Trading penny stocks is a high risk, high reward proposition. The low cost of penny stocks (trading under $5 a share) allow investors to build large positions for relatively little money. If a stock breaks out and rises even a few cents, it can lead to big gains. On the flip side, if a stock price drops by even a few cents, it can wipe an investor out.
For this reason, penny stocks are often viewed as highly speculative and considered by some people to be akin to gambling. But for risk-takers and people trying to aggressively build capital, penny stocks are an attractive investing option.
Here are 7 penny stocks to buy in October:
- Lantronix (NASDAQ:LTRX)
- American Battery Metal (OTCQB:ABML)
- StoneMor Partners (NYSE:STON)
- American Lithium (OTCQB:LIACF)
- Usio (NASDAQ:USIO)
- Marathon Patent Group (NASDAQ:MARA)
- Sunworks (NASDAQ:SUNW)
Investors need to remember that they are still investing in businesses when they buy shares of penny stocks. It’s important to undertake some due diligence and get to know the company you’re taking a stake in.
Penny Stocks to Buy in October: Lantronix (LTRX)
Lantronix is a technology company that’s focused on the Internet of Things (IoT), a network of gadgets and appliances that are connected by the Internet and can communicate amongst themselves. The IoT market includes devices such as smart speakers, security systems, and intelligent dishwashers and refrigerators.
IoT devices have been around for a while, but the segment is really starting to takeoff thanks to advances in artificial intelligence. And the market still has plenty of room to grow.
Lantronix is starting to capitalize on the burgeoning industry, with the company’s revenue hitting a record-high in its most recent quarter, up 71% from a year earlier. Management has provided guidance for a further 25% growth in revenue during 2021, and earnings per share growth of 120%. Plus, the company’s revenue has steadily risen from $40.59 million in 2016 to nearly $60 million so far in 2020.
Despite these impressive results, Lantronix remains firmly in penny stock territory at $4.95 a share. However, LTRX stock has increased 213% since hitting a 52-week low of $1.58 a share in March.
If the company maintains its solid financial performance, there is every reason to think that its share price will continue to climb higher. Of course, being a penny stock, Lantronix is subject to volatility. But the company is doing a lot of the right things in one of the most explosive markets today.
By some measures, the IoT market is forecast to be worth $1.3 trillion by 2026. Plenty of upside potential for brave investors who can stomach the risk.
American Battery Metals (ABML)
American Battery Metals is a lithium-ion battery company headquartered in Nevada. It aims to supply the electric vehicle market with lithium and other battery-grade metals. The company also has a closed-loop recycling facility for end-of-life batteries. Like other companies on this list, American Battery Metals operates in a burgeoning industry that is expected to be huge in coming years as the automotive industry switches en mass to electric vehicles and away from gas and diesel.
But while the future might be bright for the lithium-ion battery market as a whole, American Battery Metals specifically has yet to hit any home runs. Consequently its stock is trading at $0.11 a share. That may be a little too low for many investors. However, ABML stock has risen 267% since touching a low of $0.03 in March. The share price tends to move with news about the broader electric vehicle market.
What’s needed now is for American Battery Metals to sign a contract with a major electric vehicle manufacturer such as Tesla (NASDAQ:TSLA). It could happen as demand for lithium-ion batteries is set to explode as more and more automakers make the switch to electric.
They say the only things certain in life are death and taxes, and that’s good news for StoneMor, a Pennsylvania-based operator of funeral homes and cemeteries in several U.S. states. The company is one of the biggest funeral home chains in America with 90 funeral homes and 321 cemeteries in 27 states, as well as Puerto Rico. StoneMor offers a wide range of services, including the ability to allow customers to pre-purchase and plan a burial, a mausoleum space, urn or casket.
The company is profitable and increased its cemetery operating income by $2.4 million in its most recent quarter. Regardless of the growth, STON stock still trades at less than a dollar, $0.98 to be exact, though it has nearly doubled from $0.52 a share back in April.
Part of the issue has been that the company’s largest shareholder had made a pitch to buy StoneMor outright and take it private, delisting it from the New York Stock Exchange. That plan has since been called off, which removes some of the uncertainty surrounding the stock, and that will hopefully help it move higher in coming months.
American Lithium (LIACF)
Ironically, American Lithium is a Canadian company. It took the name “American Lithium” to draw attention to its lithium holdings in Nevada. The company is currently developing its own lithium separation technology, and has acquired land within three hours of Tesla’s Gigafactory.
Like American Battery Metals, it is angling to ride the market for lithium-ion batteries and electric vehicles. Besides its Over The Counter (OTC) listing, the company’s shares are also traded on the Frankfurt and Toronto Stock Exchanges.
Right now, American Lithium shares trade at $1.36. But they’ve enjoyed spectacular growth so far in 2020, up 871% since shares were trading hands for $0.14 in mid-March.
Growth has been driven by positive test results at a new Lithium site and a promising process to extract Lithium from clay. A new land acquisition in Nevada also gave LIACF stock a lift.
Contracts to supply Lithium to electric vehicle manufacturers and further refinement of the company’s extraction technology should rocket this stock even higher.
Usio is a technology company providing payment solutions such as pre-paid card processing, debit and credit offerings to merchants and small businesses.
The company operates in the same fintech space as companies such as PayPal (NASDAQ:PYPL) and Square (NYSE:SQ). And like those peers, USIO has enjoyed solid gains this year, up 88% from a low of $0.85 in March to $1.60 a share today.
Momentum has come from increased use of online and electronic payments during the Covid-19 pandemic. The company states that its goal is to combine merchant payment processing and card issuing options into one, simplified platform. That’s a lofty goal, but Usio has a ways to go to effectively compete with the big players in the fintech space.
Currently, Usio has a humble market capitalization of $32 million, and the company’s stock was recently punished after it announced plans to raise an additional $8 million from a new stock offering. That said, Usio does have a strong position within the market, though a lot of its business is concentrated in Texas and the southern U.S. where it is based.
Despite a turbulent year, USIO shares are outperforming their first quarter levels. The company saw an 18% increase in revenue and finished the first quarter with $1.7 million in cash on hand. Given the accelerated move of businesses online due to the global pandemic and the broader shift to a cashless society, Usio looks to be in the right space.
Marathon Patent Group (MARA)
Love it or hate it, crypto-currency looks like it’s here to stay. And there are a good number of people who believe that we’re headed towards a world run by digital forms of currency. Marathon Patent Group plays in this space. Specifically, the company is focused on mining digital assets. It owns crypto-currency mining machines and a data center to mine digital assets. The company operates in the Blockchain segment of digital currency and its crypto-currency machines are situated up north in Canada.
MARA stock remains a penny stock, but it has enjoyed an impressive run in 2020. Since bottoming at $0.40 a share during the market meltdown in March, the stock price has appreciated a whopping 435%, rising all the way to $2.14 a share. The skyrocketing stock price can be attributed to news from mainstream payment companies related to Blockchain and crypto currencies. For example, Square recently bought 4,709 Bitcoins, worth approximately $50 million. That amounted to 1% of Square’s total assets at the end of the second quarter.
Moves by companies such as Square provide a vote of confidence to the crypto world as a whole and help to legitimize companies such as Marathon Patent Group.
Last but not least we have an alternative energy company in California-based Sunworks, which manufactures solar panels and related technology used to turn the sun’s rays into electricity.
Alternative sources of energy continue to be in demand, and SUNW stock has enjoyed stellar growth this year as a result. The company’s share price has jumped an astounding 1,134% from a 52-week low of $0.29 to $3.58 today.
The hefty shareholder returns were sparked by a company announcement that it had secured $10 million worth of new contracts during this year’s third quarter. Most of those contracts were signed with agriculture and commercial customers.
Going forward, Sunworks plans to focus on growing its industrial and residential business segments in sunny states such as California, Texas, New Mexico and Nevada. The company plans to leverage its range of services, which include installation, design, system engineering, permitting, construction, grid connection, system monitoring and ongoing maintenance.
Sunworks currently offers systems ranging in size from two kilowatts for residential homes to multi-megawatt systems for big commercial projects. To date, the majority of the company’s revenue has come from sales to the commercial and agricultural markets. But with a focus on diversifying its client base, who knows where SUNW stock will be in a year or two.
On the date of publication, Joel Baglole held shares of TSLA.