Knowing which penny stocks to buy can be difficult. As stock markets continue to enjoy record highs, the debate regarding the overall health of the economy continues to grow. It’s hard to overlook the global slowdown or ignore the increasing impacts that economic reductions have on businesses operating in the U.S.
With nearly all corporations suffering from factors like overseas recessions, lay-offs, trade wars, and uncertainties surrounding Brexit, investors are struggling to find companies that are as optimistic about the economy as they were just a few years ago. This makes many stages of analysis more difficult, including identifying types of stocks expected to perform well, and examination must consider how cash-on-hand and cost reductions may affect hiring new workers, expansion plans, and research and development.
What Is a Penny Stock?
Stock from small companies that sells for less than $5 a share is considered to be a penny stock. While some are available on larger exchanges like NASDAQ and the New York Stock Exchange, most trades are over the counter (OTC) transactions either via the privately-owned Pink Sheets or the electronic OTC Bulletin Board (OTCBB). Knowing which are the best penny stocks to buy is an essential skill for investors to learn.
With the uncertainty and weakening of the economy, investing in penny stocks is a low-cost option. Our experts have compiled a list of seven promising penny stocks to buy that are anticipated to thrive in the coming days, with some expected to perform very well even in times of recession.
- Chesapeake Energy (NYSE: CHK)
- Endologic, Inc. (NASDAQ: ELGX)
- GrupoSupervielle S.A. (NYSE: SUPV)
- O2Micro International Limited (NASDAQ: OIIM)
- Pareteum Corporation (NASDAQ: TEUM)
- Rayonier Advanced Materials Inc. (NYSE: RYAM)
- TAT Technologies Ltd. (NASDAQ: TATT)
1. Chesapeake Energy (NYSE: CHK)
Many investors have an on-again, off-again love affair with Chesapeake Energy as they are still attempting to recover from the gas and oil bust that created significantly lower revenues and resulted in them being nearly $10 billion in debt.
It is important to understand the risk factor of investing in this stock, especially if gas and oil prices fall again. However, CHK earnings reports have been rebounding lately and they have met or beat their earnings consensuses for the past three years.
Also, a continuation of oil’s price increase should start to positively benefit CHK stock slightly more than larger players like Exxon Mobil.
2. Endologic, Inc. (NASDAQ: ELGX)
Developing and manufacturing minimally invasive aortic disorder treatments such as stents and other specialty devices, Endologic, Inc., like most medical corporations, is more likely to remain solid during any kind of recession or economic tremors as people generally prioritize health over finances.
While ELGX stock prices have experienced a downtrend during the last several months, they are showing signs of bottoming out around the $2.39 – $2.28 range. While it is too soon to confirm whether Endologic stock will hit the floor at these prices, the uptrend will be significant if they do. Range-bound trading is demonstrating a high level of shareholder turnover and the downtrend is starting to slow.
Investors must pay attention to the $25 million in losses that the company posts for most quarters. Even though the number sounds large, it’s important to remember that Endologic has a $324 million asset position.
3. Grupo Supervielle S.A. (NYSE: SUPV)
Like other Argentina-based companies, Grupo Supervielle S.A. stock value split nearly in half on August 11 as part of the overall market decline. The uncertainty of the Argentine election contributed to the change in value as Albert Fernandez contended to replaced market-friendly Mauricio Macri. With the election decided and Fernadez set to move into the presidency, markets are already showing signs of recovery from the significant decline.
4. O2Micro International Limited (NASDAQ: OIIM)
Making a name for themselves in the high-performance integrated circuits and solutions industry, many of O2Micro International Limited’s products used in consumer electronics, computers, and automobiles and therefore susceptible to a recession hit. Investors must consider O2Micro’s corporate operations, especially with the backdrop of a trade war. Their rapidly growing international presence in regions of Singapore, Korea, Japan, Malaysia, and China bode well for significant market growth.
The bottom line is that OIIM could very well enjoy notable price increases over time. Many experts consider current stock prices to be unrealistically undervalued and anticipate significant gains when the trade war is over.
5. Pareteum Corporation (NASDAQ: TEUM)
A popular penny stock to buy, Pareteum Corporation isn’t recommended for new or inexperienced traders due to its current hyper-risky and potentially troubling status. When sellers capitulate, or give up on a stock, it presents a unique opportunity for the more advanced investor. There are many moving parts involved in a capitulation, including a dramatic trading volume spike as shares crumble, which hasn’t been the case with TEUM.
Average selling and buying activity went from around 2.5 million traded shares per day to a range of 11 million to 34 million in a matter of just four days. TEUM stock experiencing a significant decline in share price, displaying initial signs of “finding bottom”, and reaching a ballooning trading volume all signal an almost certain capitulation point.
Many issues are bringing the price of Pareteum stock down, including several class-action lawsuits. However, almost everyone looking to sell their shares has already done so, and any bad news has been factored into TEUM share value by now. Again, this penny stock should only be considered by very experienced, risk-tolerant investors seeking a short-term trade as investors usually see a solid price-recovery after capitulation.
6. Rayonier Advanced Materials Inc. (NYSE: RYAM)
Engaging in the production and sale of cellulose specialties, Rayonier Advanced Materials Inc. produces high-purity paperboard, paper, lumber, and cellulose. While some investors may view this industry as boring, history has shown that less-than-exciting industries like funeral homes, casket makers, and rendering plants typically perform well because many investors overlook them.
More importantly, nothing is boring about the $128 million in profits on $2.1 billion in top-line sales that they reported last fiscal year, especially in addition to the $324 million in earnings from the previous year. With $2.68 billion in assets and $1.97 billion in liabilities, Rayonier Advanced Materials Inc. remains in stable financial shape despite some massive and scary numbers. Especially factoring its chemicals and basic materials sector, RYAM is poised to hold up well even during a recession.
7. TAT Technologies Ltd. (NASDAQ: TATT)
A relatively new penny stock to buy now with stock prices just recently dipping below $5 per share, TATT boasted stock prices as high as $12.50 a share before its recent decline.
A business that many experts believe to be in the right industry at the right time, TAT Technologies Ltd. provides products and services for the aerospace and military markets. Considering increased domestic and global tensions and numerous advancements in technologies, the opportunities for corporate growth outweigh any potential risks.
These are still rather thinly traded shares even at lower prices, with daily trading volumes typically being just over 1,000. While some investors avoid low-activity shares, many believe in using limit orders instead of market orders to avoid overpaying for heavily undervalued shares and can sometimes cause the stock price to move as a result of their own buying and selling.
The bottom line is that TATT secures a solid financial position with $113 million in assets and only $28 million in liabilities, typically generates around $95 million in top-line annual revenues, and has done a superb job of bouncing back to profitability after times of loss.
Are penny stocks the way to push through difficult financial times? While most do poorly, some perform very well. When deciding on which penny stocks to invest in, it’s important to consider the individual company, their potential market expansion, and their operations. The stocks listed above are ones that our experts believe will perform well and continue to grow even when many shares around them struggle to do so.
Learn more about which penny stocks to buy and other investment tips by scheduling a free online training session with a pro from Raging Bull’s team of millionaire experts to discover how to take your investment portfolio to the next level.