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Penny stocks, as they are called, are not really stocks that trade for less than $1 per share. The term generally refers to stocks trading for less than $5 per share.
As any early investor in Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), NVIDIA (NASDAQ: NVDA) or other behemoths will tell you, when you can correctly predict the future of Wall Street while it’s still a penny stock… Keep it for the long term, and you will be happy with the results.
However, for every Apple or Amazon, hundreds or even thousands of penny stocks go nowhere. But again, many of them “grow up” into good, strong companies.
Even if they don’t turn into the next Amazon, these highly valued stocks for 2024 could just become solid investments that generate excellent returns for shareholders.
Here are two small stocks that may not be 10-bag graders but could become strong growers in the coming years.
1. SoundHound AI
As its name suggests, SoundHound AI (NASDAQ: SOUN) provides customers with AI-powered voice solutions. Its platform has the potential to enable products, services, and applications with voice-related capabilities such as speech recognition, text-to-speech, music and content recognition, and other audio features.
SoundHound technology is used in restaurants for ordering, in call centers, and in cars, to name a few of its applications. According to the company, its mission is to “vocally empower the world through conversational intelligence.”
SoundHound received a lot of attention earlier this year, when it was revealed that AI powerhouse NVIDIA had invested about $3.6 million in SoundHound stock. The stock immediately rose to nearly $9 per share in March.
However, SoundHound shares are now back in penny stock territory, trading at $4.08 per share. As such, it seems like a good time to get rid of this stock, as the company has a few things going for it.
First, SoundHound is one of the leaders in audio AI, and some analysts believe that the next wave of AI growth will shift from chip makers to users. If that happens, it will put the company in pole position.
SoundHound also has a wide range of large clients across the technology, automotive and restaurant worlds, which is another positive. Many companies that trade in penny stocks rely heavily on a very small number of large clients.
SoundHound has yet to turn a profit, but its revenue has been growing quickly, rising 73% in the first quarter. The company also revised its annual revenue forecast upward to a new range of $65 million to $77 million.
SoundHound has an average price target of $8 per share, which represents a 95% upside from the current price. Even the lowest estimate of the price target is $5 per share, an increase of 22%, so it is clear that analysts are optimistic about its prospects.
2. Gobi Flying
Plenty of sci-fi movies in the past have suggested that we’d all be driving around in flying cars by now. While that has not happened yet, Gobi Aviation (NYSE:JOBY) is working on it.
Joby actually manufactures an all-electric vertical take-off and landing (VTOL) aircraft designed for use as an air taxi, at least initially.
It’s still very early for this company, but it has huge potential. Joby has a contract with the US Air Force and an agreement to launch its air taxi in the UAE in 2026. Last year, the company completed a demonstration flight from JFK Airport in New York.
Joby has a partnership with Delta Air Lines and plans to launch a commercial air taxi service in New York in 2025, pending FAA approvals. Moreover, the company hopes to spread its services in more cities.
Joby has flown more than 1,500 flights spanning more than 33,000 miles with its prototype, and recently became the first electric air taxi company to receive final airworthiness standards issued by the FAA.
The company also confirmed that no design changes are required to meet certification requirements. She still has two more stages to complete and is on her way forward.
Joby doesn’t have a lot of revenue, but it’s actually just getting started. When this technology is eventually commercialized, Joby should be in a great position as a first mover in this space.
Analysts set a price target of $8 for Joby. It’s currently trading at around $4.96 per share, representing a 61% jump.
Of the two, Gobi likely has a longer runway than Soundhound, as the air taxi industry is still taking shape. However, both stocks are worth watching for their potential as leaders in cutting-edge industries.
