Beyond blue chips, small-cap penny stocks with prices under $5 per share offer thrilling upside for risk-tolerant investors, especially when economic tailwinds bolster markets. This guide spotlights prime penny stock opportunities primed to soar past $5 into small-cap territory in 2024 as their innovative businesses flourish.
What Are Penny Stocks
Defined as equities trading below $5 per share, penny stocks generally have market capitalizations below $300 million coupled with lower liquidity and financial reporting transparency than mature blue chips. However, their tiny market caps multiply rapidly around transformative business developments. Penny stocks list over-the-counter on exchanges like OTCQB and OTC Pink but many also call the NYSE and Nasdaq home.
Mitigating Penny Stock Risks
Despite exciting breakout potential, plenty of penny stocks end up worthless, given the heightened execution risks confronting unproven early-stage businesses. Still, diversifying mitigates company-specific failures. Monitoring management execution progress and setting disciplined stop losses around 8-10% protects against fraud or deficiency risks as well.
2024 Macro Backdrop Fueling Penny Stocks
With inflation cooling in 2023, central banks like the Fed cutting interest rates boost economic GDP growth forecasts to 3% by late 2024. Lower rates and improving business spending also lift small-cap indices, fueling penny stock runs. The current penny stock bull market entering its 13th year, still shows legs with these supportive monetary policy tailwinds.
4 Penny Stocks To Watch Heading Into 2024
With markets heating up, penny stocks boast emerging opportunities in key industries, including healthcare and technology. Their groundbreaking innovations and explosive growth set them on a path that is turning heads right now. Whether their small-cap status holds through 2024 or they blossom into mid-cap market leaders is to be seen. For now, we can at least check out recent catalysts at play, which could be taken into account next year. Just keep in mind that just because these “can” be bought for under $5, that doesn’t lessen the risk.
- RedHill Biopharma Ltd. (NASDAQ: RDHL)
- Blink Charging Co. (NASDAQ: BLNK)
- Baytex Energy Corp. (NYSE: BTE)
- Bit Digital, Inc. (NASDAQ: BTBT)
RedHill Biopharma Ltd. (RDHL)
Specialty biopharmaceutical company RedHill Biopharma Ltd., focuses on gastrointestinal and infectious diseases. RedHill promotes gastrointestinal drugs Talicia® and Aemcolo®, and has key late-stage development programs in various areas, including COVID-19 and oncology.
This week RedHill stock gained momentum after new headlines surfaced. The company announced that its investigational drugs, opaganib and RHB-107 (upamostat), show a synergistic effect with remdesivir against Ebola. These drugs, taken orally, have previously shown activity against multiple viruses, including COVID-19. The study, funded and conducted by the U.S. Army, revealed that combining these drugs with remdesivir improved viral inhibition while maintaining cell viability.
Why Investors Choose Penny Stocks Over Blue Chips
Reza Fathi, Ph.D., RedHill’s SVP R&D explained, “Opaganib and RHB-107 are both novel, oral, host-directed, small molecule investigational drugs with demonstrated activity against multiple viral targets, including COVID-19, and are expected to be effective against emerging viral variants.”
This news comes a few weeks after RedHill confirmed that it received roughly $4.8 million in additional non-dilutive external funding. It will cover all of a study of RHB-107 for early COVID-19 outpatient treatment, according to the company.
Blink Charging Co. (BLNK)
Electric vehicle (EV) charging equipment and services company Blink has deployed nearly 85,000 charging ports worldwide, many of which are networked EV charging stations. Blink’s primary products and services include the Blink EV charging network, charging equipment, and various acquisitions. The company is expanding its global presence and has recently announced plans to expand operations in the United Kingdom and Ireland.
In addition to the spike of interest in EV stocks, BLNK stock news has come back into focus in the stock market before 2024. The company recently announced a partnership with Mack Trucks to provide EV charging infrastructure for Mack’s customers. This collaboration involves Blink’s EV charging equipment, optimized for fleets, under Mack’s Vendor Direct Ship and Turnkey Solutions program.
The program covers all phases of infrastructure development, including site consultations, hardware and software acquisition, permit procurement, installation, and maintenance. Blink’s advanced charging solutions are key to supporting Mack’s electrification efforts, and the company has begun deploying chargers at Volvo and Mack facilities nationwide.
Blink Charging’s partnership with Mack Trucks signifies a big step in its expansion strategy, offering potential for growth. However, the company’s financial health and the competitive nature of the EV charging market present challenges. Those with BLNK stock on their watch list may want to weigh the company’s growth prospects against these risks.
In addition, some interest from Ken Griffin has also perked up some attention in the market. Ken Griffin’s Citadel Advisors increased their stake in Blink Charging (BLNK), now holding 610,671 shares. Other major shareholders, including BlackRock, Vanguard, and State Street, also increased their stakes in BLNK stock during the third quarter.
Baytex Energy Corp. (BTE)
This energy company focuses on the acquisition, development, and production of crude oil and natural gas. Baytex operates primarily in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. It engages in the exploration and production of light oil, condensate, heavy oil, natural gas liquids, and natural gas.
Thanks to the rise in energy prices at the end of the year, oil and gas stocks have come back into focus. Baytex recently issued its outlook report, which has helped it gain attention in the market. In its 2024 budget and five-year outlook, the company placed a focus on free cash flow generation and shareholder returns. The 2024 budget, approved by the Board of Directors, is set at $1.2 to $1.3 billion for exploration and development expenditures, aimed at generating average annual production of 150,000 to 156,000 boe/d.
The company expects to generate about $530 million of free cash flow in 2024 and plans to allocate 50% of this to share buybacks and dividends, with the other 50% to strengthen the balance sheet. The capital program is forecast to generate capital efficiencies of approximately $22,000 per boe/d across the portfolio.
For 2024-2028, Baytex expects to achieve 1%-4% annual production growth, reaching approximately 170,000 boe/d by 2028. The company also purchased insurance coverage to manage litigation risk related to tax reassessments received from the Canada Revenue Agency.
The company’s focus on production growth and capital efficiency, coupled with a balanced approach to capital allocation, may be encouraging for some. However, investors should also consider the potential risks associated with the tax issue and market volatility in the energy sector.
Bit Digital, Inc. (BTBT)
Crypto prices are back on the move and crypto stocks are in the spotlight again. Bit Digital is among the list of penny stocks to watch, operating in digital assets and AI infrastructure. It’s known for bitcoin mining in the US, Canada, and Iceland. Bit Digital also runs Bit Digital AI, providing cloud-infrastructure services for AI applications.
In November 2023, Bit Digital produced 142.7 BTC, a 24% increase from the previous month. In its production update, the company also said that it held 551.8 BTC and 16,064.8 ETH, valued at approximately $20.8 million and $33.0 million, respectively, on November 30, 2023. The BTC equivalent of their digital asset holdings was around 1,465.1 BTC, worth approximately $55.3 million.
Bit Digital further explained that it received a prepayment for the first month from its first customer for the Bit Digital AI business. It anticipates earning between $35 million and $37 million in revenue from this contract in 2024. While Bit Digital shows operational strength and diversification into AI, inherent risks of cryptocurrency market fluctuations and regulatory changes should be considered. The company’s expansion into AI infrastructure offers an avenue for growth, but this sector’s competitiveness and rapid evolution require careful monitoring.
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