The U.S. economy expanded for the fourth quarter of last year at a 2.9% annualized pace, higher than the Dow Jones analysts’ estimate of 2.8%, owing to an increase in government and consumer spending,

In addition, slowing inflation for the sixth consecutive time in December has raised investor optimism, further enhanced after the Fed’s moderated rate hike of 0.25 percentage points.

However, recessionary fears remain on the forefront after Fed Chair Jerome Powell signaled rate hikes to continue until the 2% inflation target rate is achieved. Experts believe such persistent rate hikes could tip the economy into recession.

Cam Harvey, a professor at Duke University and the director of research at the investment firm Research Affiliates, said, “There could be many things that we could do to mitigate the actual source of inflation, rather than this blunt instrument that just drives us into recession.”

Amid such volatilities, investors could add inexpensive stocks to their portfolios that have the potential to grow over time. Hence, fundamentally sound penny stocks trading under $1, VEON Ltd. (VEON), Gran Tierra Energy Inc. (GTE), and GEE Group Inc. (JOB) might be solid buys this week.

VEON Ltd. (VEON)

Headquartered in Amsterdam, the Netherlands, VEON and its subsidiaries provide mobile and fixed-line telecommunications services. It offers voice, data, and other telecommunication services.

On February 6, 2023, VEON announced that its board of directors had approved a change of ratio in the company’s ADR program, comprising a change in the ratio of American Depositary Shares to VEON common shares from one ADS representing one share to one ADS representing twenty-five shares. The effective date of the Ratio Change is expected to be 6 March 2023.

VEON Group CEO Kaan Terzioglu commented: “We believe the ratio change is in the best interest of all our stakeholders, as it will allow us to ensure VEON’s continued Nasdaq listing and provide a pathway toward increasing VEON’s visibility on Nasdaq.”

On December 15, 2022, VEON and Turkcell Iletisim Hizmetleri A.S. (TKC) announced their collaboration to enable 194 million mobile users in Pakistan to get access to TKC’s BiP App’s Media, Messaging, and Instant Translations. This might benefit the company.

In terms of its forward EV/Sales, VEON is trading at 1.37x, 33.9% lower than the industry average of 2.08x, while its forward non-GAAP P/E multiple of 1.57 is 90.6% lower than the industry average of 16.69x.

VEON’s trailing-12-month EBIT margin of 18.89% is 104.3% higher than the industry average of 9.25%. Its trailing-12-month ROCE of 37.50% is 606% higher than the industry average of 5.31%.

VEON’s total revenue came in at $2.08 billion for the fiscal third quarter that ended September 30, 2022, up 3.6% year-over-year. Its total adjusted EBITDA came in at $890 million, up marginally year-over-year. Its cash and cash equivalents increased 119.8% year-over-year to $3.29 billion.

Analysts expect VEON’s revenue and EPS for the fiscal year ending December 2023 to increase 4% and 10.3% year-over-year to $9.21 billion and $0.43, respectively.

The stock has gained 24.5% over the past six months to close the last trading session at $0.61. Moreover, it has gained 64.9% over the past three months.

VEON’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

VEON has an A grade for Value and a B for Growth, Stability, Sentiment, and Quality. It is ranked first among the 47 stocks within the A-rated Telecom – Foreign industry.

Click here for additional VEON ratings (Momentum).

Gran Tierra Energy Inc. (GTE)

Headquartered in Calgary, Canada, GTE and its subsidiaries explore and produce oil and gas properties in Colombia and Ecuador.

On November 1, 2022, Gary Guidry, GTE’s President and CEO, said, “We look forward to finishing 2022 on a strong note and are excited about our 2023 development and exploration capital programs and ongoing share and bond buybacks.”

In terms of forward non-GAAP P/E, GTE’s 2.02x is 74.6% lower than the industry average of 7.96x. Its forward EV/EBITDA of 1.49x is 72.5% lower than the industry average of 5.43x.

GTE’s trailing-12-month net income margin of 24.21% is 83% higher than the industry average of 13.23%. Its trailing-12-month EBITDA margin of 66.61% is 107.8% higher than the industry average of 32.05%.

GTE’s oil sales came in at $168.40 million for the third quarter that ended September 30, 2022, up 24.4% year-over-year. Its net and comprehensive income came in at $38.66 million, up 10.4% year-over-year, while its EPS stood at $0.10. Moreover, its adjusted EBITDA increased 48.2% year-over-year to $121.24 million.

GTE’s revenue is expected to increase 70.8% year-over-year to $809 million for the fiscal year that ended December 2022. Its EPS is expected to rise 270.8% year-over-year to $0.45 in the same period.

The stock has gained 5.9% over the past month to close the last trading session at $0.90.

GTE’s promising prospects are reflected in its POWR Ratings. The stock has an overall B rating, which indicates Buy in our proprietary rating system.

GTE has an A grade for Value and a B for Momentum, Sentiment, and Quality. Within the A-rated 43-stock Foreign Oil & Gas industry, it is ranked #14.

Click here for the additional POWR Ratings for Growth and Stability for GTE.

GEE Group Inc. (JOB)

JOB provides permanent and temporary professional and industrial staffing and placement services in the United States. The company operates through two business segments: Industrial Staffing Services and Professional Staffing Services.

Its forward non-GAAP P/E multiple of 8.42 is 53.2% lower than the industry average of 17.98. In terms of forward EV/Sales, the stock is trading at 0.26x, which is 85.9% lower than the industry average of 1.82x.

JOB’s trailing-12-month net income margin of 11.87% is 81.4% higher than the industry average of 6.54%. Its trailing-12-month ROTA of 16.39% is 210.7% higher than the industry average of 5.28%.

JOB’s net revenue increased marginally year-over-year to $41.52 million for the fourth quarter that ended September 30, 2022. Its non-GAAP adjusted EBITDA for the fiscal year that ended September 30, 2022, rose 1.5% year-over-year to $12.46 million.

For the fiscal year that ended September 30, 2022, the company’s free cash flow amounted to $8.90 million, compared to $244 thousand in the previous year that ended September 30, 2021.

JOB’s revenue is expected to increase 2% year-over-year to $41.94 million in the fiscal third quarter (ending June 2023). Also, for the same quarter, Street expects its EPS to come in at $0.02. It surpassed EPS and revenue estimates in three out of the four trailing quarters, which is impressive.

The stock gained 4.1% over the past month to close the last trading session at $0.51. It has gained 2.5% over the past five days.

It’s no surprise that JOB has an overall B rating which equates to Buy in our POWR Ratings system.

It has an A grade for Value and a B for Sentiment and Quality. Within the A-rated Outsourcing – Staffing Services industry, it is ranked #6 out of 21 stocks.

Beyond what we have stated above, JOB grades for Growth, Momentum, and Stability are given here.

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VEON shares fell $0.03 (-5.00%) in premarket trading Monday. Year-to-date, VEON has gained 24.49%, versus a 7.82% 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. More...

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