Penny stocks are defined as stocks under $5, and while some may have their own definitions, the general traits remain consistent. With some exceptions, penny stocks are either shares of companies just getting started or ones that’ve fallen on hard times. While the consensus might suggest these stocks are solely traded on the OTC (Over-The-Counter), there are still plenty of NYSE & NASDAQ-listed penny stocks.
Since penny stocks are “cheap” compared to the likes of Apple (NASDAQ: AAPL) or Twitter (NYSE: TWTR), traders treat them with less regard. They’re highly volatile and, in some cases, involve less savory companies with little operating history. Are penny stocks worth it? Should you take a chance with your money on them?
Depending on your taste for taking risks, knowing how to trade penny stocks can be a very lucrative endeavor. Some companies can go on to become market leaders. Novavax (NASDAQ: NVAX) is a recent example of this, as it ran from under $5 to more than $300 at one point during the height of the vaccine stock rally last year. We’ve also seen high-profile companies fall victim to shoddy leadership, bad operating strategies, and terrible luck involving outside influences, including political agendas.
Shares of electric vehicle company Nio Inc. (NYSE: NIO) fell victim to such situations. NIO stock dropped into penny stock territory a few years back. It would ultimately reach a low of $1.19 before mounting an epic, multi-year move to highs of over $60. It isn’t an outlier, though. Plenty of household stocks have fallen on hard times and currently trade as penny stocks.
Household Stocks, Now Penny Stocks
- Stryve Foods, Inc. (NASDAQ: SNAX)
- 23andMe Holding Co. (NASDAQ: ME)
- BuzzFeed, Inc. (NASDAQ: BZFD)
- Hims & Hers Health, Inc. (NYSE: HIMS)
- The Beachbody Company, Inc. (NYSE: BODY)
- ContextLogic Inc. (NASDAQ: WISH)
- SmileDirectClub Inc. (NASDAQ: SDC)
- Clear Channel Outdoor Holdings Inc. (NYSE: CCO)
- Express Inc. (NYSE: EXPR)
These are just a few of the household penny stocks traders are watching for a revival to more “formidable” prices. While these names are now trading below $5, traders may wonder if other household stocks like Tattooed Chef (NASDAQ: TTCF) will join the ranks next.
Will TTCF Stock Become A Penny Stock?
As of this article, shares of Tattooed Chef stock are trading below $10. They’re still nearly 100% higher than the penny stock threshold. But if you look at the TTCF chart, it may paint a bigger picture as to why some are asking, “will Tattooed Chef stock become a penny stock?“
Since September of last year, TTCF stock has been in freefall. Shares are down roughly 60% from those $25.35 highs. The plant-based food company has fallen on hard times, missing earnings expectations and cutting guidance. Recent 2021 results revealed some interesting results as well. But even with a revenue jump of over 40% compared to 2020, investors have remained unimpressed. Tattooed Chef branded product revenue even jumped over 50% year over year. Last year, the company also launched its first national media campaign to boost brand awareness while nearly doubling its product SKUs.
“We expect the recently acquired Belmont Confections facility to begin transitioning to the manufacture of Tattooed Chef branded bars beginning in the second quarter of 2022 and we expect that the two facilities acquired as part the New Mexico Food Distributors transaction will be fully operational and manufacturing both private label and Tattooed Chef branded products during the second quarter of 2022,” said Sam Galletti, President, and CEO, in a March 16th update. “We have also taken steps to strengthen the vertically integrated nature of our operations by initiating company-wide investments in automation, staffing, cold storage facilities, and internal R&D. We believe that these improvements will support our anticipated revenue growth, deliver operating efficiencies, accelerate our ability to achieve scale, and enhance margins.”
TTCF Stock Forecast
Has this growth and outlook come just in time, or is it too little too late (for now)? With TTCF stock earnings in the rearview, traders and analysts are looking for an execution story. But for now, the TTCF stock forecast is a bit more mixed than some may like:
- Roth Capital TTCF Stock Forecast: Buy, Price Target Cut From $24 to $16
- Jefferies TTCF Stock Forecast: Hold, Price Target Set at $17
- Cowen & Co. TTCF Stock Forecast: Outperform, Price Target Set at $24
Even with the 60%+ drop in the TTCF stock price, all recent analyst ratings put an expected upside at nearly 100% or more. In addition to this, traders may look for Tattoed Chef to execute on its expected milestones for 2022. These include:
- Revenue of $280- $285 million, driven by a combination of new product introductions, an increase in retail distribution via new relationships and penetrating existing accounts compared to 2021, and contributions from acquisitions consummated in 2021.
- Gross margin of 10-12%
- Marketing expenses of $27- $32 million
- Capital expenditures of approximately $20 million, with investments, focused on automation and robotics at our manufacturing facilities.
This is according to the latest earnings update last month.
Should You Buy TTCF Stock?
So, should you buy Tattooed Chef stock right now? While this isn’t a complete report on TTCF, it does point out some of the things that could’ve been negative catalysts to the current downtrend. Given the outlook from analysts and the expectations for executing on growth in 2022, Tattooed Chef appears to have garnered a least some bullish attention. But how that will translate into the market is yet to be seen.
Something else to consider is how the company will fund this growth. Based on its 2021 earnings report, capital expenditures jumped to $63.8 million compared to $7 million in 2020. Roughly $47 million of this was to fund acquisitions. Tattooed Chef had more than $90 million in cash and cash equivalents at the end of 2021, so the question now is how will the money spent on acquisitions in 2021 translate to 2022’s performance?
If TTCF is on your watch list right now, leave a comment about your outlook for the company and whether or not you think new lows are in store.
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