In this article, we will take a look at the 13 high growth penny stocks that are profitable. To skip our analysis of the recent market trends and activity, you can go directly to see the 5 High Growth Energy Stocks to Buy.
Penny stocks are shares of companies that trade at a share price of less than $5. Typically, penny stocks belong to small companies and their shares trade over the counter (OTC). In addition to penny stocks that only trade in OTC markets, there are plenty of penny stocks that trade on large exchanges such as the New York Stock Exchange and the NASDAQ. Although penny stock companies typically have market capitalizations of less than $1.0 billion, there market capitalizations can range from thousands of dollars to billions of dollars.
Penny stocks mostly represent small companies and companies at the starting level of the business level. This increases the potential for exponential growth in the future if conditions favor these companies. On the other hand, their small size and early stage of growth makes these companies susceptible to adverse market conditions. Briefly put on the one hand, penny stocks offer huge potential upsides, on the other hand, they also pose huge downsides.
Small-caps and penny stocks have taken a beating in the recent past as interest rates suddenly picked up. The United States Federal Reserve raised the benchmark policy rate from a low of 0.25% to a mammoth range of 5.25% to 5.5% during March 2022 to July 2023 to tame inflation. With increasing cost of capital, small-cap stocks and penny stocks were among the stocks hit hardest. The macroeconomic environment is expected to post a recovery with the potential for interest rate cuts this year as inflation has relatively been tamed.
According to UBS Insights’ posted by Chief Investment Office last month, the outlook for small companies looks bright with the companies poised for good performance this year. The report cites several reasons for the potential resurgence of small companies including faster earnings growth for smaller companies as well as bigger benefits from rate cuts, compared to larger peers. In addition, the report makes the following comments about the valuations of small-cap companies:
“Whether looking at price-to-earnings or price-to-book, relative valuations are still 10% to 15% lower than where they stood right before the regional banking crisis, suggesting still healthy relative upside for small-cap companies in the coming months.”
Majority of the stocks on our list of 13 high growth penny stocks that are profitable have respective market capitalizations of less than $1.0 billion, at the time of writing. There are only two exceptions to this: the cross-border payment platform, Payoneer Global Inc. (NASDAQ:PAYO) and Canadian oil producer, Baytex Energy Corp. (NYSE:BTE). These companies have rapidly grown their revenues in the recent past through new product launches, expansions, and other activities. The list includes companies from different sectors with nearly half the companies on the list belonging to healthcare and energy sectors.
Copyright: wrangel / 123RF Stock Photo
Methodology
To compile our list of 13 high growth penny stocks that are profitable, we first made a list of stocks with a share price of less than $5 and a year-over-year revenue growth of more than 30% for the latest quarter, as of February 7. We only retained companies with market capitalization of more than $50 million and also removed companies with unfavorable analyst recommendations. Out of these, the stocks with the highest revenue growth rates and positive net profit figures were selected. The stocks on our list have been ranked in an ascending order of revenue growth rate.
For each stock, we have also mentioned hedge fund sentiment. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13. Payoneer Global Inc. (NASDAQ:PAYO)
Latest YoY Quarterly Revenue Growth: 30.90%
Number of Hedge Fund Holders: 27
Based in New York, Payoneer Global Inc. (NASDAQ:PAYO) is a financial services company providing a global financial platform that allows small and medium-sized businesses to pay and get paid, manage their funds, and grow their business.
On November 8, Payoneer Global Inc. (NASDAQ:PAYO) released its financial results for Q3 2023. Its revenue increased by 31% y-o-y to $208 million. Its normalized EPS of $0.03 missed consensus estimates by $0.02.
As of Q4 2023, Payoneer Global Inc. (NASDAQ:PAYO) shares were held by 27 out of 933 hedge funds tracked by Insider Monkey, the highest number on our list of 13 high growth penny stocks that are profitable. Its largest shareholder was Israel Englander’s Millennium Management with ownership of 6.4 million shares valued at $27 million.
12. Global Blue Group Holding AG (NYSE:GB)
Latest YoY Quarterly Revenue Growth: 38.22%
Number of Hedge Fund Holders: 14
Signy, Switzerland-based Global Blue Group Holding AG (NYSE:GB) is a tourism shopping tax refund company best known for providing solutions for tax-free shopping, VAT/GST refunds, and dynamic currency conversion, marketing services, point-of-sale technology, retail staff education, and customer intelligence.
On November 29, Global Blue Group Holding AG (NYSE:GB) released its financial results for Q3 2023. Its total revenues increased by 38% y-o-y to €113 million, while it generated an adjusted net income of €14 million.
Concurrent to the quarterly results, Global Blue Group Holding AG (NYSE:GB) announced the completion of a strategic equity investment of $100 million from Tencent. The transaction included the acquisition of 9.1 million newly issued shares of the company by Tencent for $50 million and the acquisition of 9.1 million shares from Silver Lake Partners and board and management of the company, for $50 million. The company intends to use the proceeds from the transaction to reduce its debt balance.
As of Q4 2023, 14 of the 933 hedge funds tracked by Insider Monkey held Global Blue Group Holding AG (NYSE:GB) shares. Silver Lake Partners held the highest number of shares among hedge funds with ownership of 126 million shares valued at $597 million.
11. OppFi Inc. (NYSE:OPFI)
Latest YoY Quarterly Revenue Growth: 43.8%
Number of Hedge Fund Holders: 14
Based in Chicago, Illinois, OppFi Inc. (NYSE:OPFI) is a tech-enabled, specialty finance platform that broadens the reach of community banks to extend credit access. It facilitates credit access to American citizens that currently lack traditional options.
On November 9, OppFi Inc. (NYSE:OPFI) released its financial results for Q3 2023. Its net revenue increased by 44% y-o-y to $76 million while it generated a net income of $15.5 million. Its normalized EPS of $0.16 surpassed consensus estimates by $0.09.
OppFi Inc. (NYSE:OPFI) also raised its earnings guidance for full year 2023. It increased the adjusted net income guidance from a range of $29 million to $35 million to a range of $40 million to $42 million which represents an adjusted EPS range of $0.47 to $0.49.
10. VAALCO Energy, Inc. (NYSE:EGY)
Latest YoY Quarterly Revenue Growth: 48.91%
Number of Hedge Fund Holders: 13
Houston, Texas-based VAALCO Energy, Inc. (NYSE:EGY) is an energy company principally engaged in the acquisition, development, and production of crude oil. Its properties and acreage are located primarily offshore Gabon, onshore Egypt, and offshore Equatorial Guinea in Africa, and in western Canada.
In October 2022, VAALCO Energy, Inc. (NYSE:EGY) completed its all-stock acquisition of TransGlobe Energy Corporation which boosted the company’s size and scale through material growth in proved reserves and production volumes.
VAALCO Energy, Inc. (NYSE:EGY) declared its quarterly cash dividend of $0.0625 per share of common stock for Q4 2023 which translates to annualized dividend of $0.25 and a dividend yield of 8.20% based on the share price on February 7.
VAALCO Energy, Inc. (NYSE:EGY) ranks #4 on our list of 13 high growth penny stocks that are profitable based on the number of hedge funds that held its shares as of Q4 2023. Its shares were held by 13 hedge funds with Jim Simons’ Renaissance Technologies leading the way with ownership of 2.1 million shares valued at $9.4 million.
9. Taseko Mines Limited (NYSE:TGB)
Latest YoY Quarterly Revenue Growth: 60.33%
Number of Hedge Fund Holders: 7
Vancouver, Canada-based Taseko Mines Limited (NYSE:TGB) is a growing mid-tier mining company focused on acquiring, advancing, and operating mines and mineral properties in Canada and the United States. Its portfolio includes a fully operational copper mine, Gibraltar, in British Columbia, as well as wholly owned, large-scale, advanced-stage development projects.
On November 6, Taseko Mines Limited (NYSE:TGB) announced approval for $100 million in additional financing for its Florence Copper Project in Arizona, USA. The financing includes $50 million royalty investment from Taurus Mining Royalty Fund L.P. and $50 million senior secured debt facility from Societe Generale.
Taseko Mines Limited (NYSE:TGB) shares were held by 7 of the 933 prominent hedge funds tracked by Insider Monkey, as of Q4 2023. Jim Simons’ Renaissance Technologies was the largest hedge fund shareholder of the company with ownership of 5.2 million shares valued at $7.3 million.
8. Dynagas LNG Partners LP (NYSE:DLNG)
Latest YoY Quarterly Revenue Growth: 62.54%
Number of Hedge Fund Holders: N/A
Athens, Greece-based Dynagas LNG Partners LP (NYSE:DLNG) is a growth-oriented limited partnership focused on owning and operating high specification and versatile LNG carriers that are employed on multi-year contracts with international energy companies. Its current fleet consists of six LNG carriers, with aggregate carrying capacity of approximately 914,000 cubic meters.
On December 7, Dynagas LNG Partners LP (NYSE:DLNG) released its financial results for Q3 2023. Its total revenue increased by 63% y-o-y to $48.6 million while net income decreased by 81% y-o-y to $1.4 million. Its normalized EPS of $0.01 missed consensus estimates by $0.10.
Like other stocks such as Global Blue Group Holding AG (NYSE:GB), Payoneer Global Inc. (NASDAQ:PAYO), and Baytex Energy Corp. (NYSE:BTE), Dynagas LNG Partners LP (NYSE:DLNG) is among the 13 high growth penny stocks that are profitable.
7. Baytex Energy Corp. (NYSE:BTE)
Latest YoY Quarterly Revenue Growth: 63.34%
Number of Hedge Fund Holders: 16
Calgary, Alberta-based Baytex Energy Corp. (NYSE:BTE) is an energy company engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States.
On November 28, Baytex Energy Corp. (NYSE:BTE) announced the sale of certain of its Viking assets located at Forgan and Plato in southwest Saskatchewan for C$154 million. The company intends to use the net proceeds from the sale to reduce its bank indebtedness.
Earlier in June, Baytex Energy Corp. (NYSE:BTE) completed the acquisition of Ranger Oil Corporation for a total cash and stock consideration of $2.2 billion. The acquisition adds 162,000 net acres in the crude oil window of Eagle Ford.
Baytex Energy Corp. (NYSE:BTE) ranks #2 on our list of 13 high growth penny stocks that are profitable based on the number of hedge funds that hold its shares. As of Q4 2023, its shares were owned by 16 leading hedge funds based on the Insider Monkey data.
6. Xtant Medical Holdings, Inc. (NYSE:XTNT)
Latest YoY Quarterly Revenue Growth: 72.41%
Number of Hedge Fund Holders: 7
Belgrade, Montana-based Xtant Medical Holdings, Inc. (NYSE:XTNT) is a global medical technology company focused on the design, development, and commercialization of a portfolio of orthobiologics and spinal implant systems to facilitate spinal fusion in complex spine, deformity, and degenerative procedures.
In August, Xtant Medical Holdings, Inc. (NYSE:XTNT) completed the acquisition of certain assets and liabilities related to the domestic and international biologics and spinal fixation offerings of Surgalign Holdings, Inc. under a Bankruptcy Court supervised process for $5 million. Later on, in October, the company also acquired the nanOss production operations from RTI Surgical, Inc., for $2 million in cash.
On November 9, Xtant Medical Holdings, Inc. (NYSE:XTNT) released its quarterly results for Q3 2023. Its revenue increased by 73% y-o-y to $25 million and it generated a net income of $9 million, compared to a net loss of $2.4 million.
As of Q4 2023, Xtant Medical Holdings, Inc. (NYSE:XTNT) shares were held by 7 hedge funds tracked by Insider Monkey. Its largest shareholder was Samuel Isaly’s OrbiMed Advisors with ownership of 73.1 million shares valued at $83 million.
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Disclosure: None. 13 High Growth Penny Stocks That Are Profitable is originally published on Insider Monkey.