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.
6. Lument Finance Trust, Inc. (NYSE:LFT)
Share Price: $2.52
Forward P/E: 6.33
EPS Growth This Year: 53.80%
Number of Hedge Fund Holders: 5
Lument Finance Trust (NYSE:LFT) is a real estate investment trust that invests in, originates, finances, and manages a commercial real estate debt investment portfolio. Its primary focus is transitional floating-rate CRE mortgage loans while emphasizing middle-market multifamily assets. It also invests in other CRE-related investments, including preferred equity, mezzanine loans, commercial mortgage-backed securities, construction loans, fixed-rate loans, and other CRE debt instruments.
The company’s mortgage loan investment portfolio comprises around 88 senior secured floating rate loans with around $1.4 billion in aggregate unpaid principal balance. Lument Investment Management, LLC externally manages the company. Lument Finance Trust (NYSE:LFT) holds a competitive advantage due to its expertise in the origination, underwriting, and active asset management of multifamily mortgage investments. It also boasts strong sponsorships from the broader Lument and ORIX platforms, positioning it as a value proposition in today’s public markets. Despite the current challenging environment, the company raised its common dividend by $0.01 in June. This represents a 14% sequential increase over Q1.
It also fully deployed its capital into strong, predominantly multifamily credits by the end of 2023. Since then, it has focused on actively managing its loan investment portfolio.
The company has differentiated itself from its market peers by focusing on middle-market multifamily credit, allowing it to deliver a stable and sustainable dividend to its shareholders and preserve shareholder capital. According to the company, multifamily, particularly middle-market multifamily, is expected to remain a strong-performing asset class in the long term despite a modest softening of multifamily fundamentals.
Lument Finance (NYSE:LFT) continually maintains a strong liquidity position, with around $65 million in unrestricted cash on its balance sheet. Persistent elevated short-term rates have allowed the company to produce attractive returns on its cash balance. Intentionally adopting a defensive cash position, Lument Finance (NYSE:LFT) has gained the flexibility to manage the more challenging credits in its portfolio.
5. Banco Santander, S.A. (NYSE:SAN)
Share Price: $4.81
Forward P/E: 6.31
EPS Growth This Year: 14.50%
Number of Hedge Fund Holders: 9
Banco Santander (NYSE:SAN) is a Spain-based company that operates as a retail and commercial bank. Its segments are scattered across Continental Europe, the United Kingdom, Latin America, and the United States.
Banco Santander’s (NYSE:SAN) Q2 marked a record quarter, showing the strength of its strategy and the resilience of its business model. Profit grew by 20% compared to Q2 2023, reaching €3.2 billion. This result came even after the impact of €450 million of one-time charges, net of taxes and minorities. Profit in the first half of 2024 reached €6.1 billion, growing at a record rate of 16%. This was supported by strong cost of revenue growth in all regions and global businesses.
The company is continually accelerating its H1 transformation to become more automated, simpler, and integrated. As a result of these initiatives, its efficiency ratio improved by 261 basis points to 41.6%, its best in 15 years. In addition, the bank’s strict capital discipline, solid credit quality, and strong balance sheet with a sound capital ratio have allowed it to achieve profitable growth and shareholder value creation, with TNAV plus dividend per share growing 12%.
Its global businesses are continually pushing profitability, delivering 87 basis points in efficiency gains. Its proprietary and global tech capabilities have generated 71 basis points in efficiencies so far. The company drives these strong results by offering customers optimal user experience and products. It also holds operational leverage from its global platforms and common tech, which is reflected in the performance of its global businesses. Its retail and consumer businesses efficiency ratio improved by 480 basis points and 270 basis points, respectively, highlighting its strong operational model. The company is also leveraging its expertise to grow in the US and expand its reach. Banco Santander (NYSE:SAN) ranks fifth on our list of the cheap penny stocks to buy right now.
4. Mizuho Financial Group Inc. (NYSE:MFG)
Share Price: $4.20
Forward P/E: 8.44
EPS Growth This Year: 251.40%
Number of Hedge Fund Holders: 12
Mizuho Financial Group (NYSE:MFG) is a bank holding company based in Japan. It primarily engages in the business of bank holding companies, banks, securities specialist companies, and other companies.
Mizuho Financial (NYSE:MFG) reported an 18% increase in profit in Q1 2024, with net earnings rising to 289 billion yen ($1.9 billion) compared to 245 billion yen in the same quarter in 2023. It also reported significant earnings growth and improvement in return on equity (ROE). Mizuho Financial’s (NYSE:MFG) EPS surged 18% year-over-year, surpassing analyst expectations. A key driver of this growth was the increase in banking income due to favorable market conditions and the end of negative interest rates in Japan. With the Bank of Japan lifting rates out of negative territory for the first time since 2016, Mizuho Financial (NYSE:MFG) is well-positioned to benefit from the expanding profit margins.
In addition, its strategic capital reallocation, continued earnings growth, and improving ROE are other factors that lend it a competitive edge in the market. The increase in Japan’s interest rates is further positively affecting the bank by boosting investor sentiment towards it. In fact, its stock surged 5% on the same day the central bank raised short-term rates.
The bank has maintained its forecast of record full-year profits of 750 billion yen for FY 2025, reflecting confidence and trust in its future performance. When coupled with its solid fundamentals, this strong forecast makes the bank an attractive investment, especially for investors seeking exposure to Japan’s evolving financial landscape. Mizuho Financial (NYSE:MFG) ranks in the fourth spot on our list of the 8 cheap penny stocks to buy right now.
3. Silvercorp Metals, Inc. (NYSE:SVM)
Share Price: $4.40
Forward P/E: 12.85
EPS Growth This Year: 65%
Number of Hedge Fund Holders: 13
Silvercorp Metals (NYSE:SVM) is a Canadian mining company that produces gold, silver, lead, and zinc. It operates several silver-lead-zinc mines in China, including the Ying Mining District in Henan Province and the GC silver-lead-zinc mine in Guangdong Province. While the company’s producing mines are in China, its development and exploration projects are in Mexico and China.
The company owns seven underground mines in the Ying Mining District and two processing plants with a combined capacity of 2,500 tpd. The GC silver-lead-zinc mine is 200km west of Guangzhou, while the BYP Mine lies 220km southwest of Changsha. Silvercorp Metals (NYSE:SVM) also focuses on the Kuanping and La Yesca projects.
The company recently announced the completion of the acquisition of Adventus Mining Corporation. The acquisition positions Silvercorp Metals (NYSE:SVM) to gain a competitive advantage by promising benefits such as geographic diversification into a new and promising mining jurisdiction. A significant part of this acquisition is El Domo, Adventus’s flagship asset and an advanced copper-gold project in Ecuador. Adventus’s advanced stage and permit status means the project is well-positioned for immediate improvement and advancement toward production.
Besides geographic diversification, Silvercorp Metals (NYSE:SVM) stands to benefit from substantial metal diversification, growing its capabilities in key metals such as silver, lead, zinc, copper, and gold. It is set to increase its production growth in the short and long term.
According to the company, the acquisition is also likely to improve its precious metal exposure significantly. The combined resources are expected to increase the company’s silver-equivalent ounces to 473 million, a substantial increase from the current 217 million ounces. In addition, the acquisition will likely result in growth on a copper-equivalent basis, increasing company resources from 361 million tons to 667 million tons.
Silvercorp Metals (NYSE:SVM) is thus on the path to increasing its scale and expanding its growth profile. Its strategic alignment positions it as a significant player in the green metals sector, enabling it to take advantage of the global demand for diversified metal resources. All these factors make it one of the best cheap penny stocks to buy right now.
2. Taseko Mines Ltd (NYSE:TGB)
Share Price: $2.56
Forward P/E: 12.64
EPS Growth This Year: 81.80%
Number of Hedge Fund Holders: 13
Taseko Mines (NYSE:TGB) is a copper-focused mining company located in Canada. Its principal assets are the 100% owned Gibraltar mine in central British Columbia. It is one of the largest copper mines in North America. The Florence Copper project, which is currently under construction, also falls under the company’s portfolio. In addition, it owns the Yellowhead copper, Aley niobium, and New Prosperity gold-copper projects. The Florence Copper Project is located in Florence, Arizona, south of Phoenix, while the Yellowhead Project is in British Columbia’s Thompson-Nicola region. The Aley niobium project is located in northeast British Columbia, while the New Prosperity property lies in south-central British Columbia, with one of the most substantial gold and copper deposits in Canada.
Taseko Mines (NYSE:TGB) had several significant accomplishments in 2024, positioning it on the path to profitability. Some of these include consolidating 100% ownership of its Gibraltar mine, refinancing its bonds, completing the project financing for Florence, and kickstarting a positive start to the construction activities for the Florence project. The company also completed the CAD50 million (around $37 million) in-pit crusher relocation project. This 2-year project was a significant undertaking for its operations. Its Concentrator#1 is also back up, with both mills now running at capacity and paving the way for a strong second half of 2024.
2025 is shaping to be a good production year for the company, with its concentrate production expected to be supplemented by additional pounds from the restart of the Gibraltar SX/EW plant. The company has been stacking new oxide ore from the connector pit onto the old leach pads over the last few quarters. It plans to have more than 50 million pounds of contained copper in the leach dumps by next year, along with advanced plans to refurbish the plant in 2025. Taseko Mines (NYSE:TGB) is expected to restart cathode production in Q2 2025. Such initiatives position the company on the path to profitability, making it an attractive investment and landing it on our list of the top cheap penny stocks to buy right now.
1. Banco Bradesco S.A. (NYSE:BBD)
Share Price: $2.69
Forward P/E: 8.54
EPS Growth This Year: 9.40%
Number of Hedge Fund Holders: 20
Formerly known as Banco Brasileiro de Descontos SA, Banco Bradesco (NYSE:BBD) is a public company based in Brazil that engages in the Banking Services Industry Group. It operates as a wide-ranging commercial bank in terms of credit operations, total assets, and the volume of funding and deposits. It boasts a broad range of banking and financial services and products for key national and international institutions, companies, and individuals in Brazil and abroad.
The bank is on the path to solid and safe profitability growth. It expanded its portfolio in all segments, including the wholesale bank. Overall, Banco Bradesco (NYSE:BBD) is growing in line with the market, experiencing improvement in NPL in all segments. It also posted growth in the coverage ratio, and its operating expenses are growing in line with its expectations, accelerating its footprint with discipline.
The bank is experiencing growth in SMEs, MEs, foreign trade, real estate, and working capital. This growth trajectory ensures a good balance for the company in the coming quarters, highlighting its strong operational model. It also demonstrates its capability of commercial attraction, as it is improving its portfolio management by deploying new models.
Banco Bradesco (NYSE:BBD) is likely to continue performing well in the second half of 2024, primarily due to its new modeling system, the intensive use of machine learning, process improvement, credit card management, and an increase in personnel. It is also delivering more expanded use of generative AI in its operations, streamlining processes by helping interactions with employees and clients in several segments.
Overall, BBD ranks first among the 8 cheap penny stocks to buy right now. While we acknowledge the potential of penny stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BBD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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