Penny stocks are notoriously unpredictable. For investors to take advantage of the rapid price movements that these stocks can make requires an understanding of technical analysis. However, when looking at many of these small-cap and micro-cap stocks, the first question for investors is “Why should I buy this stock in this company?”
To answer that question, investors need to consider some other questions including:
Are these companies promising a better mousetrap or just another mousetrap?
Does the company have a viable business model that may make them an attractive buyout target for an established company in their industry?
Is the company in a sector that is currently growing?
Ideally, you want to find a penny stock that allows you to answer yes to all of those questions. These are the penny stocks that have the potential to get investors excited in the coming weeks and months and show the technical signs that point to real gains. We’ve selected 10 penny stocks that look to meet these criteria and that you should consider buying now.
Click the “Continue to Slide #2” button to view the first company.
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- Chesapeake Energy
- Mid-Con Energy Partners LP
- Advantage Oil and Gas Ltd.
- Castle Brands
- Sportsman’s Warehouse
- Limelight Networks
- Plug Power
- DHX Media
- Arotech Corporation
- mCig Inc
#1 - Chesapeake Energy (OTCMKTS:CHKAQ)
Chesapeake Energy (NYSE: CHK) - The decision to buy Chesapeake Energy really comes down to which direction you see oil and gas prices moving. The company took it on the chin during the last downturn and was saddled with almost $10 billion in debt. However, many analysts are projecting oil and gas prices to rise through 2019, and an increase would benefit a small player like CHK more than some of the major oil companies. Lending support to that argument, CHK’s stock has posted a 15% gain for 2018 as oil prices have risen to around $70. If those prices hit the $120 mark by the end of 2019 as some analysts predict, CHK could be in for a sizable bump in price.
The company also recently announced that they were selling off some assets to reduce their debt by about $2 billion and their second-quarter earnings report gave evidence that they have a viable plan in place to replace the profit they are losing from selling those assets.
In their last earnings report, results were mixed. Year-over-year earnings were down substantially with the company posting a loss of $40 million ($0.04/per share) compared to a profit of $470 million ($0.47/per share)the year before. And total revenue fell from $2.281 billion to $2.255 billion. However, their adjusted earnings per share of $0.15 came in ahead of estimates that called for $0.14. At this writing, the stock was trending just below their simple moving average (SMA) and if it finds support it could be ready to move past its high for the year which was hit in early July.
About Chesapeake Energy
Chesapeake Energy Corp. is an independent exploration and production company, which engages in acquisition, exploration and development of properties for the production of oil, natural gas and natural gas liquids from underground reservoirs. It focuses on projects located in Louisiana, Ohio, Oklahoma, Pennsylvania, Texas, and Wyoming.
Read More - Current Price
- $3.05
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#2 - Mid-Con Energy Partners LP (NASDAQ:MCEP)
Mid-Con Energy Partners LP (NASDAQ: MCEP) - Mid-Con Energy Partners illustrates the risks for small-cap companies in the oil and gas sector. In 2013, this company’s stock was up to $27 per share. But when oil prices cratered from 2014-2016, Mid-Con’s stock cratered with it, moving into penny stock territory. At one point it was selling for as low as $0.73 per share. Even with oil prices rising, the stock has struggled to find a lift, trading around $1.75 per share.
However, the stock has achieved a gain of over 42% for the year while revenues are forecast to hold steady below $60 million through 2019. What isn’t clear is if those estimates are accounting for higher oil prices. When oil was trading at $120 per barrel, Mid-Con’s stock price held steady in the 20’s, so if crude makes a leap from its current price at around $70, Mid-Con could be a good long play in the penny stock arena.
About Mid-Con Energy Partners
Mid-Con Energy Partners, LP acquires, owns, develops, and produces oil and natural gas properties in North America. The company's properties are primarily located in the Mid-Continent, Big Horn, and Powder River Basin regions of the United States in Oklahoma and Wyoming areas. As of December 31, 2019, its total estimated proved reserves were 25.6 million barrel of oil equivalent (MMBoe).
Read More - Current Price
- $5.52
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#3 - Advantage Oil and Gas Ltd. (NYSE:AAV)
Advantage Oil and Gas Ltd. (NYSE: AAV) - For investors who are looking for a more proven player in the oil and gas sector, Advantage Oil and Gas is a compelling choice. In its second-quarter earnings report, the company showed a year-over-year decline on both the top and bottom lines which is creating downward pressure on the stock. However, in the first quarter, the company’s profit margin was 29%, well above the industry average of 6.1%. And that profit shows no signs of slowing due to the juice that’s driving up demand for Canadian oil such as the Iran sanctions and forecasted production issues in South America. In fact, analysts are forecasting the Canadian oil industry as a whole to register a $1.4 billion profit in 2018.
Forecasts like that are contributing to Advantage receiving a forward price target of $5.90. The stock is currently trading at approximately $3.10.
About Advantage Oil & Gas
Advantage Oil & Gas Ltd. engages in the development and production of natural gas and liquids. It focuses its operation in Glacier, Wembley, Valhalla, and Progress, Alberta. The company was founded on January 2, 1997 and is headquartered in Calgary, Canada.
- Current Price
- $2.50
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $11.00 (340.0% Upside)
#4 - Castle Brands (NYSE:ROX)
Castle Brands (NYSE: ROX) - Castle Brands may be a case where the market has already set a floor for its stock. If that's the case, there are reasons to think that the stock may be due for a run. First, it has two compelling product offerings with its Dark & Stormy drink made from its Gosling brand of Black Seal dark rum and ginger beer and it's Jefferson bourbon brand that continues to anchor their whiskey portfolio that has increased their revenue by 20% in 2018. Their profit remains weak, but their margins have increased over the last couple of years and revenue continues to increase. The company has 166 million shares outstanding which could create some downward pressure on the stock. However, 30% of those outstanding shares are owned by company insiders signaling that management is confident of the company's prospects.
Castle Brands looks to be a target for acquisition down the road. But with the stock trading within a tight range, it seems that if it’s going to break in one direction, it would be up.
About
- Current Price
- 0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#5 - Sportsman’s Warehouse (NASDAQ:SPWH)
Sportsman’s Warehouse (NASDAQ: SPWH) - With a trailing P/E ratio that is significantly below the S&P 500 at 11.5 and same-store sales growth of 3.4% in the first quarter of 2018, Sportsman’s Warehouse is giving off some strong technical vibes that say it is undervalued. However, analysts are looking at their sales numbers with a little skepticism. While the company showed a profit in its most recent earnings statement, its earnings per share (when calculated with GAAP standards) was $0.15, unchanged on a year-over-year basis. Revenue growth that is not matched by earnings growth may be a sign that the company is increasing expenses which may explain why the company has not been growing along with the specialty retail sector. Still, the company is projecting strong revenue and EPS numbers for the remainder of 2018 which should provide support for the stock’s recent movement.
In large part due to their positive earnings report, the stock has moved past its simple moving average and still has room before it would hit its 52-week high. The stock is trading at 7x next year’s consensus EPS.
About Sportsman's Warehouse
Sportsman's Warehouse Holdings, Inc, together with its subsidiaries, operates as an outdoor sporting goods retailer in the United States. It offers camping products, such as backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment, sleeping bags, tents, and tools; and apparel products, including camouflage, jackets, hats, outerwear, sportswear, technical gear, and work wear.
Read More - Current Price
- $2.29
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $3.20 (39.7% Upside)
#6 - Limelight Networks (NASDAQ:LLNW)
Limelight Networks (NASDAQ: LLNW) - Any decision to buy Limelight Networks should be based on where you feel the future of streaming content is headed. Limelight creates Content Delivery Networks (CDNs) that help companies ensure efficient, customizable performance and content availability. According to industry analysts, CDNs will carry 71% of the total internet traffic by 2021. That's a significant increase from the 52% they carried in 2016. This is due, in large part, to the demand for streaming content without buffering. That's where the CDN comes in. However, the industry faces a threat to their clients such as Facebook and Netflix seek to create their own CDNs so they can control their internet speeds and bandwidths. However, that threat seems to be abating for the moment, which is good news for Limelight which has seen a 14% increase in revenue for the first half of 2018. The stock is trading right around $4.85 per share and recently broke above its 50-day SMA.
About Limelight Networks
Limelight Networks, Inc provides content delivery network and related services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates private global networks with distributed computing resources and extensive connectivity to last-mile broadband network providers; offers live and on-demand video delivery services; and provides online video platforms that integrates and manages advanced video delivery.
Read More - Current Price
- $0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#7 - Plug Power (NASDAQ:PLUG)
Plug Power (NASDAQ: PLUG) - The definition of insanity is doing the same thing in the same way and expecting a different result. So investors should be encouraged that Plug Power is trying something different to generate shareholder value for its stock. Although clean energy has faced consistent headwinds in generating an ROI for investment capital, the hydrogen fuel cell developer is looking to change that narrative. Plug Power signed contracts with Amazon last year and joined forces with FedEx in May. This was on top of the deal they have had in place with Walmart since 2014. Why are these deals significant? Companies like Amazon are eager to use an alternative power source to increase the production speed of their forklifts to minimize downtime.
They remain unprofitable, but their revenue is growing (it was up 90% year-over-year in Q1 of 2018) and they could be on the verge of a breakthrough as their stock is looking to cross above its SMA.
About Plug Power
Plug Power Inc develops hydrogen and fuel cell product solutions in North America, Europe, Asia, and internationally. The company offers GenDrive, a hydrogen-fueled proton exchange membrane (PEM) fuel cell system that provides power to material handling electric vehicles; GenSure, a stationary fuel cell solution that offers modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; ProGen, a fuel cell stack and engine technology used in mobility and stationary fuel cell systems, and as engines in electric delivery vans; GenFuel, a liquid hydrogen fueling delivery, generation, storage, and dispensing system; GenCare, an ongoing Internet of Things-based maintenance and on-site service program for GenDrive fuel cell systems, GenSure fuel cell systems, GenFuel hydrogen storage and dispensing products, and ProGen fuel cell engines; and GenKey, an integrated turn-key solution for transitioning to fuel cell power.
Read More - Current Price
- $2.56
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 11 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $4.52 (76.6% Upside)
#8 - DHX Media (NASDAQ:DHXM)
DHX Media (NASDAQ: DHXM) - In the world of digital media, content is king. And that may give investors a bit of optimism as they consider DHX Media. The stock has been battered this year. However, after falling 35%, it may have found a bottom. It’s currently trading right around its simple moving average. The company has taken some positive steps to add to their status as the world’s largest independent library of children’s content by acquiring the intellectual property of Peanuts. This is in addition to its portfolio which already includes Teletubbies, Inspector Gadget,Strawberry Shortcake and Yo Gabba Gabba! After acquiring Peanuts, they promptly sold 39% of their stake to Sony. This not only helped reduce debt, but it gave them the support of a high-quality partner. DHX Media would be a sector play for sure. As more consumers look to cut the cord and move to digital and streaming media, there are opportunities.
About DHX Media
DHX Media Ltd. develops, produces, distributes, broadcasts, and licenses television and film programs for conventional and specialty terrestrial and cable/satellite television broadcasters worldwide. The company operates through three segments: Content Business, DHX Television, and Consumer Products Represented.
Read More - Current Price
- $1.11
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#9 - Arotech Corporation (NASDAQ:ARTX)
Arotech Corporation (NASDAQ: ARTX) - The defense industry may seem like a strange place to find a penny stock, but Arotech fits the bill. It has a market cap of $88 million, but it operates in many countries and counts among its competitors some of the big boys like General Electric and Honeywell. In terms of fundamentals, the stock has a forward P/E ratio of 13 which may be low if they can start to accelerate their growth. Their revenue in 2017 was $98.72million, almost $5 million less than their 2014 revenue. And when you consider the company was founded in 1990, it has taken a long time to get where they are. In 2017, the company earned a profit of 17 cents per share. Forecasts project their profit per share to increase to 18 cents per share in 2018 and up to 26 cents per share in 2019. Much of this enthusiasm may have to do with the forecast for more defense spending from the Trump administration.
Arotech’s stock has shown a year-to-date gain of nearly 12%. The stock is currently trading around $3.40 and is positioned just below its 20- and 50-day SMA.
About Arotech
Arotech Corporation provides defense and security products worldwide. The company's Training and Simulation division develops, manufactures, and markets multimedia and interactive digital solutions for engineering, use-of-force training, and operator training of military, law enforcement, security, emergency services, and other personnel.
Read More - Current Price
- $3.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#10 - mCig Inc (OTCMKTS:MCIG)
mCig Inc. (OTCMKTS: MCIG) - We round out our list of ten top penny stocks with a pure speculative play in one of the most debated sectors: the cannabis industry. The question investors have to ask regarding mCig is if they see the current trend towards legalizing marijuana to become a reality in all 50 states. mCig is a marijuana cultivation construction company, which means they help build the greenhouses and other infrastructure that growers need to produce their product. Currently, the number of licenses issued in a particular state is severely limited. That’s what drives mCig’s potential. However, several states that have made marijuana legal are already loosening their restrictions, increasing competition and driving down the price of marijuana, causing some growers to go out of business.
However, if you’re just looking at a short-term play, mCig can be an intriguing option. The company reported earnings of$4.78 million in the fiscal year 2017, up from $1.72 million in 2016. And their profit was $1.53 million. Already in 2018, the company has brought in over $6 million in revenue. That’s a nice trend, but it has yet to be reflected in the stock price, which is still below $0.25 cents a share and is down about 28% for the year.
About BOTS
BOTS, Inc operates as a holding company. The firm engages in the manufacture and distribution of electronic cigarettes, vaporizers, and accessories. It operates through the following segments: Cultivation, Manufacturing and Distribution (“CMD“); Retail Sales; Media and Technologies; Agriculture; and Corporate.
Read More - Current Price
- $0.03
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
Not all penny stocks are the same. Some are startups. Some are established companies that have weathered some hard times. Some are niche players in established industries. The important thing to remember as an investor is that there is a reason why their stock is trading at a low price. If you understand why and are willing to accept the risk that can come from waiting on a reward that may not materialize, then penny stocks can be an attractive addition to your portfolio.
Here are a couple of tips for selecting the right penny stocks for your portfolio:
Do your homework. This industry is rife with fly-by-night companies promising to be the latest “hot stock or industry”. If the fundamentals don’t match the promises, it’s prudent to wait.
It may be a good idea to only focus on sectors where you have a good knowledge base. That will make it easier to tell the contenders from the pretenders. You can use a screening service to give you a list of potential penny stock investments in a sector to help you narrow down your search
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