Venturing into the realm of high potential penny stocks is a high-risk proposition. However, within the myriad of penny stocks, there exist a few emerging companies that offer an attractive business profile.
The lure of these companies lies in their potential for significant value creation, provided they can deliver robust financial performance over the long-term. Hence, the pursuit of high-performing penny stocks remains an enticing prospect for many investors.
The idea here is to identify the best penny stocks before they soar, essentially finding hidden gems in a vast market. I have used GuruFocus’ patented Value and Quality Scores in curating this list of the top penny stocks to buy. Each of the companies listed below has a score of greater than eight out of ten in terms of both value and quality.
The Value Score is a top measure of a stock’s price against its intrinsic value, helping pinpoint undervalued gems. Conversely, the Quality Score evaluates a company’s financial strength and predictability. High scores in both these areas suggest a stock that’s not just undervalued, but is also financially robust. So, let’s turn our attention to the three penny stocks ready to soar.
| PAYS | Paysign | $2.49 |
| EGY | VAALCO Energy | $3.96 |
| SIRI | Sirius XM | $3.67 |
Paysign (PAYS)
Paysign (NASDAQ:PAYS) is a fast-growing microcap stock that effectively makes its mark in the payment solutions sector. The company specializes in payment processing for plasma donation centers, generating a whopping 90% of its sales from this niche. Since its debut in 2011, the company has witnessed remarkable growth, boasting a 40% market share of all plasma collection centers in the USA.
Furthermore, Paysign offers potent processing services and prepaid cards under its brand, catering to various target audiences. Hence, this versatility underscores Paysign’s adaptability in the ever-evolving payments sphere.
Paysign operates a robust business that has seen amazing revenue growth of 26.8% over the past five years. The company’s most recent year-over-year results have been even more impressive, with its top-line growth at more than 27%. Additionally, Paysign’s EBITDA growth totaled more than 830% over this period, a mind-boggling figure considering the current economic climate. On top of that, the company exited the first quarter this year with an eye-catching $6.4 million in cash, representing a 360% bump from December 2015.
VAALCO Energy (EGY)
Texas-based VAALCO Energy (NYSE:EGY) operates a small-cap hydrocarbon exploration business. Its upstream operations are primarily based in the Etame Marin block off the shores of Gabon. Energy markets have been erratic, but the geopolitical uncertainty we’ve seen of late demonstrates that things change quickly in this sector.
Nevertheless, despite the slowdown in its top-line growth, VAALCO operates a remarkably-profitable business that continues to impress. Year-over-year growth in both gross profit and EBITDA margins came in at a spectacular 63.6% and 41%, respectively. Also, EGY stock offers investors a healthy 4.8% dividend yield and a balance sheet that’s relatively pristine.
Furthermore, the addition of TransGlobe Energy brings a level of stability and consistent cash flow to the company’s typically-unpredictable offshore business. TransGlobe boasts a relatively stable track record of steady production and revenue, which can help mitigate the inherent risks associated with VAALCO’s core offshore operations.
Sirius XM (SIRI)
Sirius XM (NASDAQ:SIRI) stands out as a leading under-the-radar stock to wager on. As a top broadcasting company, it offers satellite and online radio services, a niche sector that took a major hit during the pandemic.
However, for the bold contrarian, Sirius XM presents as an intriguing long-term growth prospect. Over the long-term, we could see a marked improvement in auto sales, particularly driven by a shift toward electrification. Unfortunately, the past few quarters have hurt Sirius’ business, as auto sales have declined amid high prices. However, a return to pre-pandemic life has led to almost a 60% increase in Vehicle Miles Traveled from April 2020 to March 2023, a positive long-term catalyst for SiriusXM.
Additionally, Sirius recently increased its full-year adjusted EBITDA and free cash flow guidance, another positive for the firm. Moreover, its stock trades at just 1.5-times forward sales estimates, 54% lower than its 5-year average.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.