Thanks to the economic recovery and favorable conditions in 2010, these up-and-coming penny stocks are poised to grow exponentially into industry leaders, surge on a buyout from a big blue chip or just plain prove their worth with tremendous sales and profits.
Here are four penny stocks to buy now.
Penny Stocks to Buy Now – American Apparel (APP)
American Apparel (APP) is a manufacturer and retailer of basic apparel items for men, women, children and pets. Based in Los Angeles, the company operates over 260 stores across the globe. In addition, APP sells directly over the Internet and operates a wholesale t-shirt supply business. Shares had blasted to six dollars last May after bottoming in March of 2009 just above $1. Since then, APP has drifted lower despite an improving operating environment. At under $3 per share, APP trades for slightly more than book value and a mere fraction of its annual sales. The company is expected to have finished 2009 with a small profit of 3 cents per share, but analysts expect APP to make 25 cents in the current year. You can buy that parabolic growth for a bit more than 10 times estimated earnings. If the company can deliver with results that meet expectations, APP could double in value in 2010. Buy shares up to $3.25 per share. My target is $6.50.
Penny Stocks to Buy Now – Animal Health (AHII)
Animal Health International (AHII) is a distributor of a wide spectrum of animal health products. Shares of AHII have recovered nicely since bottoming below $1 per share last March, but at under $2.00, shares trade well below the near $15 high of two years ago. Recently the company was upgraded by a Wall Street firm to overweight. The upgrade appears to be related to valuation and improvement in the economy. We love our pets, but spending on animals was clearly negatively impacted by the recession. Analysts expect the company to make 32 cents in the current fiscal year ending June 30. That number is expected to grow to 42 cents in the following year. Trading at less than five times forward earnings makes AHII an attractive penny stock to buy now. Buy shares up to $2.25. My target is $5.
Penny Stocks to Buy Now – Dynegy (DYN)
Dynegy (DYN) is a Texas-based utility company engaged in the production and sale of electricity. The company came to fame during the Enron crisis and its aftermath. Shares of DYN recovered during the last bull market, peaking at more than $10 per share in 2007. DYN crashed again during the recession and financial crisis, bottoming at a buck a share. A slight recovery has the stock trading around $1.50 per share today. As for operations, the company is expected to post a slight loss of 23 cents per share in 2010 after a breakeven year in 2009. Shares trade for less than half sales and book value, making the company attractive to value investors. Given the operating losses, this pick is a bit more speculative than other selections. That speculation is offset by better liquidity and the potential to leverage its business profitably in a growing economy. Buy DYN up to $2. My target is $5.
Penny Stocks to Buy Now – Ruth’s Hospitality Group (RUTH)
The upscale dining business has undergone tremendous turmoil during the recession. Budget conscious consumers are hitting the buffet instead of the high price steakhouse. As a result, Ruth’s Hospitality Group (RUTH) saw profits slide and share price collapse. Ruth appears to have stabilized its operation, providing a floor for shareholders. The stock is up more than 300% since bottoming but still offers attractive value for penny stock investors. Analysts expect RUTH to make 29 cents per share in 2010, putting the stock at just above 10 times earnings. I expect the company to beat expectations in 2010, providing another double opportunity for new investors at today’s prices. Buy RUTH up to $4. My target is $8.