In my book, one of the best penny stock investments can make right now is a swing trade in small cap tech stock Tower Semiconductor (TSEM). Shares of this penny stock are hovering around $1.35, and it’s an investment well worth your money — if your trading strategy favors active investing and a little more risk in your stocks.
I’m not typically a big proponent of penny stocks, since many of these companies are too small to offer the elite fundamentals I look for — either they don’t have analyst coverage to prompt an earnings or sales surprise, or they just don’t have a large enough operation for growth to mean anything. But TSEM counters both of those complaints. Tower Semiconductor has coverage on Wall Street, and by more than one analyst. Also the company enjoys a market cap belied by its $1.30 share price – almost $270 million as of this writing.
As for performance, TSEM shares are up about 40% this year compared to a small slide in the broader market since January 1. That shows you the power of this stock.
Tower Semiconductor is located in Israel, and operates two fabrication facilities there, as well as one fabrication facility in the United States and manufacturing partnerships in China. It is a real global player in the tech sector. Tower along with its wholly owned subsidiary Jazz Semiconductor are seeing brisk growth as consumer spending improves around the global and the demand for communications equipments and electronics — as well as the semiconductors that make them tick — is growing rapidly. This is creating many hot tech investment opportunities, of which TSEM is just one.
That growth is proceeding much faster than Wall Street anticipated After posting losses in recent quarterly reports, Tower surprised analysts with a huge profit in its recent earnings report – blowing away forecasts by over +360%. Its EPS of 14 cents trounced the consensus target of just 3 cents. What’s more, the report was a significant improvement over the previous quarter and a sign that Tower is on the right track.
When Q2 earnings roll out, I expect a similar showing. The earnings target is around 16 cents. What’s more, last year’s Q2 numbers showed a significant loss – so even if TSEM hits the mark it will be showing evidence of a strong turnaround trend.
All this presents a great buying opportunity. I have just completed my weekly fundamental analysis and TSEM is one of my top penny stocks to buy now
. That said, you should keep in mind Tower’s big gains year-to-date and try to buy in on a dip and understand that shares could hit a ceiling soon. I recommend buying in on a day like today, when shares are down about 2% — though always trade during market hours, and use a limit order to make sure you don’t overpay. And use a stop loss to protect yourself if you don’t have the stomach for a wild ride, since this stock can be quite volatile.
Finally, don’t get greedy — shares of TSEM were in the $1.80 range as recently as March, so if the stock bounces back you could make a quick 40% on a swing trade. If TSEM tallies gains like that, hanging on and hoping for a doubler could cause more harm than good.
As of this writing, Louis Navellier did not own shares of TSEM in either personal or client portfolios.
