Ten years ago, penny stocks were all the rage in the financial media. Almost every outlet offered some sort of penny stock investing tip.
Frankly, it was a bit nauseating and most clearly a money grab for some. A lot of scam companies hyped certain penny stocks only to inflate share prices for their own benefit.
Sure, investing in penny stocks can yield fantastical results.
But it can also result in disaster if you’re not looking in the right place.
Still, the masses were mesmerized, and the industry was ready to feed the penny stock hype.
So much so that an old publisher of mine tried to get in on the act with its own penny stock offering.
THREE STOCKS: Any one of these cannabis companies could potentially deliver a 1,000% windfall. Click here to learn more…
I was the guru selected to run the letter. My mission was simple – bring some sort of financial analysis discipline to what was the “Wild West” of penny stocks.
Was it possible to own a penny stock (defined as a stock trading on a national exchange priced below $5 per share) that traded for a discount to future value?
Forget about the pink sheets and stocks trading for actual pennies. I wanted to recommend real companies that had very real prospects of growing profits in the future. I succeeded, but I also failed at times.
That’s the nature of penny stocks.
You will find that it is possible to find massive winners, but you have to be willing to take on risk.
Denny’s at the time was making a big splash by advertising during the super bowl while its shares traded for under $3 per share.
Today, Denny’s is at $18.
Sirius looked bleaker, trading for under $1 per share. But this alternative to local radio stations had a massive advantage that I knew would ultimately pay off.
Sure enough, the payoff came in the form of a stock now trading for more than $5 per share.
Financial discipline brought me these two big winners.
Every single day, the VQScore system analyzes tens of thousands of stocks. It weeds out every company without positive earnings and factors in numerous other technical indicators. What we’re left with is only the best of the best.
So when the VQScore gives a penny stock a high rating, you know the company is financially stable and growing its businesses. These aren’t typical penny stocks.
And that’s why we’re so bullish on these recommendations.
Here are the three best penny stocks to buy now, as rated by the Money Morning Stock VQScore system…
Best Penny Stocks to Buy Now, No. 3
One of the first things I look for in a penny stock is recent trading history. How long has the stock traded in penny stock territory?
Laredo Petroleum Inc. (NYSE: LPI) is an oil and gas exploration company with a long history as a successful stock to own.
The only glitch came this fall, when oil prices fell precipitously, sending shares of Laredo into penny stock territory.
This is the kind of penny stock to pounce on because Laredo won’t be a penny stock for long.
If oil prices climb as many predict, Laredo shares will blast through $5 per share and beyond.
With analysts looking for Laredo to have made $1 per share in 2018, the stock trades for just three times earnings.
This is extremely low, making Laredo a penny stock to buy now.
Best Penny Stocks to Buy Now, No. 2
Drug store retailer Rite Aid Corp. (NYSE: RAD) is at the top of the list of retailers poised to go bankrupt in the near future.
As we have seen with another retailer poised for bankruptcy, Sears, it is difficult if not impossible to kill off a company in this country.
That fact gives investors enough hope for a recovery at Rite Aid.
Last year’s cancellation of a merger with Albertsons may have been the final nail in the coffin.
But look at it this way – another buyer may soon emerge.
Worst-case scenario, investors can look forward to some sort of turnaround that increases shareholder value.
At just $0.96 per share, the stock is about as cheap as it is going to get.
To the extent another buyer emerges or a turnaround gains traction, shares could double in value or more.
Analysts expect Rite Aid to make $0.03 per share in 2019.
That’s a start in the right direction for this penny stock.
Best Penny Stocks to Buy Now, No. 1
When buying a penny stock, the same rules apply as if the stock were trading at a higher price.
That is to say, investors should look at penny stocks with earnings and revenue growth prospects that merit investment.
That’s why we rely on the methodology of the VQScore.
With ASE Technology Holding Co. (NYSE: AXS), future growth potential is what will drive shares higher.
We’ve seen this act before with ASE – a semiconductor company.
When ASE was a penny stock in 2009, a massive rally in shares ensued as sales and profits exploded.
The same looks to be true going forward.
Analysts expect earnings to be flat in 2019, but revenue is expected to grow from $12.15 billion to $13.49 billion.
At 10 times estimated earnings, shares of ASE are priced attractively.
These 3 Stocks Are the Key to 2019’s Greatest Profits
The 2018 midterm election was a turning point for the cannabis industry.
We expect nothing short of historic profits by the end of the year.
But not all pot stocks will hand you life-changing wins. In fact, often the companies making headlines are least likely to see the biggest gains.
These three stocks, on the other hand, are flying under the radar… for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth.
I don’t know of any other sector providing anywhere near this level of growth now.
About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.
Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.
This post is from MoneyMorning. We encourage our readers to continue reading the full article from the original source here.