Penny Stocks to Watch in May 2022
The stock markets have been turbulent since the start of 2022, to say the least. Between inflation, war, food insecurity, stock market volatility, an approaching recession, and whipsawing energy prices, investors are torn between taking cover and chasing the numerous opportunities.
There are plenty of compelling investments right now—not only in spite of the overall economic commotion, but in some cases because of it. In the realm of penny stocks, here are a few interesting investments that should perform well during a time we believe most stocks will be under pressure.
Penny Stocks to Watch in May 2022
Some of the setups described below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds newsletter. Leeds may own shares in some of the investments mentioned, in which case the newsletter will clearly indicate that fact. Please note that penny stocks are notoriously volatile.
New Stocks to Watch
Dalrada Corporation (DFCO)
Dalrada Corporation (DFCO) has many successful business channels, the combination of which have resulted in rapidly improving financial results. Demand, mainly in Dalrada’s healthcare and technology segments, has led to a 1,096% leap in revenues in the second quarter of 2022.
On the clean energy front, Dalrada claims that its solutions result in customers seeing a 75% reduction in energy consumption and a 93% reduction in emissions. It also has products that screen for cervical cancers (providing immediate results), as well as a technology division that “bridges the technology gap through digital transformation and software modernization.”
At the time of writing, Dalrada shares traded at 45 cents, although that is up from 10 months ago, when shares were as low as 20 cents. Shares are now holding in a higher range, with 40 to 45 cents possibly being the new price floor.
In the full year for 2018, Dalrada did not bring in any revenues. Then, fiscal 2019 witnessed the first $72,000, followed by $1.18 million in 2020 and $3.41 million in 2021. That compelling trend is also displayed in the past five quarterly periods, going from $1.06 million in Q4 2020 to $1.59 million in Q1 2021, $3,445 in Q2 2021, $4.6 million in Q3 2021, and most recently $5.45 million in Q4 2021, the latest reported period.
In the world of penny stocks, the kind of operational momentum Dalrada is displaying often precedes strong upward momentum for the share prices. If and as Dalrada’s solutions gain sales traction, this investment possibly represents a high-risk, very high-reward stock.
MustGrow Biologics Corp. (MGROF)
One of the rising concerns in recent years has been that of an approaching global food crisis. If such an eventuality comes to fruition, companies like MustGrow Biologics Corp. (MGROF) will be among the winners. MustGrow Biologics is an agriculture biotechnology company developing sustainable plant-based biological solutions.
It is focused on providing natural, science-based biological solutions to replace synthetic chemicals used in high-value crops such as fruit and vegetables and other industries. For example, MustGrow Biologics is creating natural biopesticide products from mustard seed. It offers preplant soil biofumigant, bioherbicide, and postharvest food preservation.
As with many very young (and small) companies, MustGrow Biologics has not produced any income yet. However, corporate expenses continue to burn along, which means that MustGrow lost $696,000 in Q3 2021.
On the balance sheet, MustGrow shows $1.11 million in liabilities, which is much less than $3.1 million in total assets. At the company’s very low operational expense levels, that will allow plenty of time for MustGrow to develop and roll out its biotechnologies.
As with any biotech company, most will look to the company’s pipeline of products under development. MustGrow has nine biotech solutions at various stages of the development cycle.
CynergisTek, Inc. (CTEK)
CynergisTek, Inc. (CTEK) provides cybersecurity, privacy, and compliance services for corporations, which is a market niche that is in demand more than ever in recent years. It provides these services through assessment and technical testing, remediation, management, and validation services.
CynergisTek, with its 89 employees, was able to generate revenues of $16.3 million in fiscal 2021. After all expenses were factored in, the business ended up with a $2.25 million loss.
One of the most important financial ratios for any company is the current ratio, displaying current asset levels of 1.76 times those of current liabilities. Meanwhile, the gross profit margin is at 36.43%, which is a healthy level for a company of its size.
Focusing on the Q4 results, CynergisTek enjoyed $4.43 million in revenues. Unfortunately, that was not enough to avoid the $2.51 million loss for the three-month period.
When comparing the assets to liabilities for fiscal 2021, CynergisTek looks strong. Assets of $29.24 million eclipse total liabilities of $4.92 million. Meanwhile, the CynergisTek share price has been trending lower over the year, from $2.85 to where it sits now at $0.80, potentially representing an attractive range to begin watching the shares.
GSE Systems, Inc. (GVP)
GSE Systems, Inc. (GVP) provides engineering services, staffing, and simulation software. It operates through the Performance Improvement Solutions and Nuclear Industry Training and Consulting segments, which includes power plant high-fidelity simulation solutions, technical engineering, power plant thermal performance optimization, and interactive computer-based tutorials/simulation.
No longer a small company, GSE Systems boasts 308 employees and generated $55.18 million in revenues in fiscal 2021. After all operational expenses are factored in, the company still reported a net income of $10.61 million.
Current assets were $20 million in the latest fiscal quarter, while total assets were $39.05 million. This compares to much lower liability levels—current liabilities were $15.04 million, while total liabilities came in at only $16.01 million.
With the world going increasingly nuclear, GSE Systems may see its services in demand for decades going forward. Even with the meaningful headcount and the involved and complicated industry niche, it was still able to generate the $10.61 million in net earnings, which bodes very well for the corporate operations going forward.