Advanced Micro Devices (NASDAQ:AMD): A former penny stock that turned insanely profitable, became a $100 stock in less than five years
BBQ Holdings (NASDAQ:BBQ): Stock rose from $1.65 per share lows to nearly $20 as profits started trickling in
Syndax Pharmaceuticals (NASDAQ:SNDX): A cancer drug developer whose recent licensing revenue catapulted it to profitability… and out of penny stock trading ranges
VAALCO Energy (NYSE:EGY): Rode on oil price surges to profitability
Digital Turbine (NASDAQ:APPS): Generated a 4,000% return in five years as sustained sales growth made operations profitable
eXp World Holdings (NASDAQ:EXPI): Penny stock in 2017, started making money in 2020 and hit a 52-week high of $55 in 2021
The Joint Corp. (NASDAQ:JYNT): Broke into profitability in 2018 and has grown earnings ever since.
Penny stocks may be notorious for their extreme volatility and high investment risk; however, several penny stock success stories still encourage aggressive growth-oriented investors to make small capital allocations to the speculative investments due to their potential to offer life-changing returns in the shortest times possible – especially if the small companies finally start making sustainable profits.
Most penny stocks are companies with poor fundamentals. They are largely small, unprofitable businesses that burn shareholders’ capital, little companies with unproven business models and sometimes include companies headed for bankruptcy. However, their fortunes change dramatically once they start showing signs of sustainable profitability.
The essence of every commercial business is to make money — and several former penny stocks that used to trade below $5 a share have historically graduated and grown into multi-billion-dollar businesses that offered early investors huge capital gains once they started showing a capacity to make money and to generate positive cash flow from operations.
Actually, some of the former penny stocks on my list became $100 stocks or better once they turned profitable. Not only did the companies make money; they gifted their faithful investors with sizeable returns during the transition and many continue to offer significant upside today as profits grow.
As a long-term oriented investor, five years is a fairly long enough period for a company to start showing some capacity to earn money sustainably and win over investors’ hearts.
Advanced Micro Devices (AMD) billboard showing two of its popular product lines, Ryzen and Radeon.
Source: Joseph GTK / Shutterstock.com
It seems unbelievable that investors could buy Advanced Micro Devices stock at prices below $5 a share just six short years ago. Actually, shares in the micro-chip and semiconductor giant changed hands at prices between $2 and $5 a share between late 2012 and July 2016 before finally breaking out of penny stock territory completely just over five years ago.
The rally in AMD stock came as the company reorganized its business, outsourced chip manufacturing and started gaining ground against industry leader Intel (NASDAQ:INTC). The company’s income statement has seen dramatic improvements over the past six years.
AMD’s $4.3 billion in sales produced a near $500 million net loss in 2016 before a $5.3 billion revenue in 2017 narrowed the annual loss to $33 million the following year. The company invoiced $6.5 billion in sales and made $337 million in profit in 2018. Fast forward to 2021 and AMD’s sales topped $16.4 billion while earnings surged to $3.2 billion for the fiscal year.
AMD stock is one of the perfect penny stock success stories one can think of today. It’s now a $100 stock and generated over 670% in investor returns over the past five years.
BBQ Holdings (BBQ)
Source: Brad Moon
Restaurant operator BBQ Holdings has company-owned and franchise-operated restaurants located in the United States, Canada, and the UAE. Famous Dave’s Bar-B-Que is one of the more, um, famous of its brands.
BBQ Holdings stock used to trade below $5 for most of 2019 and touched a low of $1.65 in April 2020 during a COVID-19 induced market crash. The company usually reported losses since 2015 before unusually bouncing to profitability at the end of 2020.
Shares broke out of penny stock trading ranges and took off in January 2021 to hit a multi-year high of $19.75 as revenue growth returned to restaurant operators after eased pandemic regulations. Sales surged by 53% last year. Wall Street analysts expect BBQ to grow sales by 40% in 2022. Earnings per share (EPS) could rise to $1.16 this year before reaching $1.40 per share next year.
Investors saw BBQ stock generate a 330% return over the past five years as the company graduated from a loss-making penny stock to profitability during the period.
Penny Stocks Success Story: Syndax Pharmaceuticals Inc. (SNDX)
a scientist with protective equipment and microscope in a lab
SNDX stock struggled during a lengthy development cycle and shares traded at $3.63 per share by Dec. 21, 2018, as losses mounted and a lengthy drug development cycle gobbled shareholders’ capital.
Back in 2018, Syndax reported a $76 million loss from operations from annual revenue under $2 million. Operating cash flow was a negative $69 million and the company continually issued common stock to fund operations.
Remarkably, a new licensing agreement with Incyte grew annual revenue from $1.5 million in 2020 to $139.7 million in 2021. Syndax reported a $24.9 million net profit for 2021. Earnings per share increased from a $1.87 loss in 2020 to a $0.48 profit in 2021.
SNDX stock has returned 418% in capital gains since Dec. 21, 2018, to date. It’s another penny stock that successfully made money.
VAALCO Energy (EGY)
miniature oil barrel and oil well figures on top of stack of money
Source: Shutterstock
VAALCO Energy is an oil and natural gas stock that finally graduated from penny stock trading ranges this year. The company has oil and gas interests in Gabon and Equatorial Guinea and its emerging market exposure could have amplified equity risks to its profile since it went public 30 years ago.
Like most other oil plays, EGY’s revenue and earnings are extremely volatile. Revenue declined from $128 million in 2014 to hit a low of $69 million in 2016 as oil prices nosedived. However, 2021 was a bumper year as annual sales of $228 million produced a net profit of $82 million.
EGY stock is no longer a penny stock in 2022 as oil prices printed record highs. VAALCO Energy stock has rewarded investors with a 218% return over the past 12 months as shares exchanged hands above $7.20 at the time of writing. Oil price growth helped the former penny stock to make money.
Penny Stocks Success Story: Digital Turbine (APPS)
Close up hand holding mobile with Digital Advertising and icons, Digital Marketing concept.
Source: weedezign via Shutterstock
Mobile content advertising and monetization specialist company Digital Turbine is one of the most recent penny stock success stories investors will love in 2022.
APPS stock has generated a 4,144% return over the past five years as the company graduated from a penny stock in 2020 and never looked back.
Digital Turbine used to be a perennial loss-making penny stock. The company reported millions in losses each calendar year since 2012. However, shares steadily rose from under $1 a share in 2017 to briefly breach the $5 mark in late 2019 as revenue growth promised to usher APPS into profitability someday.
Accelerated sales growth to $258 during the calendar year 2020 produced $39 million in net earnings and some acquisitions powered 142% year-over-year surge in fiscal fourth-quarter 2021 sales pushing Digital Turbine to a $1 billion revenue run-rate and profits surged. APPS earned $81 million from operations and reported GAAP net earnings of $46 million during the past 12 months.
eXp World Holdings (EXPI)
a large house has a For Sale sign out front
Source: Shutterstock
Cloud-based residential real estate brokerage company eXp World Holdings is another penny stock success story investors can reference.
EXPI was just a loss-making penny stock trading way below $5 a share by October 2017. Phenomenal revenue growth saw eXp sales increase from $156 million (and a $22 million operating loss) in 2017 to $500 million (and another $22 million operating loss) in 2018. The company successfully narrowed its operating losses to $9 million in 2019 before finally breaking into profitability in 2020.
The tech firm reported its first operating profit in 2020 as revenue nearly doubled to $1.8 billion from $980 million in 2019. A further 103% sequential increase in sales to $3.8 billion in 2021 earned the company some $34 million in operating earnings and a GAAP net profit of $81 million last year.
To be sure, watching EXPI stock fall almost 33% in the last three weeks should raise investor eyebrows. Short interest has been on the increase since December, at 10.9% as of March 15. And just last week the company came under scrutiny from short-selling blogger Edwin Dorsey, writing in The Bear Cave newsletter. He questioned the company’s accounting practices, high insider selling and its recruiting pipeline.
Penny Stocks Success Story: The Joint Corp. (JYNT)
The Joint Corp. used to be a penny stock until shares closed above $5.10 on Jan. 22, 2018. A massive rally that ensued late in 2020 saw JYNT stock price breach the $100 mark by September 2021. Although shares have given up most of their recent gains, Joint stock has returned over 800% over the past five years.
The massive returns on Joint stock materialized as the company’s steady organic growth successfully ushered it into significant profitability by 2018.
Steady revenue growth over five years from $25 million in sales in 2017 to $81 million in revenue in 2021 allowed Joint to report a $3.3 million operating profit in 2019 before posting record net profits during the COVID-19 pandemic in 2020.
Wall Street analysts see a further 26.8% growth in revenue this year, followed by a 26% uptick in sales next year. Net income could double between 2022 and 2023 as living proof that penny stocks can make money — and sustainably so.
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.
On the date of publication, Brian Paradza owned Advanced Micro Devices (AMD) common stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Brian Paradza is an investing enthusiast who was awarded the CFA Charter in 2019. A strong believer in fundamentals-based long-term investing, Brian learns from gurus like Warren Buffett but acknowledges human behavioral tendencies that drive short-term “madness”. You may find him inquisitive as he examines tech investing opportunities, cannabis, blockchains, and the new cryptocurrencies asset class.
