We watch the big averages move up and down — mostly up — every day. Money rotating into the industrials moves the Dow Jones Industrial Average and S&P 500. Money going into Big Tech moves the Nasdaq Composite. But what goes slightly unnoticed as the mega-cap stocks battle for dominance are penny stocks that are well-positioned to take of advantage of this market.
As they build up their market capitalizations, they expand operations or start to compete in bigger markets. Their niche existence gets a little bigger.
Generally, these small-cap players show up in sectors where growth looks particularly strong. This gives them the opportunity to join larger firms as subcontractors or win more specific contracts as they arise.
And in today’s market, a small stock isn’t necessarily tiny. Some of these firms have market caps in the billions, but have low-priced stocks. With that in mind, it is high time to check out these seven penny stocks. They are all poised to take off.
- Casa Systems (NASDAQ:CASA)
- Endeavour Silver (NYSE:EXK)
- Gerdau (NYSE:GGB)
- Genworth Financial (NYSE:GNW)
- Leju Holdings (NASDAQ:LEJU)
- Nordic American Tankers (NYSE:NAT)
- Ribbon Communications (NASDAQ:RBBN)
Penny Stocks: Casa Systems (CASA)
One of the biggest trends right now is wiring countries for 5G telecom. CASA is a company specialized in doing that work.
It has products and solutions for mobile service providers as well as fixed service providers and cable providers. It also works with physical and cloud-based systems.
The current challenge in the U.S. is everyone is building out their own 5G network and that means it’s not a broad playing field — it’s separate games in different parts of the U.S.
But CASA has expanded operations globally, which means it’s a player across Europe and Asia.
The pandemic has slowed those efforts since workers aren’t up to full production mode. But those days are starting to fade and within the next quarter or two, 5G expansion may be on the move again. And CASA will be there to help.
CASA has strong third-quarter earnings. It is up 28% in the past 12 months and 11% year to date.
Endeavour Silver (EXK)
One of the big stories this year has been precious metals. Gold is usually the superstar when you talk about precious metals, since it’s a store of value and a popular hedge when the markets and economy are hurting.
Silver is a bit of different bird. It’s an industrial metal as well as a precious metal. But its price usually follows the fate of gold. And both are affected by the price of the dollar, since both are priced in dollars.
The dollar has waned as the pandemic has worn on, but it’s still at respectable levels. And the talk of a vaccine for Covid-19 has boosted those levels.
EXK is a Canada-based silver mining company around since 1981, so it has seen its share of boom and bust markets. It has mines in Mexico and Chile and is a well-known entity in those countries. Established mines also means steady production at consistent margins.
The stock is up 50% in the past 12 months, and 48% year to date.
Penny Stocks: Gerdau (GGB)
One of the overlooked beneficiaries of getting the economy back to normal will be steel production. Boosting economies means big government projects. And with low interest rates, companies can also borrow and expand cheaply.
GGB is the largest long steel maker in Latin America with operations in the U.S. and South Africa as well. It has been around since 1901.
That means it’s the leader in steel for construction, automotive, industrial and agricultural markets in Latin America. Remember, Brazil has a huge auto industry that exports cars around the world.
And with a market cap of $6.2 billion, it’s only a penny in stock price.
Obviously, this hasn’t been a great year for building products or industrial production, so the while the stock is up 6% in the past year, it’s off 21% year to date. That will change soon and it’s a bargain here.
Genworth Financial (GNW)
It may not be one of the big names out there, but GNW is a mortgage insurance and health insurance company that has been around since 1871. It has a $2.2 billion market cap and has mortgage insurance operations in Australia and Canada, as well as the U.S.
On the health insurance side, it focuses on long-term healthcare insurance for individuals as well as groups.
Both business lines should do very well in coming quarters. Housing is already strong given low rates. And Australia had a second big lockdown and is just reopening with the virus nearly eradicated.
Long-term healthcare insurance is going to be a growth market for many years, since a U.S. healthcare plan isn’t in the offing anytime soon.
And this is a good opportunity. GNW is up 12% in the past year, and 1% year to date.
Penny Stocks: Leju Holdings (LEJU)
Looking for an interesting China play that isn’t a social media company? LEJU may be the stock.
The company specializes in online-to-offline (O2O) real estate, which means it markets properties online and then also offers sales, marketing and financing offline. It’s a new trend that many other companies across the retail space are adopting. eXp World Holdings (EXPI) is the most obvious example.
In the past six months or so, the Chinese real estate market has been undergoing some significant changes. It has found a way to firm up lending criteria and clear up much of the speculation that created a real estate bubble a couple years ago.
That’s all good news for LEJU. And now that the pandemic has been nearly eliminated in China and the country is back to business, this should bode well for LEJU.
The stock is up 38% in the past year, and 22% year to date.
Nordic American Tankers (NAT)
One of the most economically cyclical industries out there is shipping. When times are good, materials and products are shipping around the world to markets looking for commodities or goods. When economies are hurting, that shipping slows.
And what you get with most shipping companies is the stocks rise when seasonal demand is high and then drop when seasonal demand slacks, especially in ships that transport oil. But in those slow months, dividends are usually huge.
Such is the case with NAT. It has one of the largest fleets of Suezmax oil tankers. And right now, the stock is off due to the pandemic and the global economic havoc it has created. But the dividend is 13.2%.
You can also see this cyclical behavior in the stock price. Right now it’s trading around $3.05 a share, yet its 52-week high is $9. These stocks aren’t for the faint of heart. But growing economies means growing demand for oil.
Penny Stocks: Ribbon Communications (RBBN)
The big telecom companies around the world get much of their work done by special subcontractors that few people ever hear about.
The next time a company is laying fiber optic cable or installing software in routers and repeaters, you’ll likely notice that contractors are doing the work.
The same thing happens inside of all the equipment and software that powers the networks around the world. RBBN operates in 80 countries supplying software services and equipment to power state-of-the-art telecom.
And as 5G starts to sweep the world, this means a new boost in demand for companies like RBBN.
That’s why the stock is up 50% in the year to date. It has major clients around the world and its boat will rise their fortunes.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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.