In this article, we will be taking a look at the 10 best debt free penny stocks to invest in. To see more stocks, click 5 Best Debt Free Penny Stocks to Invest In.
Penny Stocks
Penny stocks refer to the shares of the companies that are trading at a low price and have low liquidity. Typically, stocks that trade for less than $5 per share are considered to be penny stocks. A majority of these stocks trade on the over-the-counter (OTC) markets but some penny stocks may also be traded on major stock exchanges such as the NASDAQ or the NYSE.
Penny stocks typically represent companies at the growth stage with limited resources. The growth stage, combined with the illiquid nature of the stocks, renders these stocks highly volatile with a potential for sudden significant changes in share prices. With a high degree of risk, these stocks also offer an opportunity to generate significant returns.
Debt Free Stocks
Companies typically use debt to finance their operations or to acquire assets. Utilization of debt for business purposes can help a company add value if used correctly. Incorrect usage of debt, on the other hand, has the potential to destroy value. Some companies and some industries can take on more debt than others depending on the fundamentals.
Debt free stocks have more cash and other liquid assets than debt on their balance sheets. Low debt on balance sheets bodes well for the future possibility of the company to remain operational through existing financial resources as well as a comparatively greater ability to raise debt, if required, in the future at competitive rates. These companies are also better off in periods of economic downturn as they have low financial obligations to meet.
Market Conditions
The United States financial markets as well as other major global markets are facing turbulent times due to increasing interest rates, fears of recession and the resultant banking crisis that has emerged in the past few weeks. The banking crisis began on March 10 when SVB became the biggest U.S. bank failure since the collapse of Lehman Brothers in 2008.
In addition to the banking crisis, the economic downturn has raised concerns about a recession. Adverse financial conditions led to a 12-year high for corporate bankruptcies in the United States during the first two months of 2023, according to a report by S&P Global Market Intelligence. A total of 111 bankruptcies were filed during the two months with a potential for additional bankruptcy filings in the upcoming months.
Methodology
We used stock screeners to shortlist stocks that were trading at a share price of less than $5 as of March 27 to identify penny stocks. The selection was further narrowed down to identify debt free companies by screening for companies that had zero debt to equity or zero long term debt to equity ratios according to Finviz.com.
We then filtered the list and retained companies with strong product pipelines, growth catalysts, and positive market sentiment. The final step involved the ranking of the identified list of stocks based on their popularity among the top hedge funds tracked by Insider Monkey.
10. Organigram Holdings Inc. (NASDAQ:OGI)
Number of Hedge Fund Holders: 7
Organigram Holdings Inc. (NASDAQ:OGI), based in Moncton, Canada, is a leading Canadian licensed producer of high-quality medical and recreational cannabis. The company was founded in 2013 and began operations as a medical cannabis provider. It has since expanded its focus to producing indoor-grown cannabis for patients and adult recreational consumers.
In March 2021, Organigram Holdings Inc. (NASDAQ:OGI) announced the formation of a strategic partnership with British American Tobacco plc (NYSE:BTI). As part of the agreement, British American Tobacco plc (NYSE:BTI) acquired nearly 20% shares of Organigram Holdings Inc. (NASDAQ:OGI) for a total consideration of C$221 million. The companies agreed to collaborate for the accelerated development of the next generation of cannabis products with an initial focus on CBD.
On January 12, Organigram Holdings Inc. (NASDAQ:OGI) released its financial results for the three months ended November 30, 2022. Its net revenues surged by 43% y-o-y to C$43 million, while the company reported a net income of C$5.3 million. Following the results announcement, Stifel analyst Andrew Partheniou upgraded Organigram Holdings Inc. (NASDAQ:OGI) shares to “Buy” from “Hold” with a price target of C$1.50 per share.
9. Kopin Corporation (NASDAQ:KOPN)
Number of Hedge Fund Holders: 9
Westborough, Massachusetts-based Kopin Corporation (NASDAQ:KOPN) is a leading provider of application-specific optical solutions for defense, enterprise, industrial, and consumer products. Its technology portfolio includes ultra-small micro displays (AMLCD, OLED, FLCOS and Micro LED displays), optics, speech enhancement technology, and low-power ASICs.
In January 2023, Kopin Corporation (NASDAQ:KOPN) announced a restructuring of the company which included a partial spinout of its OLED Development Unit. As part of the restructuring, the company agreed to license its OLED intellectual property to newly formed Lightning Silicon, Inc. which will focus on advancing OLED micro-display technologies and manufacturing strategies for the consumer AR and VR applications. Kopin Corporation (NASDAQ:KOPN) retained a 20% ownership in the new company and will receive royalties for the products built on its IP.
Kopin Corporation (NASDAQ:KOPN) also conducted a secondary offering of its common stock which is expected to raise gross proceeds of nearly $20 million. The company intends to use the net proceeds it receives from the offering for working capital and general corporate purposes.
8. HUYA Inc. (NYSE:HUYA)
Number of Hedge Fund Holders: 11
Guangzhou, China-based HUYA Inc. (NYSE:HUYA) is a leading game live streaming platform in China with a large and active game live streaming community. The company partners with e-sports event organizers, as well as major game developers and publishers, and has developed e-sports live streaming as one of the most popular content genres on its platform which has more than 86 million average monthly active users.
HUYA Inc. (NYSE:HUYA) reported its financial results for the third quarter of 2022 on November 15. It generated a revenue of $334 million and a net income of $8.5 million.
On December 13, China Renaissance analyst Yiwen Zhang upgraded HUYA Inc. (NYSE:HUYA) shares to “Buy” from “Hold” with a price target of $4.20 for its shares. The analyst is bullish on the shares for the company’s leadership position and potential improvements in the company’s bottom line during 2023.
7. DouYu International Holdings Limited (NASDAQ:DOYU)
Number of Hedge Fund Holders: 11
DouYu International Holdings Limited (NASDAQ:DOYU) is a leading game-centric live streaming platform in China. It operates its platform on both PC and mobile apps and offers a wide array of video and graphic contents, as well as opportunities to participate in community events and discussions. It had 57.1 million average monthly active users and 5.6 million quarterly average paying users.
As of Q4 2022, 11 leading hedge funds tracked by Insider Monkey owned shares of DouYu International Holdings Limited (NASDAQ:DOYU), valued at $42 million. Its largest shareholder was Oasis Management with ownership of 12.9 million shares valued at $18 million.
6. Denison Mines Corp. (NYSE:DNN)
Number of Hedge Fund Holders: 14
Toronto, Ontario-based Denison Mines Corp. (NYSE:DNN) is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan. It has an effective 95% interest in the Wheeler River Uranium Project and also has several other ownership interests including 22.5% interest in Strategic McClean Lake Uranium Mill, and 66.9% interest in emerging Waterbury Lake project, among others.
In November 2022, Denison Mines Corp. (NYSE:DNN) announced that it had successfully completed the neutralization phase of the Phoenix recovery Feasibility Field Test at its Wheeler River Project. The test demonstrates the amenability of mining at the project and has paved the way for the company to complete its feasibility study during H1 2023.
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Disclosure: None. 10 Best Debt Free Penny Stocks to Invest In is originally published on Insider Monkey.