Cheap stocks trading for under $5 a share – colloquially known as “penny stocks” even if they trade for more than a penny – are aggressive investments but can be quite profitable if investors focus on companies and sectors with big potential growth. One of those sectors as we enter the holiday shopping season is retail. With just a small uptick in consumer spending, some penny stock retailers could see dramatic gains in the months ahead.
For those of you who are looking to add some fast-moving but low-priced stocks to your portfolio, here are five of my favorite penny stock retail companies to buy right now:
Appliance Recycling Centers of America Inc. (ARCI)
Appliance Recycling Centers of America Inc. (NASDAQ: ARCI) sells household appliances through a chain of company owned factory outlets named ApplianceSmart. The company is also known for its appliance recycling and replacement services for electric utilities. Year-to-date, ARCI has gained +43.9% compared to gains of +14.4% and +9% for the NASDAQ and Dow Jones, respectively. On the earnings front, this penny stock beat estimates by 10 cents last quarter.
Birks & Mayors Inc. (BMJ)
Retailer Birks & Mayors Inc. (AMEX: BMJ) designs, manufactures and sells luxury jewelry, time pieces and giftware. Designer jewelry, diamonds, gemstones, precious metal jewelry, time pieces and giftware are its most popular merchandise. Since January, this penny stock has gained +20.7% compared to smaller gains by the broader markets. More importantly is the stock’s short-term performance since Sept. 1, with BMJ up +21.8% since then. In its last quarterly statement, BMJ posted a revenue growth of +8.8% year-over-year. At under $1.50 a share, Birks & Mayors is a bargain stock buy.
Casual Male Retail Group (CMRG)
Casual Male Retail Group (NASDAQ: CMRG) is well known for its specialty big and tall men’s apparel. The company owns nearly 400 Casual Male XL retail stores, 65 Casual Male Outlets and 19 Rochester Clothing Stores. Over the past 12 months, this penny stock has jumped an impressive +112%. Also, since September, the stock has climbed +55.1%. CMRG has outperformed earnings estimates three of the last four quarters as well. After a strong day on Tuesday, Casual Male stock just set a new 52-week high.
Dreams Inc. (DRJ)
Dreams Inc. (AMEX: DRJ) manufactures, distributes and retails sports licensed products, memorabilia and acrylic display cases. The company also runs several websites that sell the licensed goods. Since January, this retail stock has gained +66.7%, and the stock is up +82.4% since September, compared to smaller gains by the broader markets. Despite reporting earnings of -$0.02 last quarter, analysts are projecting EPS of $0.14 this quarter on strong holiday sales. DRJ has a 52-week range of $1.12 to $3.18 and is approaching a new 52-week high.
Tandy Leather Factory Inc. (TLF)
As its name would suggest, Tandy Leather Factory Inc. (NASDAQ: TLF) is a retailer and wholesale distributor of leather and leather related products. Some of its products include leatherworking tools, belt adornments, leather dyes, saddles, tack hardware and belt buckles. Since September, TLF has posted a modest gain of +4.7%. Likewise, the stock posted a quarterly earnings growth of +7.4% in its last income statement. But my quantitative and fundamental analysis shows TLF is due for a breakout. This cheap stock is a buy in my book.