5 Top Penny Stocks
With stock markets just off their all-time highs, it’s not easy to find cheap securities. But there are still some bargains around if you know where to look: penny stocks.
Stocks trading under $5.00 can be a great source of ideas. Because the price tags on these names are so tiny, they don’t tend to draw much attention from Wall Street institutions. In fact, most mutual funds are barred from owning penny stocks.
That gives retail investors an edge. And because of their cheap prices, Main Street investors are able to buy a larger number of shares.
There aren’t many bargains out there. But if you’re willing to do some digging, you may be able to uncover some outright bargains. Here are five of my favorite penny stocks to watch:
|Name||Stock Price||Market Cap|
|Bombardier, Inc.||$0.81||$1.55 billion|
|Yamana Gold Inc.||$2.72||$2.69 billion|
|Kinross Gold Corporation||$2.89||$3.35 billion|
|Northern Oil & Gas, Inc.||$3.32||$235.07 million|
|First Majestic Silver Corp.||$4.35||$721.64 million|
Data source: Yahoo! Finance, last accessed March 1, 2016
Let’s say a few words about these companies:
Bombardier, Inc.’s (TSX:BBD.B) late “C Series” has been a big weight on the stock. That said, it looks as though the worst-case scenario has already been priced in. And with a project backlog surpassing $50.0 billion, there’s enough work to keep management busy for the next two years. Any good news could send shares soaring.
Shares of Yamana Gold Inc. (NYSE:AUY) and Kinross Gold Corporation (NYSE:KGC) soared during the previous boom. Because of the leverage inherent in their businesses, even a small increase in gold prices translated into huge profits. But with gold prices in the dumps, this leverage has worked in reverse.
Here’s the thing: gold miners now trade at a historical discount relative to gold bullion. Blue-chip miners like Yamana and Kinross could even make an attractive acquisition target to larger rivals. I wouldn’t be surprised to see a larger miner like Goldcorp or Barrick scoop up these names on the cheap.
It’s a similar story to energy. Low crude prices have crushed the oil patch. However, the industry is heading toward a supply crunch, as consumers ramp up demand and producers delay new projects. If that happens, marginal names like Northern Oil & Gas, Inc. (NYSE:NOG) will be one of the hottest stocks on the New York Stock Exchange.
Finally, we have First Majestic Silver Corp. (NYSE:AG). With the sell-off in silver prices, investors have thrown out every mining name out there. But First Majestic is a first-tier producer with ample growth prospects. The sell-off in the resource space has created an once-in-a-lifetime opportunity to potentially scoop up this company on the cheap.