Finding penny stocks to buy and hold for the next decade is not an easy task. After all, penny stocks are inherently risky and likely to be start-ups. As a result, these firms are likely to be relatively weak regarding financial resources, brand strength, and marketing, making it difficult for them to gain market share in their respective sectors.
But finding excellent penny stocks is not impossible. After all, Amazon (NASDAQ:AMZN), Monster Beverage (NASDAQ:MNST), and Plug Power (NASDAQ:PLUG) were once penny stocks. So history shows that a lucky few start-ups whose stocks trade for less than $5 per share, qualifying them as penny stocks, will indeed have what it takes to become highly successful over the long term.
Of course, without excellent products, today’s penny stocks will not become the large-cap stocks of tomorrow. But other characteristics are also important, including great partnerships and, of course, an ability to exploit powerful trends that will likely continue indefinitely.
Here are seven low-priced stocks with all or most of those characteristics, making them good penny stocks to buy and hold for the next decade.
| Ticker | Company | Price |
| PTRA | Proterra | $4.13 |
| NKLA | Nikola | $2.22 |
| KITT | Nauticus Robotics | $3.71 |
| JOBY | Joby Aviation | $4.40 |
| DCFC | Tritium | $1.90 |
| MOB | Mobilicom | $1.99 |
| AUR | Aurora Innovation | $1.42 |
Proterra (PTRA)
Proterra (NASDAQ:PTRA), an electric bus and battery maker, should be significantly boosted by help from Washington and strong demand for EV batteries, while the company’s third-quarter financial results and 2022 guidance indicate that it’s growing and should succeed over the longer term. Also noteworthy is that the company had a large total of $409 million of cash and investments as of the end of the third quarter, while it generated a positive cash flow of $6.9 million last quarter. As a result, it’s unlikely to need additional cash for a very long time.
Meanwhile, The Bipartisan Infrastructure Law funds the “EPA’s new Clean School Bus Program [with] $5 billion over the next five years to replace existing school buses with zero-emission and low-emission models,” the EPA reported last year.
Proterra sells EV batteries “for commercial applications.” With many American and European companies looking to avoid using gasoline-powered vehicles and the U.S. suffering an EV battery shortage, the demand for Proterra’s batteries should be huge.
In the third quarter, the company’s revenue jumped 55% year-over-year to $96 million, while its battery-system deliveries soared 274% YOY to 292.
Nikola (NKLA)
Nikola (NASDAQ:NKLA), an embattled electric truck maker, reported mixed fourth-quarter results on Feb. 23. But for me, the main takeaway is that the automaker remains on track to disrupt the American truck business.
On Feb. 23, the company reported that it had “successfully completed alpha pilot testing [of its fuel cell truck] with Walmart and TTSI.” The latter company is a major logistics firm. Additionally, Nikola noted that it had built 17 “beta” fuel-cell vehicles. And Nikola expects to begin delivering fuel-cell vehicles in the second half of this year.
As I’ve written previously, the evidence shows that the ability of battery-electric trucks to carry large loads over long distances is quite limited. Therefore, as American and European companies look to replace trucks powered by diesel and gasoline, I expect the demand for fuel-cell trucks powered by hydrogen to soar.
As far as battery-electric trucks are concerned, Nikola produced 133 of them and delivered 20 EVs. Last quarter, it lowered the vehicles’ charging times so that they can now be charged to 80% of their capacity in just 90 minutes.
I believe Nikola’s market capitalization of just $1.2 billion is way below its long-term outlook.
Nauticus Robotics (KITT)
Nauticus Robotics (NASDAQ:KITT) combines two disruptive, rapidly growing trends: robotics and artificial intelligence. Moreover, the company has found a unique niche: specifically, the company has developed AI-powered robots that operate in oceans. And intriguingly, Nauticus reports that it employs many ex-NASA engineers — trailblazers — with decades of experience in researching, engineering, and building space robotics.
The company has developed “a robotic navy,” consisting of 20 pairs of robots. In April 2022, Nauticus said they would be “deployed in multiple offshore industries serving applications ranging from subsea maintenance and intervention to data collection activities.” The company explains that its robots are “controlled through acoustic communication networking and can perform a wide range of data collection, inspection, and manipulation tasks.”
Providing some validation for Nauticus, its technology, and its products, the Pentagon’s Defense Innovation Unit last year gave the company a contract to create a robot that will enable the Marines to eliminate mines from “shallow water” and develop an autonomous robot that can operate both on sea and land.
In the third quarter, the robot maker’s top line increased to $3 million, up from $2 million during the same period a year earlier.
Joby Aviation (JOBY)
Joby (NYSE:JOBY) develops flying taxis that take off and land like helicopters. Such vehicles are called “electric vertical takeoff and landing vehicles” or eVTOLs. In a recent article, CNBC reported that eVTOLs could disrupt helicopters because the latter vehicles are costly and quite prone to failure. eVTOLs are significantly safer than helicopters because they are electrified, a United Airlines (NASDAQ:UAL) executive told the business news outlet. United Airlines has invested in two of Joby’s competitors.
In conjunction with its fourth-quarter results, released on Feb. 23, Joby reported that it’s ahead of its competitors in getting its eVTOLs certified by Washington and added that it’s “the first eVTOL company to start final assembly of a company conforming aircraft.” Joby expects to produce its first working aircraft by the end of June and start testing it with pilots aboard by the end of this year.
Like Nautilus, Joby and its technology have been validated by a deal signed by the Defense Department. Under the agreement, which could be worth as much as $75 million, the Pentagon will test the viability of Joby’s aircraft for use in various situations.
Joby’s market capitalization of $2.74 billion far understates its potential.
Tritium (DCFC)
Tritium (NASDAQ:DCFC), which builds electric-vehicle chargers, has partnered with one of the world’s largest oil companies, BP (NYSE:BP). Tritium has not specified how many chargers with which it will supply BP. However, Tritium did note that it will provide BP with chargers “for deployment across the United States, United Kingdom, Europe, and Australia.”
Moreover, last year, Tritium’s orders jumped 38% to a pretty impressive total of $195 million, while it estimated that its 2022 revenue had soared 157% in the second half of 2022 to about $72 million.
Also worth noting is that Tritium should significantly benefit from the proliferation of EVs in many regions of the world and governments’ support for vehicles in many countries. In the U.S., for example, Washington is spending $7.5 billion to subsidize EV chargers and has established a new tax credit of up to $7,500 per EV.
Tritium’s market capitalization of just $295.4 million vastly underestimates its long-term outlook.
Mobilicom (MOB)
Mobilicom (NASDAQ:MOB) develops several components that are placed within drones and other “small unmanned vehicles.” According to one forecast, the global drone market is expected to increase by more than 16% annually between 2021 and 2026. It is expected to be worth about $58.4 billion by the latter year.
Impressively, Mobilicom obtained 36 design wins between Q2 of 2020 and Q1 of 2022. Among its customers are two huge drone makers: Elbit Systems (NASDAQ:ESLT), which develops drones for militaries worldwide, and Teledyne Technologies (NYSE:TDY). And the last quarter alone, MOB had 44 design wins.
And according to Seeking Alpha contributor The Value Pendulum, Mobilicom “has a strong footing in the defense industry.” With drones being used extensively and effectively in the Russia-Ukraine War, the demand for Elbit’s advanced drones by many militaries will likely soar in the quarters and years ahead.
Given the company’s impressive design wins and the proliferation of drones, it has tremendous potential.
Aurora Innovation (AUR)
Aurora (NASDAQ:AUR) has developed an autonomous-driving system for trucks, and FedEx (NYSE:FDX) and Uber (NYSE:UBER) are among the major companies that are currently using the company’s software to transport freight in Texas.
Last quarter, Aurora’s software, Horizon, began enabling the autonomous delivery of 40 loads per week of freight.
“Customers continue to increase their usage of Aurora Horizon, which allows us to further leverage commercial runs to help offset the cost to development and validation of the Aurora Driver,” the company’s CEO, Chris Urmson, reported on its fourth-quarter earnings conference call, held earlier this month.
By the end of the current quarter, Aurora expects to finish loading all of the necessary features onto Horizon. By the end of next year, it expects to launch Horizon commercially.
Last quarter, Aurora updated Horizon for the fourth time, providing it with the ability “to detect and appropriately respond to emergency vehicles.”
Given the considerable truck driver shortage in the U.S., Aurora has a gigantic and very lucrative potential market, while its top-notch partners have validated the company and its technology.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
As of the date of publication, Larry Ramer owned shares of AUR and ESLT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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