5 Penny Stocks That Aren’t Scams: Best Cheap Stocks to Buy

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1. Burford Capital Limited (NYSE:BUR)

Stock Upside Potential: 113.12%

Forward P/E: 9.68

Number of Hedge Fund Holders: 49

Burford Capital Limited (NYSE:BUR) is one of the best cheap penny stocks to buy that aren’t scams. On March 30, BofA Securities reiterated Burford Capital Limited (NYSE:BUR) as a Buy, trimming the price target to $5.61 from $12.10.

The price target cut is in response to the research firm using a three-year rolling Cash Return on Tangible Equity of 20% to derive the valuation. It also moved the company’s income rating to 9 from 7, reflecting the lack of a cash dividend. BofA also touted Burford Capital’s cash generation ability as healthy.

In the last two years, Burford Capital has produced more than $1.2 billion in cash proceeds and is on course to generate over $5 billion over time. According to Christopher Bogart, Chief Executive Officer, the core business is healthy, growing well, and well-positioned to produce high asset returns. Given the strong cash position and expected cash proceeds, the company is well-positioned for continued growth and debt rationalization despite the YPF setback.

Burford Capital Limited (NYSE:BUR) is the world’s leading provider of legal finance and risk management, offering capital and expertise to law firms and Fortune 500 companies. They fund commercial litigation and arbitration, enabling clients to monetize legal assets, manage legal costs, and reduce risk through non-recourse investment, meaning they only get paid if the client wins.

While we acknowledge the potential of BUR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than BUR and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: 0.28% Percent of George Soros’ Stock Portfolio Is in These 10 Small-Cap Stocks and 7 Must-Buy Non-Tech Stocks to Invest in Now.

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