Penny stocks are the domain of the bold. Nevertheless, for investors nearer the conservative end of the risk spectrum, penny stocks can make sense.
At InvestorPlace, we practice sound investment fundamentals. So, while a prudent investment strategy is recommended, that doesn’t mean that risk isn’t sometimes warranted. In fact, in many cases, it is. However, investors should dedicate a small portion of their respective portfolios to penny stocks.
Moreover, most investments into penny stocks are likely going to be short term. Investors are going to look for catalysts, such as news which indicates quick growth. Investors often get in, book profits and exit their position.
So, bearing all of the above in mind, here are seven penny stocks to buy right now.
- Sky Solar Holdings Ltd. (NASDAQ:SKYS)
- New Gold Inc. (NYSEAMERICAN:NGD)
- Party City Holdco Inc. (NYSE:PRTY)
- Zosano Pharma Corporation (NASDAQ:ZSAN)
- DURECT Corp. (NASDAQ:DRRX)
- SeaChange International (NASDAQ:SEAC)
- United Microelectronics Corp. (NYSE:UMC)
Let’s dive in.
Penny Stocks to Buy: Sky Solar Holdings Ltd. (SKYS)
Sky Solar Holdings develops, owns and operates solar farms around the world. It’s farms — or parks as they call them — exist in Japan, Greece, Canada, the Czech Republic, Bulgaria, and Spain. In terms of their market performance, SKYS stock has shown a lot of movement in the past few months, but had been flat prior to that. So, now, there’s a good opportunity for buyers.
Recent news from the company regarding a legal settlement caused shares to jump over 50% in a day. Courts have ruled in favor of Sky Solar on one count regarding false statements made about their business practices. Importantly, there are other claims being handled as well. This means Sky Solar could be receiving judgments in their favor for damage claims, and such claims can easily catalyze price appreciation further.
Additionally, investors will be keenly scrutinizing the business already as it has spiked — so it may rise in any case.
Overall, though, solar energy is becoming more important to the energy mix of countries worldwide. Sky Solar’s geographically diverse operations should serve to smooth many potential troubles. And collectively, the company has also been profitable. It recorded $18.2 million and $13 million in profit in the first half of 2018 and 2019, respectively.
So, SKYS stock should be on your list of penny stocks to buy.
New Gold Inc. (NGD)
New Gold is an intermediate producer of gold. The term “intermediate” refers to size, with senior producers being both bigger and more geographically diversified. That said, New Gold has operations in Canada and Mexico only — and their Mexico location is under reclamation and no longer actively producing.
Meanwhile, New Gold’s three Canada locations exist in British Columbia (2) and Ontario (1). The company primarily produces gold, but also silver and copper.
On Wall Street, NGD stock has traded as high as $14 in the past ten years. Currently, however, shares can be had for around $1.50. That said, New Gold CEO Renaud Adams provided some reasons to be excited about its shares’ potential in the company’s recent earnings release:
“…Over the balance of the year, our operations will return to pre-Covid levels and we will complete all non-recurring capital projects at Rainy River and advance the development of the C-zone as we position the Company for free cash flow generation beginning in 2021. New Gold’s future will be supported by profitable operations, a stronger balance sheet, and as our current hedges expire at year end, we will be fully exposed to the strengthened gold price.”
That said, there seem to be some catalysts in the future for NGD stock — which makes it a member of the top penny stocks to buy.
Penny Stocks to Buy: Party City Holdco Inc. (PRTY)
Party City shares recently jumped on Aug. 14, but there is certainly time left.
The catalyst for a PRTY stock purchase is that Halloween is coming. An while children may be doing much less trick-or-treating this year, people are still going to buy costumes this Halloween. Additionally, Christmas is just a few months away — meaning decorations will continue to sell.
Sure, the company did have a poor second quarter with revenues decreasing over 50%. However, it did undergo a capital restructuring. Overall, though, as people get ready for the holiday season, shares should benefit. In turn, making PRTY stock another one to keep your eye on.
Zosano Pharma Corporation (ZSAN)
Pharmaceutical companies live and die by their ability to bring new drugs to market. Their ability to then sell those commercialized drugs and develop new therapeutics creates the large pharma companies we know today.
That said, Zosano Pharma recently announced it is commercializing its acute migraine treatment in tandem with EVERSANA. The company helps pharmaceutical companies bring drugs to market, which is huge for Zosano. Also, migraines are estimated to lead to productivity losses as high as $36 billion annually in the U.S. Therefore, this drug could rack up massive sales tallies.
If that happens, ZSAN stock could appreciate quickly. So, right now, it could be a good idea to snag up shares of this penny stock.
Penny Stocks to Buy: DURECT Corp. (DRRX)
DURECT is a therapeutics company based in California. Its therapeutics are currently being led by its epigenetic regulator program. Epigenetics is the study of the modification of gene expression as opposed to modification of the gene code itself. That said, this class of therapeutics regulates how genes express themselves in DURECT’s patients.
Moreover, the company’s leading candidate drug — DUR-928 — has many potential applications. Importantly, it is being studied in a Phase 2 clinical trial for its efficacy in treating acute kidney and liver injury in Covid-19 patients. The potential for this to catalyze significant price appreciation of DRRX stock is obvious, should it pass all clinical stages.
Collectively, the company also has other therapeutics in its pipeline. That said, investors will be intrigued to know that the company’s two other drugs have passed clinical stages and are being commercialized.
So, for these reasons, DRRX stock should be on your list of penny stocks to buy right now.
SeaChange International (SEAC)
SeaChange International is a software company that helps content get to screens. In fact, the company has many well known customers including Verizon (NYSE:VZ), DISH (NASDAQ:DISH), Virgin Media and COX to name a few.
And while the company didn’t have a stellar quarter financially, there is a promising catalyst for SEAC stock investors. The company has aligned itself with Amazon’s (NASDAQ:AMZN) Amazon Web Services (AWS) arm and their machine learning services. In regards to financial catalysts, however, there aren’t any that particularly make this a compelling buy. Nonetheless, the Amazon deal alone makes these shares intriguing.
So, with that in mind, SEAC stock should be considered for your penny stock portfolio.
United Microelectronics Corp. (UMC)
UMC stock derives its value from its parent company’s semiconductor foundry business. And with that, United Microelectronics serves every major sector of the electronics industry.
In my opinion, the most important factor for a strong stock is the same one that is most important for a strong business: sales. That said, United Microelectronics has been on a tear in that regard. In fact, its year-over-year net sales increase has risen every month in 2020. That alone would be enough reason to consider a purchase. But combine that with its industry and geopolitical position, and you have a real winner.
Moreover, the company was founded in Taiwan, which has a significant relationship with the U.S. And with American companies looking to decouple their supply chains from Chinese manufacturing, this is going to open many doors for high tech companies in Asia — especially those opposed to the Chinese Government.
Therefore, because of these 2 catalysts, UMC stock shares deserve a serious look.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing. As of this writing Alex did not own shares of any of the above mentioned stocks.