The top U.S. stock market indices continue to notch fresh highs, with the heightened enthusiasm surrounding potential interest rate cuts this year. Market analysts are pricing in a couple of rate cuts later this year of 25 basis points each. Moreover, we’re also seeing gold prices rally to all-time highs, signaling that rate cuts may be around the corner. Hence, amidst this positivity, it’s an excellent time to consider investing in high-potential penny stocks to buy.
Wagering on the penny stocks to buy can prove incredibly lucrative, especially if you can identify diamonds in the rough. It’s imperative to tread lightly, considering their notorious reputation for burning shareholder value. Those who can understand this dichotomy are set to reap massive long-term rewards. Here are three penny stocks to buy with promising growth potential that are poised to surge in a full-blown bull market.
Penny Stocks to Buy: VAALCO Energy (EGY)
VAALCO Energy (NYSE:EGY) stock may slightly exceed the typical penny stock range (under $5), but it’s far too cheap to ignore. Trading under 1.50 times forward sales estimates, EGY stock attracts a ‘moderate buy’ rating from Wall-Street, with a 50% upside from current prices. Additionally, it also offers a dividend, yielding almost 4%.
For those who don’t know, VAALCO is an independent oil and gas producer with operations in multiple locations, including Egypt, Gabon, and Canada. Like its peers, the Russia/Ukraine conflict triggered a massive surge in energy demand, bolstering VAALCO’s top- and bottom-line performances.
The past three quarters, in particular, were excellent for VAALCO, with revenues jumping 43% on average. In its most recent quarterly earnings print, revenues were up 25% to $100.1 million, while its EPS of six cents per share beat estimates by three cents. Moreover, net income for the quarter was at a healthy $7.7 million, up substantially from $3.4 million in the first-quarter (Q1) of 2023.
The company is benefitting from the favorable economic environment, while its efficient management contributed to a robust quarter. Additionally, its strategic acquisition of Svenska Petroleum Exploration AB for $40.2 million significantly increased its productive capacity. The resumption of operations at the Baobab field also significantly boosted the company’s output.
SoundHound (SOUN)
AI-powered voice solutions provider SoundHound (NASDAQ:SOUN) has been one of the hottest penny stocks in the past year. SOUN stock has surged an eye-catching 142% year-to-date (YTD), dwarfing the S&P 500’s 12% gain. A few months ago, SOUN stock got a massive boost when AI bellwether Nvidia (NASDAQ:NVDA) revealed a considerable stake in the business. However, most experts felt it needed another significant driver to sustain its rally —cue its first-quarter (Q1) earnings explosion.
SoundHound delivered a spectacular 73% bump in year-over-year (YOY) sales to $11.6 million, beating market estimates by $1.49 million. Additionally, its loss per share of seven cents beat analyst estimates by one cent per share. Also, it raised the lower end of its sales forecast to $77 million, a $65 million jump. Analysts at Wedbush feel that the revenue adjustment suggests that the company is effectively positioned to leverage the power of AI chatbots as it collaborates with an array of businesses.
Iamgold (IAG)
Iamgold (NYSE:IAG) is among the largest gold miners in Canada. It’s been on quite the tear in the stock market lately. As discussed earlier, Gold prices have surged in anticipation of rate cuts later this year. Hence, IAG stock is up a staggering 78% YTD and still has plenty of gas in its tank.
Moreover, the commencement of its highly anticipated Côté Gold mine adds to its long-term bull case. When in full production, it will be the third-largest mine in Maple Leaf country. IAG projects a healthy production forecast between 560,000 and 665,000 ounces in 2024, with the firm poised for robust cash flow improvements.
Furthermore, its liquidity position is remarkably healthy, with its reserves at $693.8 million at the end of Q1, positioning it well for strategic expansion. Additionally, its portfolio of undeveloped assets provides ample opportunities for aggressive investments over the next couple of years.
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.
