It used to be that the term “penny stocks” actually meant stocks that sold for under a dollar.
And there was a huge industry built around these “zero-to-hero” kind of stories.
Now, most major U.S. exchanges don’t allow stocks to trade below a dollar. And most stocks start at big prices so that hedge funds and mutual funds will be able to buy them from the start.
Many funds and institutions don’t buy stocks under $5 a share and most won’t touch a stock that’s trading at a higher price for liquidity purposes. That leaves many stocks out in the wilderness of individual investors and day traders.
It’s also the provenance of niche markets like small tech firms, energy companies and precious metals firms that have good-sized market capitalizations but are more focused companies.
But it’s my recommendation that investors looking to keep their portfolios moving in the right direction should invest wisely and adjust their strategies accordingly. That’s because there are good plays in the $10-and-under crowd. And these seven “A”-rated stocks under $10 are having a moment in the current market. My Portfolio Grader says they’re worth some seed capital right now.
‘A’-Rated Stocks to Buy: DHT Holdings (DHT)
DHT Holdings (NYSE:DHT) is a shipping company that focuses on oil transport. It has a fleet of ships that are deployed around the world, moving oil from one port to the next.
This business is pretty economically cyclical, meaning when the global economy is doing well, these companies are doing well. As economies expand, they use more energy moving and producing goods, so they need more energy. And that extra energy usually shows up by boat.
And nowadays, when energy prices are low, some countries will stockpile crude so they have it when prices rise. But a good economy is always a boon to this industry.
For example, DHT stock is up 105% in the past year as competition for energy shipments from the Middle East have increased in Asia and developing economies.
Opera (NASDAQ:OPRA) is a Norway-based web browser firm that dates back to the early days of the Internet.
Some of the reason for its lack of notoriety is the fact that once Google and others started gaining momentum — and funding — OPRA looked to new markets for opportunities.
Now it is a player in Africa and India, two enormous markets that are under-served by the big browser companies. That means OPRA works licensing deals with Google and Yandex (NASDAQ:YNDX), which is Russia’s version of Google, for its services and browsers.
It has also started a fintech wing of its company, offering microloans in Africa and other banking services. This is a very popular market in India, where few people have bank accounts.
The stock is up 72% this year and it’s in a good position to grow, now that the global economy is getting back in shape.
Eldorado Gold (EGO)
As you know, I prefer to invest in stocks that are still growing, and Eldorado Gold (NYSE:EGO) is in a sector that tends to soar higher in bullish markets — gold mining.
EGO in particular is a Canada-based gold exploration company that has mines in Canada, Turkey, Greece, Brazil, Romania and Serbia. These don’t sound like the typical hot spots for gold mining, but EGO sports a $1 billion market cap, which means it’s a good-sized gold miner but not anywhere close to a big mining firm. That means it can exploit smaller mines profitably.
Generally speaking, when gold prices are up, gold mining stocks are up even higher. They leverage performance on the up and down side. And 2019 was not an exception.
Gold was up around 20% for the year. This gold miner was up 170%. That’s some leverage.
But bear in mind, it’s like small energy exploration and production companies. They sink in down years which means they soar in good ones. And 2020 is shaping up to be another good year for gold.
Avon Products (AVP)
But just as the Fuller Brush man has faded into memory, so did the Avon Lady. And it almost destroyed the company. But Avon rebuilt and refocused.
This time it looked to the markets where e-commerce still wasn’t as common as it is in most of Europe and the U.S. It went to emerging economies, where infrastructure made online shopping tricky and connectivity wasn’t always ubiquitous.
Plus, AVP moved into the future and embraced online sales.
And it’s paying off. What’s more, cosmetics are expected to be one of the biggest consumer growth industries in the next 5-10 years.
The stock is up a whopping 287% in the past year, which shows that investors are starting to see some real long-term value here.
But that wild success faded, as most of these viral games do. And 20 other games filled the void left by the big game that is losing traction. And then it’s hard to sustain a stock when your business model and expectations were built so high in the first place.
The next hope, while the company was rapidly building and launching new games, was that a big firm would buy it out at a premium. Then everyone could walk away with some cash and start anew.
But that didn’t happen and ZNGA stock drifted in the single digits for years. But it has had time to mature, start to build a solid business model and deliver games that are gaining traction.
Its most recent quarterly numbers (released in late October) beat expectations. And the stock is up 58% this year. It’s a little pricey, but it’s a high margin business, so a couple good quarters could get that valuation into shape.
Sibanye Gold (SBGL)
Sibanye Gold (NYSE:SBGL) is a mining company that is a bit broader than most gold miners. It also looks for platinum, palladium and the derivative metals that generally come along with precious metal exploration.
Platinum prices are up almost 22% in the past year. Palladium prices are up 35%. Gold is up 18% and silver around 12%.
And miners are leveraged to those prices. It’s also a bonus that platinum and palladium are industrial metals, so they are linked to economic conditions more than say, gold.
But now that the sun is shining on the miners, it’s showing up in their stocks. SBGL is up a staggering 270% this year. That’s pretty impressive for a non-tech firm with a $6.5 billion market cap.
Also, SBGL is headquartered in South Africa where important rare earth minerals are abundant. It wouldn’t be surprising if it finds a way into those markets in the future as well.
Kinross Gold (KGC)
Kinross Gold (NYSE:KGC) is a Canada-based company with mining operations in North America, Africa, Russia and South America. It primarily mines for gold and silver ore.
Gold miners have had a good run this year, and it’s shaping up for them to continue this run into 2020. KGC is a well-run company that’s big enough to withstand the vagaries of the market (it can be volatile), but small enough to leverage growth in the sector.
Also, silver is an industrial metal, used in a variety of tech equipment. As the tech market grows, so does the value of silver.
Gold prices are finishing the year around 18% to the good, with silver up around 12%. But KGC stock is up 48%. That means investors are getting in early for what they expect to be a big year next year.
To prepare for 2020, these are the steps every investor should take right now:
- Follow the money: Buy stocks that are seeing massive cash infusions.
- Protect your portfolio: Invest in market-beating stocks with my simple trick.
- Go risk-off: Strong fundamentals are more paramount than ever.
My stock-picking track record includes the following:
- 274% gain in semiconductor stock Nvidia (NASDAQ:NVDA)
- 134% gain in defensive plays
- 123% gain in a personnel service stock
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.