Editor’s note: “7 of the Best Penny Stocks to Buy Now” was previously published in June 2020. It has since been updated to include the most relevant information available.
For the cost of one AMZN share, an investor could buy hundreds or thousands of shares in a penny stock. But there’s more to their appeal than their cheap prices. Many investors hope to hit it big by investing in the best penny stocks — companies that will turn into Amazon or Tesla.
Indeed, Amazon started its life as a publicly traded company in the ranks of penny stocks. You could buy shares in May 1997 for $1.73 each. But since then, they’ve been on an incredible upward trajectory.
But while the best penny stocks offer upside potential, many are trading for less than $5 for a reason. Some represent once-great companies that have fallen on hard times, like Ford (NYSE:F). Others like Hertz (NYSE:HTZ) are on life support and at risk of delisting. The bottom line is that penny stocks offer big rewards, but they come with big risks.
That means before investing in penny stocks, you should do some research and know what you’re getting into. With that in mind, here are seven of the best penny stocks to buy in 2020:
- ElectraMeccanica Vehicles (NASDAQ:SOLO)
- Silvercorp Metals (NYSEMKT:SVM)
- Zovio (NASDAQ:ZVO)
- Revive Therapeutics (OTCMKTS:RVVTF)
- Coty (NYSE:COTY)
- Husky Energy (OTCMKTS:HUSKF)
- Harte Hanks (NYSE:HHS)
Best Penny Stocks: ElectraMeccanica Vehicles (SOLO)
Electric vehicle stocks are hot. Investors only need to look at the continued run of Tesla or the mania surrounding the recent initial public offering of Nikola Motors (NASDAQ:NKLA) to understand that electric vehicle makers are leading the automotive industry today.
And ElectraMeccanica Vehicles offers huge potential in the space. SOLO stock has recovered from its March lows and risen from 92 cents a share to more than $2.50 in recent weeks. The recovery came after the Canadian company reported that its sales in the first quarter rose to CA$116,831 Canadian from CA$101,404.
Shareholders also like that ElectraMeccanica Vehicles is planning to build a U.S. assembly plant and technical center. The company recently announced that it has narrowed its list for its new U.S. home to Arizona, Colorado, Florida, North Carolina and Tennessee.
It also announced the accelerated development of its first all electric micro-car, and that it’s looking at opening retail dealerships in Arizona and Oregon.
Could ElectraMeccanica Vehicles be the next Tesla? Time will tell, but at $1.73 per share, SOLO stock may be worth the risk.
Silvercorp Metals (SVM)
Gold has been getting a lot of love as a safe-haven investment these days. But don’t count silver out. The price of the precious metal has risen 16% in the past year — and it’s still gaining.
One of the best penny stocks to buy is Silvercorp Metals, a precious metals miner that deserves some love. As is the case with many junior miners, SVM trades as a penny stock. But this company has a lot going for it.
First of all, Silvercorp Metals has a solid balance sheet. It has kept debt low and boasts both a 38% operating margin and a 25% profit margin. Those are stellar — especially for a company in the mining world.
Additionally, Silvercorp is focused exclusively on China. In fact, it’s the country’s largest producer that primarily focuses on silver.
For people who remain bullish on gold and disparage silver, consider that Silvercorp recently announced that it is planning to diversify its operations. SVM stock has risen from $2.89 per share in March and is now flirting with $5 a share. Once this company firmly breaks out of the penny stock ranks, there’s no telling where the share price will go.
Schools continue to move their curriculum and teaching online, so now may be the time for investors to consider Zovio. The California-based education technology company has soared since April, topping $6 in August before settling back at just about $4 a share.
Right now, the consensus is that Zovio and its education peers will continue to see their share prices rise. That comes as colleges and universities face challenges reopening. And Zovio is well-positioned to take advantage of the current situation.
Zovio is a lot more than a video conferencing company. Schools use its software to run courses online. And it provides data management and software to help manage curriculum, financial aid, enrollment and tuition. Next up, the company is expanding to the corporate world, planning to provide company training and certification.
In short, Zovio seems primed to succeed in the new normal.
Revive Therapeutics (RVVTF)
Biotech companies are garnering a lot of attention during the race for a cure to Covid-19. Established players such as Moderna (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ) have seen their stock prices pop on news of their efforts.
Several smaller, less-known biotech companies are also hunting for a cure to Covid-19. And chief among them is Revive Therapeutics. The company is testing bucillamine, an antirheumatic agent, to see if it works against the coronavirus. One benefit is that its results should be available in a shorter time frame than those of industry stalwarts.
It’s not clear whether Revive Therapeutics’ approach will work with Covid-19. But it is worth noting that RVVTF stock has not pulled back along with other coronavirus stocks recently, and it has not broken below its 50-day moving average in several months.
Revive Therapeutics has also announced an expansion of its research partnership with the University of Wisconsin, and the company is also working on several drugs to potentially treat addiction disorders.
Get this stock now while it is still trading for just 15 cents per share.
American multinational beauty company Coty has been in existence since 1904. This is an example of a once-successful company that has fallen on difficult times. And those stresses are reflected in the stock price.
COTY stock is currently trading below $3 a share, down substantially from its 52-week high of $13.82. However, it looks like the company is due for a rebound. Coty — which makes and sells cosmetics, fragrances and hair care products — has responded to the Covid-19 pandemic by producing hydro-alcoholic gel that is used as hand sanitizer.
The company is also spinning off several divisions as part of a $4.3 billion investment deal with global equity firm KKR (NYSE:KKR). Following the divestment, KKR will hold a 60% stake and Coty will retain 40% ownership. And, probably the biggest news of all, Coty has recently struck a deal with social media influencer Kylie Jenner. Specifically, Coty has launched a new skin care product called Kylie Skin. This made it one of the fastest-growing beauty brands on social media according to the company.
With so much going on, it might be advisable to invest now while COTY stock is still depressed.
Husky Energy (HUSKF)
Husky Energy is a Canadian oil company that has been hit hard by the pandemic and this year’s collapse in oil prices. However, the company is well-positioned to ride out the current storm and has a lot going for it in the long term.
The Calgary-based company owns multiple assets in Canada’s oil sands, as well as overseas in Asia. Husky Energy has arranged to borrow $500 million — increasing its liquidity to $5 billion. This should help it ride out the pandemic with ease.
Additionally, Husky Energy has more than 500 retail gas stations that it is in the process of divesting, many of which are attached to profitable restaurants and gift shops. Husky has also put capital expenditures on hold for the remainder of this year. All these moves have won praise from analysts. Yet Husky Energy’s shares are still trading at $3.42 per share. This is a company whose share price was at $30 a decade ago.
Given the efforts by management to right the ship, buying HUSKF stock at current prices could represent a bargain.
Harte Hanks (HHS)
Texas-based marketing services company Harte Hanks looks like a deal just above $3 per share. The company, which has its hands in digital, social, mobile, print and direct mail marketing, reported a surprise profit in its most recent quarter. HHS stock has been on a massive upswing since.
Harte Hanks has also benefited from insiders buying up company stock. At the end of May, it was disclosed that CEO Andrew Benett paid $78,000 to buy HHS stock at $2.45 per share.
Also, Harte Hanks is in the process of restructuring its board of directors and the company has recently announced several new contracts. Clearly, Harte Hanks is benefiting from a slate of good news lately that has sent the stock price up from a low of $1.17 in March.
How long the run lasts is anyone’s guess, but HHS may not be a penny stock for much longer.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks – How to Profit Without Getting Scammed.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. As of this writing, Joel Baglole held shares of MRNA stock.