Penny stocks have a reputation for being high risk, having a scarcity of information surrounding the business, and intense volatility. Most of these factors eliminate these investment opportunities from most investors’ radars, especially given the typical lack of solid fundamentals.
But every so often, a gem emerges that has the potential to eke out incredible returns. With that in mind, I’ve spotted two companies that could generate some explosive returns over the long term.
#1 best penny stock in 2022
Ambev S.A (NYSE:ABEV) is a Brazil-based company that engages in producing, distributing, and selling beverages. The company’s products range from beer, carbonated soft drinks, other non-alcoholic and non-carbonated drinks.
Beyond being a penny stock, Ambev is a high-yield dividend stock with a 4.34% shareholder payout. This makes it a potential pick for my passive-income portfolio as well. Interestingly, the company managed to beat analyst earning per share (EPS) estimates in three of the last four quarters. It equally outperformed in revenue in three of the previous four quarters.
Despite this, Ambev’s share price is down 10.22% in the past year. Considering the company’s stellar performance, this looks like a buying opportunity to me. However, as good as this penny stock sounds, it faces fierce competition from industry giants such as Coca-Cola and PepsiCo.
A rising leader in e-commerce apparel
Year to date, Express Inc. (NYSE:EXPR) shares have surged over 220%. This makes it one of the best performing penny stocks in 2021. And in my opinion, Express has the potential to continue surging in 2022.
Express Inc. sells apparel for men, women, and children through its e-commerce website, mobile app, and brick-and-mortar stores. The company has over 550 retail and outlet stores spread across the United States and Puerto Rico. And despite the disruptions of the pandemic, the penny stock has managed to beat earnings expectations in its last four quarters.
While speaking on the Q3 results, CEO Tim Baxter said this, “our strong third quarter results reflect the second consecutive quarter of profitable growth and positive comparable sales versus 2019, and demonstrate the power of our EXPRESSway Forward strategy.” I think, if this penny stock continues in this trajectory, its share price growth will be explosive.
It is not all rosy for Express, of course. The Apparel space is highly competitive. Aside from that, several e-commerce websites and mobile apps offer similar products at varying prices. It’s, therefore, possible the group may start losing market share if it cannot stay ahead of its rivals.
In any case, Express has the potential to deliver explosive growth in 2022 and beyond. At least, that’s what I think. That’s why it’s on my list of best penny stocks to buy for my portfolio.
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Prosper Ambaka owns shares in Express Inc. at the time of writing. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies, assets and strategies mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
