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3 Penny Stocks to Buy for Under $3 in November

The October inflation report has raised optimism. However, inflation is far from the Fed’s target, and rate hikes could continue. Amid widespread recession fears, quality penny stocks trading under $3, Overseas Shipholding (OSG), Good Times Restaurants (GTIM), and Educational Development (EDUC) could be solid buys instead of high-priced stocks. Read on…

The market recently witnessed a bounce back after the October consumer price index registered a lower-than-expected increase, which indicated that inflation is cooling down.

Moreover, Federal Reserve Governor Christopher Waller said he’s open to reducing the level of interest rate increases as long as the economic data cooperates. The market expects policymakers to approve a 50 basis points rate hike in the Fed's next meeting.

However, inflation remains quite high, and the Fed’s aggressive rate hikes have led to a significant market sell-off. The benchmark indices have lost substantially in 2022. The S&P 500 lost 17.2%, while the Dow Jones Industrial Average lost 7.7% year-to-date.

On top of it, a U.S. recession could still materialize next year. According to former Boston Federal Reserve President Eric Rosengren, a recession in 2023 is “quite likely.”

Given this backdrop, it could be wise to invest in penny stocks that could grow over time rather than pricey options. Fundamentally sound stocks, Overseas Shipholding Group, Inc. (OSG), Good Times Restaurants Inc. (GTIM), and Educational Development Corporation (EDUC), which are trading under $3, could be solid buys this month.

Overseas Shipholding Group, Inc. (OSG)

OSG is the owner and operator of a fleet of oceangoing vessels engaged in the transportation of crude oil and petroleum products in the United States flag trade. The company serves independent oil traders, refinery operators, and government entities.

On November 15, OSG announced its plans to purchase five million shares of the company’s common stock from Cyrus Capital at $2.86 per share for a total of $14.30 million.

Sam Norton, the President and CEO of OSG, stated, “The price paid in this share purchase equates to an enterprise value of roughly 4.5 times expected 2022 adjusted EBITDA, an implied valuation which we consider to be very attractive.”

OSG’s shipping revenues increased 31% year-over-year to $123.06 million in the fiscal third quarter ended September 30. Net income and its per-share amount came in at $13.25 million and $0.15, respectively, increased significantly from their negative year-ago values.

The stock has gained 56.9% year-to-date and 41.8% over the past six months to close its last trading session at $2.95.

OSG’s strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an A grade for Momentum and Quality and a B for Growth, Value, and Sentiment. It is ranked #1 out of 47 stocks in the B-rated Shipping industry.

In addition to the POWR Rating grades we’ve stated above, one can see OSG’s rating for Stability here.

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 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, as compared to $11.44 million as of September 28, 2021.

Over the past month, the stock has gained 8.5% to close the last trading session at $2.43.

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 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).

Educational Development Corporation (EDUC)

Publishing company EDUC operates as a trade co-publisher of educational children’s books in the United States. It has two operational segments, Publishing and Usborne Books & More (UBAM).

On October 26, EDUC announced the acquisition of SmartLab Toys from Quarto Publishing Group. SmartLab Toys is a creator of S.T.E.A.M. toys and games that focus on hands-on, educational experiences to encourage kids to develop skills in the core disciplines.

The company expects to introduce a select group of SmartLab Toys products in January and intends to expand on the initial release with additional products over the next year.

In the second quarter ended August 31, 2022, EDUC’s net revenues amounted to $19.42 million. The company’s total operating expenses amounted to $13.45 million, reflecting a decrease of 33.2% year-over-year. Its total current assets stood at $70.22 million as of August 31, 2022.

Analysts expect EDUC’s revenue to increase 5.1% year-over-year to $24.50 million for the quarter ending February 2023. Its EPS is expected to come to $0.04 in the same period.

The stock has gained 29.1% over the past month to close its last trading session at $2.84. It has gained 2.2% intraday.

It is no surprise that EDUC has an overall A rating, equating to a Strong Buy in our POWR Ratings system.

EDUC has a B grade for Growth, Value, Momentum, Sentiment, and Quality. In the Entertainment – Publishing industry, it is ranked #1 of 11 stocks.

To see the additional POWR Ratings for Stability for EDUC, click here.

OSG shares were trading at $2.90 per share on Friday afternoon, down $0.05 (-1.69%). Year-to-date, OSG has gained 54.26%, versus a -16.03% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.


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