The market has been in bull mode for the past two years. But as we all know, most stocks benefiting from this bullishness have been big-cap tech growth stocks. However, I believe now is a good time to look into some tiny stocks. These stocks haven’t done nearly as well. So, it’s true that investors with a large percentage of their portfolios allocated to these stocks haven’t done well at all. For example, the Russell 2000 is still down by nearly 17% from its peak in 2021.
That said, I think many penny stocks are set to bounce back in the coming months. Why? For starters, small caps are trading at attractive valuations compared to their larger counterparts. They’ve been overlooked and under-appreciated. But that also means the valuation gap has widened massively, and there are likely some winners to be picked.
Moreover, an anticipated pivot from the Federal Reserve could provide the rising tide that lifts all boats. If interest rates come down sooner than expected, it would provide a major boost to small caps, which are more sensitive to how interest rates impact borrowing costs.
With those things in mind, here are three tiny stocks I think could are worth considering.
Everspin Technologies (MRAM)
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Everspin Technologies (NASDAQ:MRAM) has been on a wild ride over the past year, down nearly 35%. However, I think brighter days are likely ahead.
Several mega trends are converging to create a perfect storm of opportunity for Everspin. The explosive growth in data centers and edge computing could drive accelerating demand for high-performance, energy-efficient memory. Everspin’s MRAM technology fits the bill perfectly. It combines DRAM’s speed with flash’s non-volatility.
Moreover, Everspin recently scored a major design win with IBM (NYSE:IBM), which chose its 1Gb STT-MRAM for use in the new FlashCore Module 4.
In addition, OpenAI’s text-to-video model Sora could be a major tailwind for Everspin. Video data itself is memory-intensive, as it involves storing information about many frames, each containing detailed visual information. Analysts are taking notice, too, with Craig-Hallum recently reiterating a buy rating and $10 price target, implying 65% upside from current levels. This was a trim from an $11 price target set earlier.
On the other hand, Needham trimmed its price target to $8 per share due to licensing delays. However, with the MRAM market projected to grow at a 32% CAGR, I believe the rewards of investing int this stock far outweighs the risks.
MoneyLion (ML)
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MoneyLion (NYSE:ML) is roaring ahead (pun intended). Thus, I think the stock’s decline over the past month and a half is a great buying opportunity.
The company recently posted stellar Q1 2024 results, with record revenue, adjusted EBITDA, and even GAAP profitability. Macro tailwinds around digital banking adoption and strategic partnerships with the likes of EY position MoneyLion perfectly to keep riding this momentum higher.
Analysts are also taking notice. Over the past few months, several firms, including Craig-Hallum, Needham, and Lake Street Capital, have either initiated bullish coverage or raised their price targets on ML shares. The average analyst price target now stands at $114 per share. This implies around 60% upside from current levels.
MoneyLion is a prime beneficiary of the accelerating shift to digital financial services. Moreover, rate cuts could turbocharge growth. Lower rates would spur consumer borrowing on MoneyLion’s lending products. And with the stock already up a whopping 495% over the past year, more gains could be in store for this fintech star as rates normalize. MoneyLion has the right ingredients in place to keep growing.
Endeavour Silver (EXK)
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Endeavour Silver (NYSE:EXK) is riding high on the soaring precious metals market. Gold is trading near all-time highs above $2,360/oz, while silver is flirting with $31/oz, its highest level since 2012. This is providing a major tailwind for silver miners like Endeavour.
The company reported solid Q2 production of 2.2 million silver equivalent ounces, tracking towards the upper end of its full-year guidance range. Construction is also progressing well at the company’s new Terronera mine in Mexico. This mine is expected to significantly boost Endeavour’s production profile when it comes online in late 2024. Additionally, this mine will provide a meaningful boost to Endeavor’s overall probable reserves.
Analysts are taking notice of Endeavour’s strong fundamentals. The average price target from 4 analysts is $4.77 per share, implying decent upside from current levels. Institutional investors are also buying, with Mirae Asset Global Investments recently acquiring 188,787 additional shares.
Mining stocks can be volatile, and silver prices could retreat from their recent highs. However, there are strong growth drivers the company is benefiting from in the solar and electrification space. Accordingly, I believe the long-term outlook for silver demand remains robust. With Endeavour trading 45% off its 2021 peak, I think the stock offers compelling value at these levels for investors willing to ride out some volatility.
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On the date of publication, Omor Ibne Ehsan 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
