Penny stocks are low-priced stocks with small market capitalization. Due to their illiquidity and wide bid-ask spread, they fall in the category of risky and speculative stocks. However, their potential for higher returns at low costs makes them an appealing investment choice.
Amid this backdrop, investors could consider keeping high-risk, high-reward penny stocks Sabre Corporation (SABR), Angi Inc. (ANGI) and Taboola.com Ltd. (TBLA) on their watchlist.
The U.S. economy is soaring, as evidenced by the second quarter reports. The economy grew at a 2.8% rate in the second quarter, with solid consumer spending growth and rising business investment. Inflation pressures have also eased recently. Followed by a historic interest rate cut by the Fed in September.
Amid this, investors spread their money across different segments and different market caps. Among these are penny stocks, which are stocks of small publicly traded companies listed on stock exchanges for a price under $5.
Additionally, penny stocks have a strong advantage over high-priced stocks of possible price spikes to multi-dollar levels where investors stand to be rewarded well by investing significantly less, despite being associated with volatility.
Given the industry’s bright prospects, let’s delve into the fundamentals of some of the high-risk, high-reward stocks.
Sabre Corporation (SABR)
SABR is a software and technology company that drives the global travel industry, supporting a diverse array of travel businesses, from airlines and hotels to travel agencies and other suppliers. It operates through two segments: Travel Solutions; and Hospitality Solutions, serving customers in 160 countries.
On October 3, SABR and Arajet, a Dominican flag carrier, announced a multi-year distribution agreement by which Arajet will distribute its inventory of flights and services through its travel agents across the world, giving SABR agents access to additional airline content to create personalized offers and experiences for their leisure travelers through the Sabre Global Distribution System (GDS).
On September 24, SABR and Alphabet Inc. (GOOGL) announced a partnership to use Google's Travel Impact Model (TIM) for the first time in calculating past emissions from business travel. This project's findings will empower SABR to help set realistic reduction targets and optimize travel efficiency.
SABR’s revenue for the fiscal 2024 second quarter, which ended June 30, increased 4% year-over-year to $767.24 million. The company’s adjusted operating income increased 132.1% from the prior year’s quarter to $106.99 million. Its adjusted EBITDA grew 76.2% from the year-ago value to $128.69 million.
For the fiscal year 2025, analysts expect SABR’s revenue to increase 5.3% year-over-year to $3.21 billion. Its EPS is also expected to come at $0.21.
SABR shares have gained 36.6% over the past six months, closing the last trading session at $3.51.
SABR’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
SABR is ranked #19 out of 76 stocks in the Technology - Services industry. The stock has a B grade for Growth, Value, and Quality.
To see SABR’s Stability, Sentiment, and Momentum ratings, click here.
Angi Inc. (ANGI)
ANGI connects home service professionals with consumers internationally. The company operates through three segments: Ads and Leads; Services; and International. It provides consumers with tools and resources to help them find local, pre-screened, and customer-rated service professionals. It also connects consumers with service professionals for local services.
ANGI’s trailing-12-month gross profit margin of 95.51% is 85.1% higher than the industry average of 51.59%. Also, the stock’s trailing-12-month asset turnover ratio of 0.68x is 37.1% higher than the industry average of 0.49x.
For the fiscal second quarter that ended June 30, 2024, ANGI reported revenue of $315.13 million. The company’s operating income came in at $9.19 million, compared to an operating loss of $15.39 million in the previous-year quarter. Its adjusted EBITDA increased 115% year-over-year to $42.20 million.
Additionally, the company’s net earnings and EPS came in at $3.76 million and $0.01 compared to losses of $14.70 million and $0.03 in the prior year’s period, respectively.
Street expects ANGI’s revenue for the fiscal year (ending December 2025) to increase 1.7% year-over-year to $1.21 billion. Street expects the company to report an EPS of $0.06 for the same period indicating a significant year-over-year increase. Moreover, ANGI has surpassed consensus EPS estimates in three of the trailing four quarters, which is impressive.
ANGI’s stock has soared 8.7% over the past six months to close the last trading session at $2.49.
ANGI’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value, Quality, and Sentiment. It is ranked #6 in the 52-stock A-rated Internet industry.
Beyond what is stated above, we’ve also rated ANGI for Growth, Stability, and Momentum. Get all ANGI ratings here.
Taboola.com Ltd. (TBLA)
TBLA operates an artificial intelligence-based algorithmic engine platform internationally. The company offers Taboola, a platform that partners with websites, devices, and mobile apps to recommend editorial content and advertisements on the open web to users.
On October 2, TBLA announced a partnership with Jounce Media, an industry leader in programmatic supply chain management, to verify that the TBLA Select publisher network is free from Made for Advertising (MFA) properties. Making its network MFA-free is a positive step that serves both marketers and publishers.
On August 30, TBLA unveiled its performance advertising-focused bidding technology, Maximize Conversions, for all advertisers. Maximize Conversions is an AI-powered technology that allows TBLA advertisers to drive more conversions and lower costs for campaigns.
TBLA’s revenues for the fiscal second quarter that ended June 30, 2024, increased 29% year-over-year to $428.20 million. Its gross profit grew 18.2% from the year-ago value to $144.80 million. The company’s adjusted EBITDA came in at $37.23 million, reflecting a growth of 137.7% from the prior year’s quarter.
In addition, the company’s cash and cash equivalents were $182.20 million as of June 30, 2024, compared to $176.11 million as of December 31, 2023.
Analysts expect TBLA’s revenue and EPS for the third quarter (ending September 2024) to increase 19.2% and 321.1% year-over-year to $429.40 million and $0.08, respectively. Also, the company has topped the consensus EPS estimate in all of the trailing four quarters.
Shares of TBLA have surged marginally over the past month to close the last trading session at $3.28.
TBLA’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B for Value and Growth. Within the B-rated Advertising industry, TBLA is ranked #2 out of 16 stocks.
Click here to access additional ratings of TBLA for Momentum, Stability, and Quality.
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SABR shares were trading at $3.35 per share on Monday afternoon, down $0.16 (-4.56%). Year-to-date, SABR has declined -23.86%, versus a 20.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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