These are the 3 Best Penny Stocks to buy in April 2024, as per Wall Street analysts. In the U.S., penny stocks are defined as those companies whose shares trade at less than $5 per piece. Penny stocks are also referred to as micro-cap stocks having market capitalization between $50 million and $300 million. Penny stocks are high-risk-high-reward stocks.
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Penny stocks have relatively lower liquidity and are usually very speculative. Owing to the low share prices, even a modest change in the stock price could result in a large percentage share gain/loss.
We leveraged TipRanks’ Penny Stock Screener tool to identify three stocks from the consumer cyclical sector. With this background in mind, let’s dive right into them.
#1 Canoo Inc. (NASDAQ:GOEV)
Canoo is an electric vehicle (EV) manufacturer. It is focused on affordable EVs, built on its breakthrough multi-purpose modular electric platform and digital ecosystem.
In the past year, GOEV stock has lost 85.6%. In its Q4 FY23 results update, Canoo warned of a liquidity crisis, which could result in stopping the business operations entirely or downscaling the operations. Canoo is in the early stages of generating revenue, having started its initial commercial vehicle deliveries in Q4.
In FY23, Canoo’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) loss improved to $224.4 million from a loss of $408.6 million in the previous year. Also, net loss narrowed to $302.6 million from $487.7 million reported in FY22.
Recently, the company announced a deal with Saudi Arabia’s Jazeera Paints to deliver 20 EVs initially, with Jazeera having the option to buy an additional 160 Canoo vehicles.
What are the Predictions for Canoo Stock?
Despite the shortcomings, GOEV stock commands a Strong Buy consensus rating on TipRanks. This is based on four Buys versus one Hold rating. Following commercial sales in Q4, analysts expect the company’s financial position to improve in the long run, driven by higher revenue and strategic cost reduction.
The average Canoo price prediction of $8.31 implies a massive 235.1% upside potential from current levels.
#2 CarParts.com Inc. (NASDAQ:PRTS)
CarParts.com is a go-to e-commerce platform for auto care. The company offers end-to-end after-market solutions, including vehicle repair and maintenance. Its in-house national distribution network helps in cutting down the costs related to intermediary physical stores, making the products more affordable to customers.
In FY23, CarParts.com reported its highest Fiscal year sales. Notably, net sales rose 2% to $675.7 million. However, net loss widened to $8.2 million from $1 million in FY22, with gross margins declining 100 basis points to 33.9%. The bottom line was impacted by higher outbound transportation costs and an increase in operating expenses.
Furthermore, for Fiscal 2024, the company guided for comparable net sales growth in the range of (2%) to 2%. It expects gross margin to be between 30% and 32%, indicating further decline. In the past year, PRTS shares have lost 73.4%.
Interestingly, the declining margins and widening losses have caught the attention of co-founder and ex-CEO Mehran Nia. On April 15, Nia crafted a strong and critical letter to the Board of directors, advocating his intervention to stop the company from falling further into the death trap and make a colossal turnaround while there is still hope and cash reserves. The letter sent PRTS stock up 5.7% in after-hours trading yesterday.
Is PRTS Stock a Good Buy?
Irrespective of the challenges, analysts remain optimistic about PRTS stock. On TipRanks, PRTS has a Strong Buy consensus rating, backed by four unanimous Buys. The average CarParts.com price target of $3.69 implies 163.6% upside potential from current levels.
#3 Mondee Holdings (NASDAQ:MOND)
Mondee Holdings operates an artificial intelligence(AI)-enabled travel marketplace that streamlines trip planning and travel management. The company unites technology with human expertise to craft enhanced local travel experiences. Its customers include travel agents, gig workers, freelancers, businesses, travelers, and influencers.
In 2023, Mondee’s gross bookings grew 19% to $2.56 billion and net revenue rose 39% to $222.28 million. Also, compared to FY22, the company’s net loss narrowed by roughly $30 million to reach $60.15 million, while adjusted EBITDA nearly doubled to $21.04 million.
For FY24, Mondee projects net revenue in the range of $250 million to $255 million and adjusted EBITDA growth of 24% at the midpoint of the guidance range. In the past year, MOND shares have lost 78.9%.
What is the Price Target for Mondee Stock?
On TipRanks, the average Mondee Holdings price target of $4.28 implies 104.8% upside potential from current levels. Also, MOND stock has a Strong Buy consensus rating based on three unanimous Buys.
Key Thoughts
The aforementioned three Penny Stocks belong to the consumer cyclical sector, making them even riskier, since the sector witnesses huge volatility based on business cycles and economic conditions. However, these stocks can offer much higher growth potential than other stocks in times of economic expansion and often outperform the broader market. Plus, they are favored by analysts, who expect huge upside potential.
