Penny stock investing is too risky for most investors, but there are ways to invest in small-cap companies with explosive profit potential without losing your shirt. You don’t have to make aggressive buys in microcaps that trade for one or two cents. By focusing on penny stocks that are really more like “dollar stocks,” listed on major exchanges and with a market cap that is small but still a respectable $100 million or better, investors can mitigate some of their risk.
Right now, I have my eye on four such penny stocks in the media industry: Nexstar Broadcasting Group (NASDAQ: NXST), Cumulus Media (NASDAQ: CMLS), Primedia (NYSE: PRM) and Sirius XM Radio (NASDAQ: SIRI). Here are the details:
Nexstar Broadcasting Group (NXST)
Television broadcasting company Nexstar Broadcasting Group (NASDAQ: NXST) focuses on the acquisition, development and operation of television stations in medium-sized markets across the U.S. Year-to-date, this penny stock has gained 23.2% compared to gains of 10.5% and 7% for the NASDAQ and Dow Jones. Since September, NXST is up an impressive 33.1%. While NXST did post poor earnings of 11 cents a share last quarter, analysts are expecting big things from this media stock next quarter and are projecting 29 cents a share. Nexstar trades just under $5 currently.
Cumulus Media Inc. (CMLS)
Cumulus Media (NASDAQ: CMLS) acquires, develops and operates both AM and FM radio stations. Since January, CMLS has jumped 51.3% compared to smaller gains by the broader markets. More impressive, this penny stock has climbed 63.5% since Sept. 1. Last quarter, CMLS beat earnings estimates by 218% and posted a quarterly revenue growth of 3.6%. CMLS has a trading price of $3.45, which is quite an upgrade from its 52-week low of $1.91.
Primedia (PRM)
Media company Primedia (NYSE: PRM) offers customers with directories for rental property sector and residential real estate industry. Since the start of September, PRM stock has gained 27.6%, and is the stock is up 11.4% year-to-date. Additionally, PRM has met or exceeded earnings estimates for three of the last four quarters. Last quarter this penny stock beat EPS earnings by 271%! Trading at $4.05, PRM is less than a quarter away from its 52-week high of $4.29.
Sirius XM Radio (SIRI)
Sirius XM Radio (NASDAQ: SIRI) is known for its two wholly owned subsidiaries, XM Satellite Radio Holdings and Satellite CD Radio. SIRI has performed the best in 2010 of any stock on this list, gaining 130.8% since January. Since September, this penny stock has climbed 44.9%. Sirius has also met or exceeded earnings estimates three of the last four quarters. Trading at just $1.38, SIRI is a very affordable stock that could be great for your portfolio, based on its yearly performance.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
