gyroscopes are highly accurate and can be integrated into navigation systems for various autonomous vehicles, including unmanned aerial vehicles (UAVs). With so much attention paid to drone warfare, Emcore could benefit from intense interest in this specialty.
As with other penny stocks, though, investors must be prepared to handle extreme volatility. Since the start of this year, EMKR dropped more than 10%. Over the past one-year period, shares hemorrhaged over 69% of market value.
Still, analysts project top-line growth. By the end of 2024, they anticipate revenue of $101.61 million. In 2025, this figure could rise to $114.66 million. They also peg shares a unanimous strong buy with a $1.18 price target, implying over 168% upside potential.
Ondas (ONDS)
A tech platform provider, Ondas (NASDAQ:ONDS) states on its website that it provides mission-critical network and data solutions for industrial and government markets. The organization breaks down into two units, one covering wireless broadband technology for facilitating myriad industrial applications while the other focuses on autonomous systems. This unit includes its autonomous drone service, which can provide inspection, mapping, and data collection solutions.
According to Grand View Research, the underlying industrial technology market – more commonly known as Industry 4.0 – reached a valuation of $146.14 billion in 2022. Further, analysts believe that the space could expand at a CAGR of 19.9% from 2023 to 2030. By the end of the forecast period, the segment could be worth $627.59 billion.
To be sure, Ondas presents extraordinary risks, even when stacked against other penny stocks. Just in this year alone, ONDS slipped almost 29%. At the same time, the company posted a three-year revenue growth rate of 40.6%, well above its peers.
Analysts see more growth ahead, projecting sales of just under $42 million in the current fiscal year.
Wag! Group (PET)
A pet care specialist, Wag! Group (NASDAQ:PET) offers a tech platform that helps connect pet owners with independent pet professionals for on-demand and scheduled dog walking, training and other pet care services, all via the convenience of a mobile app. Basically, it’s pet care for the current century. Still, PET stock has been all over the map.
Since the January opener, shares have gained more than 14%. That’s encouraging. What’s not so pleasant, though, is the trailing-year loss of nearly 9%. And since the company’s public market debut, PET has dropped over 79% of equity value. Unfortunately, pet owners have borne the brunt of the damage when it comes to consumer inflation.
Here’s the good news: overall, Americans continue to open their wallets for various pet-related products and services. So, Wag! could potentially benefit from a trickle-down effect, to borrow a political phrase.
Even better, analysts anticipate robust growth in 2024 to the tune of $108.43 million. In 2025, this tally could rise to $131.97 million. Craig-Hallum’s Jeremy Hamblin provided the most recent coverage, calling for shares to hit $5.50 or 175% up.
Aeva Technologies (AEVA)
Providing a next-generation lidar system, Aeva Technologies (NYSE:AEVA) may play a huge role in autonomous mobility. Sure, there are many companies out there that specialize in lidar-based solutions. Quite a few now represent tempting penny stocks. However, Aeva attempts to distinguish itself from the competition through its continuous wave technology.
Essentially, Aeva’s system doesn’t just “see” objects around it – that’s child’s play at this point. Rather, it constantly detects the objects’ velocities and most importantly the change in said velocities. This way, the system can avoid accidents, taking appropriate tactical measures. Or, by calculating where objects will be in space and time, strategic avoidance capabilities could be possible.
All this raises the prospect that with the right opportunity, AEVA could be one of the penny stocks to skyrocket. Analysts see tremendous growth for the current fiscal year, or $15.09 million on average. Further, the high-side estimate hits $20.3 million.
Overall, the Street’s experts believe shares could reach $3.50. If so, we’re talking almost 263% growth potential.
Porch (PRCH)
A risky idea among penny stocks, Porch (NASDAQ:PRCH) could be quirk enough to rise above the muck. A software platform company, Porch specializes in home services. Specifically, it connects homeowners with home service companies via its platform. Through this convenient mechanism, homeowners can search for and connect with qualified service providers, receive quotes, schedule appointments, and other important administrative tasks.
Stated differently, Porch removes the pain points associated with finding and securing home-services-related contracts. Of course, with the troubles that the consumer economy faces right now, PRCH encounters broader headwinds. Yes, shares have gained almost 24% over the past 52 weeks. However, since its initial public offering, PRCH is down more than 69%.
However, let’s consider the real estate ecosystem. Plenty of folks bought homes during the wild years. And that almost invariably means they will need home services. Indeed, many folks bought their homes without any contingencies. So, some necessary repairs are likely to pop up.
Analysts view PRCH as a consensus strong buy with a $13.25 price target, implying 329% upside.
Velo3D (VLD)
In my opinion, Velo3D (NYSE:VLD) is easily the riskiest idea on this list of penny stocks to consider. Since the year started, VLD dropped 27% in market value but that’s just the tip of the iceberg. In the past 52 weeks, VLD suffered a severe implosion to a magnitude of over 91%. Since its IPO, the company – which specializes in metal-based additive manufacturing (AM) – has tanked more than 97%.
So, why bother taking a shot here? On a technical front, it’s possible that VLD stock posted a near-term bottom on Feb. 7. If the bears have cleared the room, the subsequent upside move could be intense. More importantly, Grand View Research states that the global additive manufacturing market reached a valuation of $20.37 billion last year. So, the growth opportunity is massive.
What’s more, the sector could expand at a CAGR of 23.3% from 2023 to 2030. At the end of the period, the industry might generate revenue of $88.28 billion. Keep in mind that Velo3D’s market capitalization is only $69.4 million.
In turn, Lake Street’s Jacob Stephan sees VLD hitting $2 or a rise of over 639%.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
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.