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3 Penny Stocks Under $4 to Buy Now

Even though easing inflation is raising consumer optimism, the Fed expects rate hikes to continue into next year. Amid this backdrop, investors could consider buying quality penny stocks trivago (TRVG), Yiren Digital (YRD), and Good Times Restaurants (GTIM), which are trading under $4, instead of the pricey names. Read on…

The Consumer Price Index (CPI) for November increased 7.1% year-over-year, which was lower than the analysts’ estimate of 7.3%. This boosted consumer confidence as inflation is showing signs of cooling down, with a sharp decline from the prior month’s 7.7%.

Moreover, the Labor Department reported that U.S. nonfarm payrolls increased by 263,000 for November, much better than the 200,000 that the economists surveyed by Dow Jones were expecting.

However, keeping with the expectations, the Fed announced a 50-basis point rate hike this week, taking the borrowing rate to a targeted range between 4.25% and 4.5%, the highest level in 15 years.

Against this backdrop, investors could opt for penny stocks that have the potential to grow over time instead of the pricey options. Fundamentally strong stocks trading under $4, trivago N.V. (TRVG), Yiren Digital Ltd. (YRD), and Good Times Restaurants Inc. (GTIM) might be worth buying now.

trivago N.V. (TRVG)

Headquartered in Düsseldorf, Germany, TRVG operates a hotel and accommodation search platform globally. The company offers an online meta-search for hotels and accommodations through online travel agencies, hotel chains, and independent hotels.

On October 18, TRVG and AXS, a digital ticketing platform for live sports and entertainment, announced a global partnership to allow eventgoers to access affordable stay booking options with event ticket purchases made via AXS. The collaboration also makes TRVG the exclusive accommodation partner of AXS, which should be strategically beneficial.

For the fiscal third quarter ended September 30, TRVG’s total revenue increased 32.5% year-over-year to €183.70 million ($192.73 million). Cash, cash equivalents, and restricted cash at the end of the period improved by 19% from the prior-year period to €231.81 million ($243.21 million). Adjusted EBITDA rose 116.1% year-over-year to €33.50 million ($35.15 million).

Street expects TRVG’s EPS to increase 327.7% year-over-year to $0.24 for the fiscal year ending December 2022. Furthermore, revenue for the same period is expected to rise 38.4% from the prior-year period to $571.18 million. The company surpassed EPS estimates in each of the four trailing quarters.

It is up 7.8% over the past month to close its last trading session at $1.38. Moreover, it gained 3.8% intraday.

This promising prospect is reflected in TRVG’s POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

TRVG has an A grade for Quality and a rated B for Growth and Value. In the Internet industry, it is ranked #2 out of 59 stocks.

Click here for the additional POWR Ratings for Momentum, Stability, and Sentiment for TRVG.

Yiren Digital Ltd. (YRD)

YRD is a Beijing, China-based fintech company that operates a digital financial management platform to connect investors and individual borrowers for loan transactions. It offers its products through, a wealth management website, and a mobile application.

For its fiscal third quarter, ended September 30, YRD’s total operating costs and expenses decreased 38.2% year-over-year to $71 million. Its income per ADS came in at $0.42. The company had $514.70 million in cash, cash equivalents, and restricted cash for the same quarter, representing an increase of 51.3% year-over-year.

The company projects the total revenue in the fourth quarter of 2022 to be between RMB0.9 billion ($128.77 million) to RMB1.1 billion ($157.38 million), with the net profit margin expected to remain stable.

Analysts expect YRD’s revenue to come in at $620.96 million for the fiscal year 2022. The stock has gained 19.1% over the past three months to close its last trading session at $1.31. Moreover, it gained 1.6% intraday.

It’s no surprise that YRD has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.

The stock has a B grade for Growth, Value, Momentum, and Quality. YRD is ranked first out of 13 stocks in the Foreign Consumer Finance industry.

Click here to see the additional ratings for YRD (Stability and Sentiment).

Good Times Restaurants Inc. (GTIM)

GTIM engages in the restaurant business in the United States. The company operates and franchises Good Times Burgers & Frozen Custard, an upscale quick-service drive-through dining restaurant, and Bad Daddy’s Burger Bar, a full-service upscale casual dining restaurant.

On October 18, GTIM announced that same-store sales for the fourth fiscal quarter ended September 27, 2022, increased 5.9% for its Good Times brand and 3.7% for its Bad Daddy’s brand. Average weekly sales for the quarter for its Good Times brand and Bad Daddy’s brand came in at $29,896 and $49,945, respectively.

For the full fiscal year, same-store sales increased by 1.1% for its Good Times brand and 11.2% for its Bad Daddy’s brand. Average weekly sales were $27,974 and $49,425 for its Good Times and Bad Daddy’s brands, respectively.

As of June 28, 2022, GTIM’s cash and cash equivalents stood at $9.70 million, compared to $8.86 million on September 28, 2021. Its current assets came in at $13.14 million as of June 28, 2022, compared to $11.44 million as of September 28, 2021.

Over the past month, the stock has gained 10.7% to close the last trading session at $2.69. Moreover, it increased 2.3% intraday.

This promising outlook is reflected in GTIM’s POWR Ratings. GTIM has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

It has an A grade for Value and a B for Growth, Momentum, Sentiment, and Quality. GTIM is ranked #1 among 47 stocks in the A-rated Restaurants industry.

Click here for the additional POWR Ratings for GTIM (Stability).

TRVG shares were trading at $1.35 per share on Thursday afternoon, down $0.03 (-2.17%). Year-to-date, TRVG has declined -38.07%, versus a -17.29% rise in the benchmark S&P 500 index during the same period.

About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.


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