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3 No-Brainer Penny Stocks to Buy for 2023 and Beyond

Investing in penny stocks does bring an element of nervousness. The stock price action can be unpredictable, particularly if we look at some purely speculative penny stocks. However, if we dive deeper into the sea of stocks, there are precious…

Investing in penny stocks does bring an element of nervousness. The stock price action can be unpredictable, particularly if we look at some purely speculative penny stocks. However, if we dive deeper into the sea of stocks, there are precious pearls, which I would prefer to classify as no-brainer penny stocks.

Typically, these penny stocks represent companies that have reasonable business fundamentals. The business operating track record indicates that exposure to these stocks is a risk worth considering. In the next few years, these penny stocks can upgrade to mid-cap stocks.

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Amidst this bullish view, investors need to have a genuine investment horizon. It’s unlikely that we will soon witness the penny stock euphoria of 2021. Although the expectations on ROI need to be toned down, these no-brainer penny stocks will have multibagger potential over the next two to three years.

Let’s discuss the reasons that make these stocks attractive.

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Symbol
Company
Price
RIG
Transocean
$4.14
TLRY
Tilray Brands
$3.86
KGC
Kinross Gold
$4.10

Transocean (RIG)

Source: Postmodern Studio / Shutterstock

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With the world facing an energy crisis, Transocean (NYSE:RIG) is among the top no-brainer penny stocks to consider. While RIG stock has trended higher by 35% for year-to-date 2022, it remains massively undervalued.

The offshore drilling services rig provider is already benefiting from higher oil prices. Currently, the company has 28 ultra-deep-water floaters and ten harsh environment floaters. The company’s order backlog swelled by $1.6 billion in the last quarter to $7.3 billion. This provides clear cash flow visibility.

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A major stock upside catalyst for 2023 is a sustained improvement in EBITDA margin. New contracts are coming at a higher day rate, and the positive impact will be seen in the coming quarters. Transocean also has 12 cold-stacked rigs. These rigs will provide incremental cash flow visibility if market conditions continue to improve.

With strong cash flows, Transocean is also targeting deleveraging. Improvement in credit metrics is another catalyst for stock upside.

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Tilray Brands (TLRY)

In this photo illustration Tilray logo of a Canadian pharmaceutical and cannabis company is seen on a mobile phone and a computer screen.Source: viewimage / Shutterstock.com

With expectations of federal-level legalization of cannabis, Tilray Brands (NASDAQ:TLRY) stock is likely to skyrocket. I would not think twice before adding this cannabis stock to the portfolio. Positive business development is a reason to be bullish besides the regulatory catalyst.

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In Canada, Tilray has a leading market share in the recreational cannabis segment. Further, Tilray has a market share of 20% in Germany in the medicinal cannabis business. With Germany’s recent legalization of cannabis for recreational use, there is ample scope for expansion.

Tilray has also built a strong strategic infrastructure in the United States by acquiring brewing companies. With strong financial flexibility, the company is positioned for aggressive expansion on legalization.

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Tilray expects all its operating business units to be free cash flow positive in the current financial year. The company has also addressed the challenge of cash burn with cost-cutting and operating leverage. Overall, TLRY stock is positioned for multibagger returns in the next few years.

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Kinross Gold (KGC)

Cellphone with business logo of Canadian mining company Kinross Gold Corp. on screen in front of webpage.Source: T. Schneider / Shutterstock.com

Gold has gained some momentum, with inflation easing on a relative basis. It’s a good time to buy gold mining stocks for the long term. Kinross Gold (NYSE:KGC) looks attractive at a forward price-earnings ratio of 18.2. Additionally, the penny stock has a dividend yield of 2.9%.

Recently, Kinross reported strong Q3 2022 results. The company’s operating cash flow was $173.2 million, and Kinross closed the quarter with a total liquidity buffer of $2 billion.

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Positive free cash flows and a healthy balance sheet will ensure dividends sustain, and the company achieves the share repurchase target. Furthermore, there is flexibility for acquiring assets to boost growth.

Kinross has guided for stable gold production of approximately two million ounces annually through 2025. Even with stable production, there is visibility for dividend growth if gold trends are higher than current levels.

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With factors of geopolitical tension, inflation and growth uncertainty, allocation to gold is important. KGC stock is an attractive proxy among smaller gold mining companies.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

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Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Faisal Humayun did not hold (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.

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Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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The post 3 No-Brainer Penny Stocks to Buy for 2023 and Beyond appeared first on InvestorPlace.

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