- Superior Micro Units (NASDAQ:AMD): A former penny inventory that turned insanely worthwhile, grew to become a $100 inventory in lower than 5 years
- BBQ Holdings (NASDAQ:BBQ): Inventory rose from $1.65 per share lows to almost $20 as earnings began trickling in
- Syndax Prescribed drugs (NASDAQ:SNDX): A most cancers drug developer whose latest licensing income catapulted it to profitability… and out of penny inventory buying and selling ranges
- VAALCO Power (NYSE:EGY): Rode on oil worth surges to profitability
- Digital Turbine (NASDAQ:APPS): Generated a 4,000% return in 5 years as sustained gross sales progress made operations worthwhile
- eXp World Holdings (NASDAQ:EXPI): Penny inventory in 2017, began being profitable in 2020 and hit a 52-week excessive of $55 in 2021
- The Joint Corp. (NASDAQ:JYNT): Broke into profitability in 2018 and has grown earnings ever since.
Penny shares could also be infamous for his or her excessive volatility and excessive funding threat; nevertheless, a number of penny inventory success tales nonetheless encourage aggressive growth-oriented buyers to make small capital allocations to the speculative investments as a consequence of their potential to supply life-changing returns within the shortest occasions doable – particularly if the small corporations lastly begin making sustainable earnings.
Most penny stocks are corporations with poor fundamentals. They’re largely small, unprofitable companies that burn shareholders’ capital, little corporations with unproven enterprise fashions and generally embrace corporations headed for chapter. Nevertheless, their fortunes change dramatically as soon as they begin displaying indicators of sustainable profitability.
The essence of each business enterprise is to make cash — and several other former penny shares that used to commerce beneath $5 a share have traditionally graduated and grown into multi-billion-dollar companies that provided early buyers big capital beneficial properties as soon as they began displaying a capability to make cash and to generate optimistic money move from operations.
Really, a number of the former penny stocks on my list grew to become $100 shares or higher as soon as they turned worthwhile. Not solely did the businesses make cash; they gifted their devoted buyers with sizeable returns in the course of the transition and lots of proceed to supply vital upside at present as earnings develop.
As a long-term oriented investor, 5 years is a reasonably lengthy sufficient interval for an organization to start out displaying some capability to earn cash sustainably and win over buyers’ hearts.
Under is a curated listing of seven penny inventory success tales that made cash and rewarded early buyers handsomely in the course of the previous 5 years or so.
|AMD||Superior Micro Units||$101.00|
|SNDX||Syndax Prescribed drugs||$17.51|
||eXp World Holdings||$16.90|
||The Joint Corp.||$34.13|
Penny Shares Success Story: Superior Micro Units (AMD)
It appears unbelievable that buyers may purchase Superior Micro Units inventory at costs beneath $5 a share simply six brief years in the past. Really, shares in the micro-chip and semiconductor giant modified fingers at costs between $2 and $5 a share between late 2012 and July 2016 earlier than lastly breaking out of penny inventory territory utterly simply over 5 years in the past.
The rally in AMD inventory got here as the corporate reorganized its enterprise, outsourced chip manufacturing and began gaining floor towards business chief Intel (NASDAQ:INTC). The corporate’s income statement has seen dramatic improvements over the previous six years.
AMD’s $4.3 billion in gross sales produced a close to $500 million web loss in 2016 earlier than a $5.3 billion income in 2017 narrowed the annual loss to $33 million the next 12 months. The corporate invoiced $6.5 billion in gross sales and made $337 million in revenue in 2018. Quick ahead to 2021 and AMD’s sales topped $16.4 billion whereas earnings surged to $3.2 billion for the fiscal 12 months.
AMD inventory is without doubt one of the good penny inventory success tales one can consider at present. It’s now a $100 inventory and generated over 670% in investor returns over the previous 5 years.
BBQ Holdings (BBQ)
Restaurant operator BBQ Holdings has company-owned and franchise-operated eating places positioned in the US, Canada, and the UAE. Well-known Dave’s Bar-B-Que is without doubt one of the extra, um, well-known of its manufacturers.
BBQ Holdings inventory used to commerce beneath $5 for many of 2019 and touched a low of $1.65 in April 2020 throughout a COVID-19 induced market crash. The corporate often reported losses since 2015 earlier than unusually bouncing to profitability on the finish of 2020.
Shares broke out of penny inventory buying and selling ranges and took off in January 2021 to hit a multi-year excessive of $19.75 as income progress returned to restaurant operators after eased pandemic rules. Gross sales surged by 53% final 12 months. Wall Street analysts count on BBQ to develop gross sales by 40% in 2022. Earnings per share (EPS) may rise to $1.16 this 12 months earlier than reaching $1.40 per share subsequent 12 months.
Buyers noticed BBQ inventory generate a 330% return over the previous five years as the company graduated from a loss-making penny inventory to profitability in the course of the interval.
Penny Shares Success Story: Syndax Prescribed drugs Inc. (SNDX)
Syndax Prescribed drugs went public during the first quarter of 2016 as a clinical-stage biopharma growing most cancers therapies.
SNDX stock struggled throughout a prolonged improvement cycle and shares traded at $3.63 per share by Dec. 21, 2018, as losses mounted and a prolonged drug improvement cycle devoured shareholders’ capital.
Again in 2018, Syndax reported a $76 million loss from operations from annual income below $2 million. Working money move was a adverse $69 million and the corporate regularly issued frequent inventory to fund operations.
Remarkably, a brand new licensing settlement with Incyte grew annual income from $1.5 million in 2020 to $139.7 million in 2021. Syndax reported a $24.9 million net profit for 2021. Earnings per share elevated from a $1.87 loss in 2020 to a $0.48 revenue in 2021.
SNDX inventory has returned 418% in capital beneficial properties since Dec. 21, 2018, to this point. It’s one other penny inventory that efficiently made cash.
VAALCO Power (EGY)
VAALCO Power is an oil and pure gasoline inventory that lastly graduated from penny inventory buying and selling ranges this 12 months. The corporate has oil and gas interests in Gabon and Equatorial Guinea and its rising market publicity may have amplified fairness dangers to its profile because it went public 30 years in the past.
Like most different oil performs, EGY’s income and earnings are extraordinarily unstable. Income declined from $128 million in 2014 to hit a low of $69 million in 2016 as oil costs nosedived. Nevertheless, 2021 was a bumper 12 months as annual gross sales of $228 million produced a web revenue of $82 million.
EGY inventory is now not a penny inventory in 2022 as oil prices printed record highs. VAALCO Power inventory has rewarded buyers with a 218% return over the previous 12 months as shares exchanged fingers above $7.20 on the time of writing. Oil worth progress helped the previous penny inventory to make cash.
Penny Shares Success Story: Digital Turbine (APPS)
Cell content material promoting and monetization specialist firm Digital Turbine is without doubt one of the most up-to-date penny inventory success tales buyers will love in 2022.
APPS stock has generated a 4,144% return over the previous 5 years as the corporate graduated from a penny inventory in 2020 and by no means appeared again.
Digital Turbine was once a perennial loss-making penny inventory. The corporate reported thousands and thousands in losses every calendar 12 months since 2012. Nevertheless, shares steadily rose from below $1 a share in 2017 to briefly breach the $5 mark in late 2019 as income progress promised to usher APPS into profitability sometime.
Accelerated gross sales progress to $258 in the course of the calendar 12 months 2020 produced $39 million in web earnings and a few acquisitions powered 142% year-over-year surge in fiscal fourth-quarter 2021 gross sales pushing Digital Turbine to a $1 billion income run-rate and earnings surged. APPS earned $81 million from operations and reported GAAP web earnings of $46 million in the course of the previous 12 months.
eXp World Holdings (EXPI)
Cloud-based residential actual property brokerage firm eXp World Holdings is one other penny inventory success story buyers can reference.
EXPI was only a loss-making penny inventory buying and selling method beneath $5 a share by October 2017. Phenomenal income progress noticed eXp gross sales enhance from $156 million (and a $22 million working loss) in 2017 to $500 million (and one other $22 million working loss) in 2018. The corporate efficiently narrowed its working losses to $9 million in 2019 earlier than lastly breaking into profitability in 2020.
The tech agency reported its first working revenue in 2020 as income almost doubled to $1.8 billion from $980 million in 2019. An extra 103% sequential enhance in gross sales to $3.8 billion in 2021 earned the corporate some $34 million in working earnings and a GAAP web revenue of $81 million final 12 months.
To make certain, watching EXPI inventory fall nearly 33% within the final three weeks ought to increase investor eyebrows. Quick curiosity has been on the rise since December, at 10.9% as of March 15. And simply final week the corporate got here below scrutiny from short-selling blogger Edwin Dorsey, writing in The Bear Cave newsletter. He questioned the corporate’s accounting practices, excessive insider promoting and its recruiting pipeline.
Penny Shares Success Story: The Joint Corp. (JYNT)
The Joint Corp. operates and manages chiropractic clinics throughout the US and has been rising its annual revenues steadily over the previous 5 years.
The Joint Corp. was once a penny inventory till shares closed above $5.10 on Jan. 22, 2018. A large rally that ensued late in 2020 noticed JYNT inventory worth breach the $100 mark by September 2021. Though shares have given up most of their latest beneficial properties, Joint inventory has returned over 800% over the previous 5 years.
The huge returns on Joint inventory materialized as the corporate’s regular natural progress efficiently ushered it into vital profitability by 2018.
Regular revenue growth over five years from $25 million in gross sales in 2017 to $81 million in income in 2021 allowed Joint to report a $3.3 million working revenue in 2019 earlier than posting file web earnings in the course of the COVID-19 pandemic in 2020.
Wall Street analysts see an additional 26.8% progress in income this 12 months, adopted by a 26% uptick in gross sales subsequent 12 months. Net income could double between 2022 and 2023 as residing proof that penny shares can make cash — and sustainably so.
On Penny Shares and Low-Quantity Shares: With solely the rarest exceptions, InvestorPlace doesn’t publish commentary about corporations which have a market cap of lower than $100 million or commerce lower than 100,000 shares every day. That’s as a result of these “penny shares” are often the playground for rip-off artists and market manipulators. If we ever do publish commentary on a low-volume inventory that could be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this truth and warn readers of the dangers.
On the date of publication, Brian Paradza owned Superior Micro Units (AMD) frequent inventory. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.