5 Penny Stocks to Avoid at All Costs in 2022

September's better-than-expected jobs data report has increased the odds of further rate hikes. Ron Hetrick, a senior economist at labor force data provider Lightcast, said, "Everybody who seems to want a job is getting a job."

As a result, the Fed is expected to announce another significant rate hike in November. Moreover, David Donabedian, CIO at CIBC Private Wealth, said, "We expect the pressure on the Fed to remain high, with continued monetary tightening well into 2023."

Furthermore, the Conference Board's probability model has predicted a 96% likelihood of a recession in the U.S. within the next 12 months. Also, the board has projected negative real GDP growth rates in the last quarter of 2022 and the first quarter of 2023.

Therefore, fundamentally weak penny stocks Tellurian Inc. (TELL), Gevo, Inc. (GEVO), FingerMotion, Inc. (FNGR), Faraday Future Intelligent Electric Inc. (FFIE), and BitNile Holdings, Inc. (NILE) might be best avoided in 2022.

Tellurian Inc. (TELL)

TELL engages in the natural gas business worldwide. The company owns interests in 11,060 net acres of natural gas assets and 78 producing wells located in the Haynesville Shale trend of northern Louisiana.

TELL's current liabilities came in at $237.94 million for the period June 30, 2022, compared to $88.90 million for the period ended December 31, 2021. Also, its total long-term liabilities came in at $449.27 million for the period June 30, 2022, compared to $114.71 million for the period ended December 31, 2021.

Analysts expect TELL's EPS to decrease 22.1% per annum for the next five years. Over the past six months, the stock has lost 52.1% to close the last trading session at $2.70.

TELL's poor fundamentals are reflected in its POWR Ratings. The stock's overall F rating is a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

TELL has an F in Value, Quality, and Stability and a D in Sentiment. Within the Energy - Oil & Gas industry, it is ranked last among 94 stocks. Click here for the additional POWR Ratings for Momentum and Growth for TELL.

Gevo, Inc. (GEVO)

GEVO operates as a renewable fuels company. It operates through four segments: Gevo; Agri-Energy; Renewable Natural Gas; and Net-Zero. The company commercializes gasoline, jet fuel, and diesel fuel to achieve zero carbon emissions and reduce greenhouse gas emissions with sustainable alternatives.

GEVO's total revenue came in at $89,000 for the second quarter that ended June 30, 2022, down 74.3% year-over-year. Its gross loss came in at $3.64 million, up 48.7% year-over-year.

Street expects GEVO's EPS to decrease 14.3% year-over-year to negative $0.08 for the quarter ending September 2022. Over the past year, the stock has lost 64.3% to close the last trading session at $2.35.

GEVO's overall F rating equates to a Strong Sell in our POWR Ratings system. It also has an F grade for Stability, Value, and Quality and a D for Growth. It is ranked #85 out of 87 in the Chemicals industry.

Beyond what is stated above, we've also rated GEVO for Momentum and Sentiment. Get all GEVO ratings here.

FingerMotion, Inc. (FNGR)

FNGR, a mobile data specialist company, provides mobile payment and recharge platform solutions in China.

FNGR's revenue came in at $4.86 million for the first quarter that ended May 31, 2022, down 19% year-over-year. Its net loss came in at $1.44 million, up 58.4% year-over-year, while its loss per share came in at $0.03, up 50% year-over-year.

FNGR's EPS is expected to decrease 100% year-over-year to negative $0.24 in 2023. Its shares have gained 2.8% intraday to close the last trading session at $7.38.

FNGR's overall D rating equates to Sell in our POWR Ratings system. It has an F grade for Value and Quality.

FNGR is ranked #24 out of 26 stocks in the Telecom – Domestic industry. We have also rated FNGR for Momentum, Growth, Sentiment, and Quality. Get all FNGR ratings here.

Faraday Future Intelligent Electric Inc. (FFIE)

FFIE engages in the design, development, manufacture, engineering, sale, and distribution of electric vehicles and related products in the United States and internationally.

FFIE's operating loss came in at $137 million for the second quarter that ended June 30, 2022, up 389.3% year-over-year. Its net loss came in at $142 million, up 167.9% year-over-year.

FFIE's EPS is expected to decrease 3.8% year-over-year to a negative $1.63 in 2022. Also, it missed EPS estimates in all four trailing quarters. Over the past year, the stock has lost 92.4% to close the last trading session at $0.64.

FFIE's overall F rating equates to a Strong Sell in our POWR Ratings system. It has an F grade for Value, Stability, and Quality and a D for Sentiment. The stock is ranked #58 out of 64 in the D-rated Auto & Vehicle Manufacturers industry. We've also rated FFIE for Momentum and Growth. Get all FFIE ratings here.

BitNile Holdings, Inc. (NILE)

NILE and its subsidiaries design, develop, manufacture, and sell power system solutions for the defense/aerospace, industrial, automotive, telecommunications, healthcare, medical/biopharmaceutical, and textile industries in North America, Europe, the Middle East, and internationally.

On September 22, 2022, Kaskela Law LLC announced that it would investigate NILE on behalf of the company's investors, seeking to determine whether NILE and/or the company's representatives have issued false and/or misleading statements and/or failed to disclose material information to its investors, thereby causing investor losses.

NILE's revenues came in at $17.37 million for the second quarter that ended June 30, 2022, down 72% year-over-year. Its loss from operations came in at $23.72 million, compared to income from operations of $45.82 million for the previous-year period.

Also, its net loss came in at $25.81 million, compared to a net profit of $42.21 million in the prior year period.

Over the past year, the stock has lost 92.5% to close the last trading session at $0.17. 

NILE's overall F rating equates to a Strong Sell in our POWR Ratings system. It has an F grade for Growth, Stability, and Quality and a D for Sentiment. NILE is ranked last among 111 stocks in the D-rated Financial Services (Enterprise) industry. Click here to access the additional POWR Ratings for NILE (Growth and Momentum).

TELL shares were trading at $2.55 per share on Monday afternoon, down $0.15 (-5.56%). Year-to-date, TELL has declined -17.21%, versus a -23.32% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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