The Best Undervalued Penny Stocks
For some, there is no better market than the penny stock market. The opportunity for massive gains with such a low cost to entry means that, for a relatively low sum, you can eventually see returns in the hundreds, sometimes thousands, of percentage points.
This kind of incentive is naturally attractive to investors who can stomach a bit of volatility in exchange for such potentially high returns. And, of course—as is the case whenever we look at the stock market—the best way to earn these high returns is to identify stocks that are undervalued, get in on the ground floor, and hold them until you believe that they’ve hit their highest possible value before selling.
It’s not exactly groundbreaking stuff here, but it’s a tried and true investment strategy that, when executed correctly, is as close to a guaranteed thing as you can find on the market.
In that spirit, we’ll be taking a look at penny stocks to watch. But first, let’s go over some industries that I believe contain the top penny stocks of 2017 and, more specifically, cheap tech stocks that are poised to make big gains in the near future if everything continues apace.
Undervalued Penny Stocks for 2017
This year has been a great one for tech stocks so far. We’ve seen massive companies like Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOG) all register massive gains of over 30%.
But those stocks are expensive, and you may not be comfortable buying a single share for $1,000 when you can buy hundreds of stocks for a similar price, which have an even higher potential (although, of course, with added risk of those companies going under. After all, there’s virtually no chance that Amazon will be folding in the near future, barring something catastrophic).
Aside from the big names, however, penny tech stocks have also been experiencing big windfalls, seeing huge gains in a variety of different industries. So what are the industries where you have the best chance of finding undervalued penny stocks?
The first one I’m a big fan of is the lithium sector.
Demand in the lithium market has increased by 18% per year since 2010, and that is set to only increase as the auto industry pivots toward electric vehicles. Lithium-ion batteries are also projected to play a big role in the energy landscape of the future. (Source: “Lithium: Global Industry, Markets & Outlook,” Roskill Information Services, last accessed July 24, 2017.)
So that means, from top to bottom, from miners to lithium-ion battery producers, we’re likely to see big gains going forward.
Lithium batteries have grown to encompass 37% of total lithium consumption. Other uses like construction and manufacturing have declined and will continue to be in decline as the price of lithium rises due to increased demand from batteries and the like, but that’s all fine for lithium stocks involved in battery production and lithium mining.
Another huge boon for the lithium market, besides the push taking place in the auto industry, is governmental support. Countries like the U.S. have begun instituting legislation and guidance for companies, mandating that they begin adding more electric vehicles to their fleets.
In France, the country has gone one step further and has claimed that it will not sell any petrol or diesel cars by 2040. That type of commitment on a national scale is going to increase demand, making lithium mining stocks or lithium-ion battery producers likely to benefit. And penny stocks abound in the lithium stock market.
Another industry where you can find the top penny stocks of 2017 is in the gaming industry.
The video game industry is expected to rise by about $4.0 billion per year up until at least 2020, according to PwC. The industry is projected to be worth over $90.0 billion by that year. (Source: “Value of the global video games market from 2011 to 2020 (in billion U.S. dollars),” Statista, last accessed July 24, 2017.)
With so many different outlets for video games available these days, from mobile gaming, to console gaming, to virtual reality (VR), to augmented reality (AR), to everything in between, the gaming industry is not only ripe for continued growth, but is replete with a number of developing areas within which you can find many solid companies that are, at the moment, worth a few dollars per share but, with a few successful releases, could see dramatic growth.
Also Read: Top Gaming Stocks to Invest in for 2017
The marijuana industry is another one with strong numbers backing its future, while its present has a number of stocks that are undervalued penny stocks.
Sure, the marijuana industry has been the subject of a lot of buzz and hype, which has led to a number of stocks being overvalued, but that doesn’t mean there still aren’t a number of good marijuana penny stocks that could experience strong gains.
A final industry that penny stock hounds need to watch is the cryptocurrency market. While technically not stocks, 2017 has been the year of the coin, with many of these cryptocurrencies seeing gains of hundreds and thousands of percentage points. From Bitcoin’s epic rise to Ethereum going from under $10.00 to over $400.00 at its peak (ETH currently sits at over $220.00 as of this writing), seeing stocks rise from pennies or dollars to be valued in the hundreds of dollars is the type of gains that you want to find in the penny stock market.
With the industry layout completed, let’s get to the best undervalued penny stocks for 2017.
Chart courtesy of StockCharts.com
Critical Elements Corp (CVE:CRE)
Hailing from Canada, this lithium mining company represents the type of success you want to see from a penny stock.
CRE stock has already gone through a massive gain in 2017, jumping by more than137% since the beginning of the year. Still valued at just over a dollar, it’s one of my picks for penny stocks to watch.
The fact is, this is a company I’ve been backing for a while now, and it has not let investors down so far. While mining can be a particularly volatile market, I still think there is a lot of room for CRE to run. With that in mind, CRE is a great way to get involved in undervalued penny stocks for 2017.
Aphria Inc (TSE:APH)
Aphria has certainly taken some licks during the marijuana market’s bit of downturn (many consider this to be a marijuana bubble), but that may make it an even better time to buy, since the stock prices are low and the weed news is all positive.
With recreational legalization on its way in Canada, making it one of the first countries in the world to freely allow non-medicinal weed, and marijuana gaining another foothold in the U.S. as Nevada recently legalized pot, you have a rising green tide certain to elevate marijuana stocks as it continues to swell.
So what separates APH stock from the pack?
First, Aphria uses greenhouse production of cannabis, and is Canada’s largest producer in that arena. With greenhouse production largely seen as one of the most efficient ways to reap marijuana, you have a company in a promising market with a competitive advantage.
The company revealed in its latest quarterly report that the cost of production fell from $1.73 per gram to $1.11 per gram, which is a decrease of 36% quarter over quarter.
With its low price, strong business model, and proven track record of gains, I still believe that APH stock is among the best undervalued penny stocks for 2017.
Glu Mobile Inc. (NASDAQ:GLUU)
A gaming company that makes games for smartphones at a time when standard video games and mobile video games are on the rise puts GLUU stock in a particularly powerful position to yield strong gains in 2017.
The company has already seen gains of over 40% in 2017 and, with the industry as a whole set to rise alongside the growing prominence of smartphone gaming, Glu Mobile is likely to keep that gain train rolling.
The cryptocurrency market is one fraught with pitfalls if you’re not careful, but the investor with an eye for value and a sanguine investment strategy can see huge gains in one of the hottest markets of 2017.
One of the coins I personally like, especially for those looking for a low cost of entry, is Ethereum Classic (ETC). And yes, there is a difference between Ethereum Classic and Ethereum (ETH). Without getting into too much detail, the basic story is that there was a philosophical divide over how the cryptocurrency should be run, and that resulted in a split between ETH and ETC.
While ETH is probably the better buy in the long term, the cost per coin might dissuade investors, and that makes ETC’s more affordable price attractive. While the two cryptocurrencies have mirrored each other thus far, that is likely to change as time goes on. But, for now, ETC looks poised to build off of its already big gains in 2017, which saw its coin rise from around a $1.00 per unit to more than $15.00.