10 Best Penny Stocks to Buy for May 2022

After a brief recovery, US stocks again looked weak last week. The pessimism has been even pronounced in penny stocks and a lot of them have drifted towards their 2022 lows.

The SEC defines penny stocks as securities that trade below $5 and are issued by small companies. Thanks to the sell-off in markets, several stocks, especially those that went public through a SPAC reverse merger, have also turned penny names. Here are the 10 best penny stocks that you can consider for May 2022.

1. Denison Mines (NYSE: DNN)

Denison Mines is a Canada-based uranium mining company. Countries globally have been trying to pivot away from fossil fuels for their energy needs. This would lead to higher demand for uranium. There is a section that opposes nuclear energy. Under pressure from activists, Germany announced a phasing out of nuclear power. Now, the country finds itself in a tough position amid the Russia-Ukraine war. The country’s energy security is in jeopardy amid fears that Russia could weaponize its energy exports.

Denison Mines is a penny uranium stock

Denison Mines is a penny uranium stock and trades below $1.50. The stock looks like a good way to play the expected pivot toward nuclear energy. While green energy penetration is growing rapidly, nuclear energy might also replace some of the conventional energy sources. Overall, DNN looks like a good penny uranium stock for May 2022.

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2. Aterian (NYSE: ATER)

Aterian was founded in 2014 and is now present in more than 12 countries. According to the company, “We set out to create consumer products that respond to needs expressed by shoppers, using data and machine learning to understand the customer journey.” The company has 14 brands in its portfolio and has launched more than 300 products and has over 2,000 SKUs.

Aterian is a penny stock now

Aterian stock made a 52-week high of $26.18 but now trades below $4.50 which makes it a penny stock. The stock’s short interest and borrow fees are also high which makes it a short squeeze candidate. It is among the penny stocks that should be on your radar for May 2022.

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3. Clover Health (NYSE: CLOV)

Clover Health is a Medicare Advantage company that went public through a SPAC merger in 2021. While it is currently making losses, like many other startup companies, it expects to be EBITDA positive by 2023. The company expects US Medicare Advantage spending to more than double between 2019 to 2025, and reach $590 billion. The expected increase in Medicare Advantage is positive for companies like CLOV.

CLOV is a penny stock in the Medicare Advantage Industry

It is the worst-performing company among those that merged with a SPAC sponsored by Chamath Palihapitiya. The stock trades at attractive valuations and is among the penny stocks to watch for May 2022.

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4. Grab Holdings (NYSE: GRAB)

When Grab went public in 2021 it had the reputation of becoming the biggest SPAC merger ever, ahead of Lucid Motors which went public earlier in the year. Not many would have envisioned that Grab would become a penny stock within the first year of its listing even as its initial valuation did look quite rich. The stock has been hitting new lows and fell to a new 52-week low last week. However, it looks among the best penny stocks to buy now, especially for long-term investors.

Grab’s earnings disappointed markets

Grab’s fourth-quarter 2021 earnings disappointed markets. It reported revenues of $122 million, which were 44% lower than the corresponding period last year. The metric fell well short of the $167 million that analysts were expecting. The company’s losses ballooned to $1.1 billion in the quarter, which was higher than the $635 million it had posted in the corresponding period last year. While the company incurred expenses related to listing in the fourth quarter, the net loss reading was nonetheless higher than what analysts were expecting.

Investments took a tool on the financial performance

Grab said that its revenues tumbled as it “preemptively invested to grow driver supply to support strong recovery in mobility demand.” Looking at the other metrics, its GMV (gross merchandise value) increased 26% to $4.5 billion. It was the fourth straight quarter of record GMV for the company. Its MTUs (monthly transacting users) increased 3% as compared to the corresponding period last year while the average spending per user increased 23% to $173.

Grab is a penny stock to buy for long term

Notably, unlike some of the other penny companies, Grab has a strong business model. Also, despite the plunge its market cap is still above $11 billion. According to Grab “Looking beyond 2022, Grab is progressing towards core food delivery Segment Adjusted EBITDA breakeven by the first half of 2023 and deliveries Segment Adjusted EBITDA breakeven by the end of 2023. In the long term, Grab is targeting steady state Adjusted EBITDA to GMV margins of 12% in mobility and 3% in deliveries.”

Grab is a penny stock with massive potential

Southeast Asia has a total population of 670 million and Grab sees its total addressable market rising to $180 billion by 2025. The company expects to post revenues of $4.5 billion and an adjusted EBITDA of $0.5 billion by 2025. If the company can meet the forecasts, it can leave its penny stock status and become a multi-bagger stock for investors

Grab is a play on the long-term growth story in the ASEAN region. The company has a strong moat in the region and is transforming into a superapp. The long-term forecast for the company looks positive. Notably, with Chinese stocks looking risky amid the continued crackdown in the communist country, some investors might find Southeast Asia a good bet.

Overall, if you are looking for a penny stock to play the Southeast Asian market, Grab would be a good fit.

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5. XOS (NYSE: XOS)

XOS also went public through a SPAC reverse merger last year. It is an electric vehicle company focusing on Class 5 to Class 8 commercial electric vehicles for last mile deliveries. The stock has a dismal debut and has continued to make new lows and is a penny stock now.

XOS is a penny stock to play commercial electric vehicles

While passenger electric car makers like Tesla, NIO, and Rivian get all the attention, commercial electric vehicle makers like XOS are also a good way to play green energy. The company has partnered with several companies including UPS. Wall Street analysts are also bullish on the stock and it has four buys, one hold, and one sell rating. The stock’s median target price of $6 is a premium of 109% over current prices.

If you want to play the commercial electric vehicle space, XOS is one penny stock that should be on your radar.

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6. Taseko Mines (NYSE: TGB)

While there has been a bloodbath in penny stocks in 2022, Taseko Mines has largely held its ground thanks to the overall boom in commodity companies.

What makes TGB a good penny stock to buy?

TGB is a copper miner having operations in Canada and the US. Notably, most of the copper mining is situated in Latin America with Chile being the largest producer. The region has been known for political volatility and some of the new mines have faced opposition from local communities.

TGB’s operations in low-risk countries make it an attractive penny stock to buy. is also among the metals where most analysts have a bullish long-term forecast. The copper intensity in electric cars and renewable energy is higher than in ICE (internal combustion engine) cars and non-renewable energy generation respectively.

TGB is a penny stock to play the copper industry

Copper demand is expected to be strong over the next decade led by the green energy transition. However, supply might not keep pace given years of underinvestment. Copper inventories are running quite low which is supportive of the prices.

While most copper producers are large-cap companies, Taseko Mines is a penny stock in the copper industry. Reasonable valuations and copper’s favorable long-term outlook make TGB a penny stock worth considering.

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7. Sunworks (NYSE: SUNW)

Sunworks provides solar power systems for residential, commercial, as well as agricultural consumers. The stock has been under pressure amid the sell-off in growth names. The supply chain issues have also taken a toll on the company’s topline as well as bottomline.

Sunworks is a penny solar company

Sunworks is now a penny stock after the steep fall in its stock price. The company reported revenues of $101.2 million in 2021 as compared to $37.9 million in the previous year. However, the revenue increase was not due to organic growth but due to the acquisition of Solcius. The acquisition also helped lift the company’s gross margins to 44.1% in 2021 as compared to 21.1% in the previous year. However, the company posted a net loss of $26.6 million in 2021 which was higher than analysts’ estimates.

Commenting on the earnings, Gaylon Morris, Sunworks’ CEO said, “In the short-term, we experienced wider losses due to inflationary pressures, which we have largely addressed through supply chain enhancements and adjustments to our pricing strategies. Continued top-line growth, especially as the pandemic-related issues continue to abate, combined with better efficiency should move us toward profitability.”

Sunworks is another penny stock that should be on your radar for May 2022.

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8. Joby Aviation (NYSE: JOBY)

Joby Aviation went public in 2021 by merging with Reinvent Technology Partners. It is an urban air mobility (UAM) company that is among the most interesting investing themes for the next two decades. The company also acquired Elevate, which was Uber’s flying taxi business. Uber also sold off its autonomous car business to Aurora to focus on the ride-hailing and food delivery business. Joby Aviation stock has been under pressure amid the sell-off in speculative growth names which have their earnings skewed towards the future.

The potential for UAM makes Joby Aviation a penny stock worth considering

The UAM market is evolving and analysts have bullish projections for the sector. Morgan Stanley expects UAM to be $1.5 trillion by 2040. The stock tumbled last week amid the broader market sell-off. The fact that one of its prototypes crashed during testing did not help matters.

That said, if you want to bet on UAM, Joby Aviation is among the best names in the space. The company’s valuations have also become reasonable after the crash and its market cap is around $3.2 billion.

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9. FuelCell Energy (NYSE: FCEL)

There has been a massive sell-off in fuel cell stocks and FCEL fell into the penny stock category. While the stock is off its 52-week lows, it still trades below $5. FCEL stock is a long-term play on the fuel cell industry. The Biden administration is pivoting toward green energy, unlike the Trump administration which was more favorable toward fossil fuel energy. Re-joining the Paris Climate Deal was among Biden’s first decisions after assuming office earlier this year.

FCEL is a penny fuel cell stock

Wall Street analysts are not too bullish on FCEL stock and nine of the analysts covering it have a hold rating while the remaining two have a sell rating. The stock’s median target price of $5.25 is a 19% premium over current prices. Over the last year, several brokerages have downgraded the stock.

Meanwhile, just like the euphoria toward green energy stocks was overdone, even the current crash seems to have gone too far. Several high-flying green energy companies are penny stocks now.

Notably, FCEL is also focusing on green hydrogen and recently announced a deal with Walmart. The stock initially rose on the announcement but has since pared gains amid the broader market sell-off. At these prices, FCEL looks like a good penny stock in the fuel cell industry.

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10. AdvisorShares Dorsey Wright Micro-Cap ETF (NYSE: DWMC)

Since penny stocks are risky and more volatile, you can also consider an ETF that invests in such stocks. While passive ETFs are otherwise a good investing strategy, for penny stocks it might be prudent to look at an active fund. DWMC is one ETF that can give you exposure to penny stocks. However, the ETF has a higher net expense ratio of 1.27%.

DWMC is a good way to invest in penny stocks

ETFs can be a good investing strategy, especially for investors who lack the time or analytical skills to pick individual stocks. Especially when it comes to penny stocks, a buy-and-hold approach might not work, as say for quality large-cap stocks. It might therefore be prudent to have an expert fund manager take the investment call.

All said, given the current macro environment, investors should do their due diligence before buying penny stocks. Also, it would be prudent to diversify the investment across multiple names and do a staggered buying.

Penny stocks have been out of favor and might continue to do so for some more time. However, the quality penny names should eventually recover.

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