The market for small- and micro-cap stocks could not be worse, making it an ideal time to invest in penny stocks at attractive valuations.
Inflation, for one, has been weighing on these volatile stocks, as they struggle to reckon with an increasingly prohibitive capital raising environment.
Given the economic slowdown being induced by the Bank of Canada’s rate hikes – which are meant to slow inflation, but have yet to affect high food prices – investors are also showing a preference for safer assets, such as higher-yielding cash accounts or broad-market bond index funds, before another bull market beckons their capital off the sidelines.
Consequently, higher-risk assets such as small- and micro-cap stocks are being ignored, despite price-value dislocations, creating compelling opportunities for savvy investors to capitalize on.
To usher readers into the weekend, here are three promising penny stocks to invest in, each of which offers hard evidence for creating shareholder value by filling an unmet need.
Else Nutrition (TSX:BABY) offers clean, plant-based and clinically proven food and nutrition products for infants, toddlers, children and adults. These include drink and shake mixes, cereal, and ready-to-drink shakes, each of them prepared with only three ingredients –almonds, buckwheat and tapioca – granting the company a growing appeal in the increasingly health-conscious kids and infant nutrition markets.
The company expects its North American brick-and-mortar presence to reach almost 15,000 locations by the end of 2023, which includes many of the continent’s leading retailers, such as Walmart, Whole Foods and Loblaws. It also boasts a presence in China and the U.K., with a push into Australia planned for Q4 2023.
Recent news of Else’s multi-staged collaboration with Danone – a leading conglomerate in consumer staples that generated sales of €27.661 billion in 2022 – holds the potential to bring the company’s products to the forefront of the global stage. The letter of intent lays the groundwork for Danone to manufacture, market and commercialize Else’s products as part of its specialized nutrition portfolio.
Else Nutrition stock is down by 54.64 per cent since 2018, pricing in none of the company’s accumulated brand power over the period, and in blatant disregard of its turn to profitability in Q3 2023 with C$1.04 million in net income.
Ucore Rare Metals
Our second penny stock pick is Ucore Rare Metals (TSXV:UCU), a critical metals extraction technology company keen on disrupting China’s control of global rare earth element (REE) mining and manufacturing.
REEs are an essential ingredient for permanent magnets, which facilitate the transfer of energy in offshore wind turbines and electric vehicle (EV) motors.
Ucore’s proprietary RapidSX REE separation technology, which has been independently shown to be at least 3x more efficient than its nearest competitor, affords it key cost advantages in the US$32 billion global REE market, including reducing a processing facility’s size and construction budget by up to one third.
The company has been hard at work establishing itself as a leader in midstream REE processing over the past three years, with its demonstration facility in Kingston, Ontario, informing ongoing planning for North America’s first full-scale REE refinery in Louisiana.
The refinery will be able to yield 7,500 tonnes of REE oxides for downstream production of metals, alloys and magnets, with more facilities planned over the next few years to reduce Chinese REE imports and optimize domestic feedstock sources.
Ucore Rare Metals stock (TSXV:UCU) has been relatively stable since 2018, posting a mild loss of 22.89 per cent, indicating a strong but limited investor base committed to seeing RapidSX through its development process.
Rounding off our picks for best penny stocks to invest in is BioMark Diagnostics (CSE:BUX), a liquid biopsy company developing a molecular diagnostics technology platform to detect cancer in pre-symptomatic stages.
BioMark’s technology relies on metabolomics, an area within clinical chemistry that measures “small molecules” in biological samples. Metabolomics offers quick, reliable and cost-effective data on everything from drugs to food to contaminants, in addition to primary and secondary metabolites.
Applications include life-saving early cancer detection, measurement of treatment response and serial monitoring of cancer survivors, aligning the company with a majority of the global oncology market, which was valued at US$203.42 billion in 2022 and is expected to reach more than US$470.61 billion by 2032.
The company’s current focus is bringing its liquid biopsy test for early lung cancer detection to market by the end of 2023, but it also intends to expand its offerings into other hard-to-detect and treat cancers such as brain, breast, ovarian and pancreatic.
BioMark’s lung cancer-detection solution benefits from robust and validated biomarkers discovered by the company and backed by data with strong sensitivity and specificity. Lung cancer was responsible for 12.2 per cent of new cancer cases in 2020, falling just behind breast cancer at 12.5 per cent, and represents a US$4.4 billion screening market in North America.
Recent success with an early breast cancer study, including sensitivity and accuracy of more than 90 per cent, and the ability to identify breast cancer sub-type, has strengthened the company’s reputation in the diagnostics field, as has its recent completion of one of the world’s largest clinical trials for early lung-cancer detection at more than 4,000 patients alongside partners Pfizer and AstraZeneca, with results pending.
Given that cancer is a metabolic disease, and early detection has an outsized effect on survival rates, the company is highly confident in its technology’s ability to map out cancer cells’ early-stage biochemistry.
Shareholders, including 68 per cent insider ownership, are equally confident, having driven the stock price up by 440 per cent since 2018.
Join the discussion: Find out what everybody’s saying about these attractive penny stocks to invest in on the Else Nutrition, Ucore Rare Metals and BioMark Diagnostics Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Else Nutrition, Ucore Rare Metals and BioMark Diagnostics, please see full disclaimer here.