Many investors have an irrational fear of penny stocks. That doesn’t mean there isn’t cause for concern. Many penny stocks represent small companies with volatile performance patterns and weak fundamentals. But there are also penny stocks that represent leaders or at least mature businesses within their respective industries. Since they usually fly under the radar, some of these stocks can offer exceptional return potential if bought at the right time and held for a reasonably long period.
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A healthcare company
While Healwell Al (TSX: AIDX) technically belongs to the healthcare sector, it’s essentially an artificial intelligence (AI) company focused on the needs of the healthcare sector. They basically develop solutions and train models for the early identification of certain diseases and are tied to the diagnostic phase/segment of the healthcare delivery.
The company has an impressive portfolio of products and solutions, many developed in conjunction with similar healthcare technology companies. It’s also actively acquiring businesses in this domain.
It’s experiencing significant revenue growth, though it has yet to be profitable. However, it’s operating in a highly lucrative domain, and it’s well-positioned to rise exponentially as AI use in healthcare decision-making gains more traction. The stock is also going up, albeit unsteadily, but still at a compelling pace. In the last 12 months, the stock has shot up 157% and is now trading at $1.9 per share.
A robotics company
Robotics is a tiny niche, and only a handful of tech stocks in Canada represent robotics businesses. Kraken Robotics (TSXV: PNG) is easily one of the most prominent robotics stocks in Canada and is currently trading at $2.8 per share despite rising 278% in the last 12 months. This rapid rise can be attributed to many factors, including its position as a preeminent underwater robotics leader.
The company offers a decent range of products and solutions centred on underwater/marine surveillance, monitoring, and even retrieval. These products and services are useful for a range of public and private entities, which is why the company boasts an impressive client portfolio, including naval institutions of multiple countries and energy giants.
The company has also shown significant financial growth, including a 52% year-over-year revenue increase.
Foolish takeaway
Both penny stocks are aggressively bullish and may remain so for multiple quarters. At their current pace, they may offer more growth in months than many conventional growth stocks may offer in several years. So, they are worth looking into. They may also prove to be significant long-term holdings, considering AI and robotics’s long-term potential and the companies’ status as leaders within their niche markets.
