In this article, we will look at the 8 Cheap Penny Stocks to Buy Right Now.
The economy of the United States has stabilized, with inflation continuously cooling down and the risk of recession overruled. The Federal Reserve cut interest rates on September 18, slashing them by half a point as a start to its first easing cycle in four years. The Federal Reserve statement said:
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
However, Fed Chair Jerome Powell announced on September 30 that the recent aggressive half-percentage point interest rate cuts should not be interpreted as a sign that future rate cuts would also be as aggressive. Instead, they are likely to be smaller. Talking to the National Association for Business Economics, he said:
“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course. The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
Powell expressed confidence in the country’s economic strength, claiming that inflation is expected to continue cooling. He also indicated that if the economic data shows consistency in the coming days, two more rate cuts would likely materialize in 2024. These, however, are expected to come in smaller quarter percentage point increments. This trend goes against market expectations for more aggressive cuts and easing.
During a Q&A session after his speech in Nashville, Tennessee, he said that:
“This is not a committee that feels like it’s in a hurry to cut rates quickly. If the economy performs as expected, that would mean two more rate cuts this year, a total of 50 [basis points] more.”
Sustainable Growth Expected in Small Caps Amidst Market Shifts
On July 26, Nathan Moser, Managing Director and Senior Portfolio Manager at Impax Asset Management, discussed some long-term possibilities for small-cap stocks on Schwab Network. Talking about the recent changes in small stocks, he discussed the positive shift and noted that the recent rise in small caps appears more sustainable after years of struggle. This trend is primarily driven by strong inflows into ETFs and passive investment vehicles.
Despite short-term volatility, Mooser believes the market’s current move could last for years. He thus encouraged buying on market dips, while highlighting the need to focus on profitable, high-quality companies due to the potential risks typically associated with lower-quality stocks in small caps.
With that, let’s look at the 8 cheap penny stocks to buy right now.
Image: Depositphotos
Our Methodology
We first consulted stock screeners from Finviz and Yahoo Finance to create an initial list of 15 publicly traded penny stocks with forward P/E ratios of less than 15 as of October 1, 2024. From this list, we selected the 8 stocks with the highest number of hedge funds holders as of Q2 2024, and used that as our ranking metric. The stocks we identified are profitable, have positive EPS growth, and are expected to remain profitable in the future as well.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Cheap Penny Stocks to Buy Right Now
8. Dynagas LNG Partners LP (NYSE:DLNG)
Share Price: $3.89
Forward P/E: 3.61
EPS Growth This Year: 169.20%
Number of Hedge Fund Holders: 1
Dynagas LNG (NYSE:DLNG) operates in the seaborne transportation industry through its subsidiaries. It owns and operates liquified natural gas (LNG) carriers and operates in Greece and internationally. Its vessels are employed with international energy companies on multi-year charters. The company’s current fleet comprises six LNG carriers with an aggregate carrying capacity of around 914,000 cubic meters. All six LNG carriers operate long-term charters with esteemed international gas companies. These contracts have an average remaining term of 6.4 years, meaning that the Partnership does not expect any vessel to become available until 2028, assuming no unforeseen events occur. Dynagas GP LLC serves as Dynagas LNG’s (NYSE:DLNG) general partner. Incorporated in 2013, the company is headquartered in Athens, Greece.
Q2 2024 saw a reported net income of $10.7 million and adjusted net income of $12.4 million for the company. Dynagas (NYSE:DLNG) has a solid operational model in place. It successfully concluded new lease financing agreements with China Development Bank Financial Leasing, securing financing worth $344.9 million. The Partnership used this funding, along with $63.7 million from its existing cash reserves, to fully repay amounts outstanding under its previous credit facility of $408.7 million on June 27, 2024. This took place ahead of its scheduled maturity in September 2024.
After a sustained period of strategic deleveraging, the company has secured a more flexible financing structure while significantly slashing debt levels. Two LNG carriers are now operating completely debt-free, positioning Dynagas (NYSE:DLNG) to continue the next phase of growth and development.
Dynagas (NYSE:DLNG) has stable operations and maintained 100% schedule fleet utilization in Q2 2024. During the three months ending on June 30, 2024, it generated $22.5 million in net cash from operating activities, up 155.7% from the $8.8 million generated in the corresponding period of 2023. This growth was primarily driven by working capital changes. As of June 30, 2024, the Partnership’s estimated contracted time charter coverage for 2024, 2025, and 2026 stood at 100%, 100%, and 99%, respectively.
7. CBAK Energy Technology, Inc. (NASDAQ:CBAK)
Share Price: $1.17
Forward P/E: 3.81
EPS Growth This Year: 1450%
Number of Hedge Fund Holders: 3
CBAK Energy (NASDAQ:CBAK) is an investment holding company based in China. It operates through two primary segments: the CBAK segment and the Hitran’s segment. The CBAK segment encompasses manufacturing, commercializing, and distributing a wide array of standard and customized lithium-ion rechargeable batteries for use in several applications. In contrast, Hitran’s segment includes developing and manufacturing cathode materials and NCM precursors. Its products are sold to third-party operated packing plants used primarily in mobile phones and other electronic devices. Its products also have other applications, including electric and hybrid electric cars. They also include electric buses and light electric vehicles (LEV), such as electric motors, electric bicycles, electric tools, sight-seeing cars, and others.
CBAK Energy (NASDAQ:CBAK) is operating on solid fundamentals, achieving a 55% increase in net revenues from its battery business and reaching $80.4 million for the first half of 2024. This growth came amid broader industry challenges and declining sales volumes faced by its competitors. Its strategic move towards diverse energy storage applications and residential energy solutions has played a vital role in this growth, with a substantial amount of revenue growth coming from these sectors. It also boasts strong brand loyalty. When coupled with its solid sales momentum, the company holds a significant competitive market advantage.
Net revenues for the company also grew 13% to $47.8 million from $42.4 million in the same period in 2023, primarily due to an increase in revenue from the company’s battery business. Net profit for the battery business was $7.89 million in Q2, continuing the positive growth trajectory from Q1. In June, CBAK Energy (NASDAQ:CBAK) unveiled plans to significantly advance fast-charging technology with the improved model 32140 battery, which achieves a full charge in just 35 minutes. The upgrade enables the 32140 large cylindrical battery to shift its original 0.8C fast charging rate to 1.8C fast charging rate, accelerating charging speed by 1.25 times. The battery’s cycle life under high-current charge and discharge has doubled as well, improving its overall efficiency and durability.