The economy continues to go gangbusters, and sector rotation is getting real. This is a great opportunity for penny stocks.
Certainly, there are plenty of commentators that are wringing their hands about inflation. But the fact is, the Federal Reserve is clear on the fact that it realizes that inflation may be more than transitory and is ready to act.
Remember that the world’s central banks stepped in and grabbed control of the global economy after the 2008 banking meltdown. It had never been done before and no on knew how it was going to play out.
Well, more than a decade later, central banks are finally ceding control back to markets. It might be scary, but there’s also a great opportunity to step into the next big leg up with stocks well suited for this environment.
Each of these penny stocks has an A-rating in my Portfolio Grader, which makes them perfect choices for aggressive long-term investors:
- Hudson Technologies (NASDAQ:HDSN)
- Martin Midstream Partners (NASDAQ:MMLP)
- Pangea Logistics Solutions (NASDAQ:PANL)
- Safe Bulkers (NYSE:SB)
- TransGlobe Energy (NASDAQ:TGA)
- Target Hospitality (NASDAQ:TH)
- Sensonics (NYSEAMERICAN:SENS)
A-Rated Penny Stocks: Hudson Technologies (HDSN)
Did you know that 15% of world energy consumption is related to air condition and refrigeration?
HDSN is a refrigerant company that manages the full cycle of refrigerants, from on-site refrigerant services, reclaiming refrigerants and end of use protocols. As climate change becomes more difficult to debate, smart use of refrigerants is a key factor in managing industries’ environmental footprints.
And this is a growing business. Now that e-commerce is gaining steam, that means more distribution points for not only clothes and gadgets, but also for perishables that require refrigeration.
HDSN stock is flashing some tantalizing numbers here, too. It has a $167 million market cap, has gained 233% in the past 12 months, yet still trades at a current price-to-earnings ratio below 9x. Yowza.
Martin Midstream Partners (MMLP)
Notice the LP at the end of MMLP’s ticker. That’s short for limited partnership, a corporate structure similar to the structure of a real estate investment trust (REIT). Shareholders are considered ownership and net profits are distributed to the shareholders in the form of dividends.
Usually that means a big dividend with moderate stock growth. But given energy demand, MMLP has a booming stock with a small dividend at this point. That’s OK. This midstream energy company (fundamentally a small pipeline company) also has a thriving inland shipping business. Both sectors should remain in great demand for years to come.
MMLP stock has a $117 million market cap, so it’s also an attractive takeover play by larger midstream companies or integrated energy companies. The stock is up 54% in the past 12 months and that strength should continue.
A-Rated Penny Stocks: Pangea Logistics Solutions (PANL)
In this era of globalized supply chains and expanding e-commerce, shipping has become a major economic necessity. We have firsthand knowledge of just how jarring disruptions in this supply chain can be. Part of the reason inflation is so high in the U.S. is shipping issues.
And it’s not just shipping finished goods. Oil, steel, wheat, soybeans and many other fundamental commodities are part of that massive shipping economy.
PANL specializes in logistics for the shipping industry. It also builds ports, which will be in growing demand as well to pick up the overflow from overcrowded large ports. But PANL is a young, modern logistics company that’s only about 8 years old and makes our penny stock list because of its $180 million market cap.
PANL stock has risen 41% in the past 12 months, has a 3.4% dividend, and still has a current P/E of just 3x.
Safe Bulkers (SB)
One of the key indicators of global economic health is a shipping indicator called the Baltic Dry Index. Basically, it represents the amount of “dry” goods — wheat, iron ore, steel, etc. — that are being shipped around the world. The higher the index, the more raw materials that are in demand.
While the index hit a high in October, it’s now in its typical winter slumber. But given the supply chain issues, dry bulk shippers still remain busy. It’s just taking longer to pick up and drop off shipments.
SB has been a dry bulk shipper since the 1950s. And while it still lives with penny stocks, it has a $438 million market cap. What’s more, that market cap has grown significantly in the past 12 months. The stock is up 93%. Yet SB still has a current P/E of just below 4x.
Once the Covid disruptions are out of the way, shipping will continue to be in high demand, and it will take a while to catch up before then.
A-Rated Penny Stocks: TransGlobe Energy (TGA)
One of the best sectors to be in when energy prices rise is the exploration and production (E&P), or “upstream” sector of the energy markets. You see, the cost of producing a barrel of oil is fixed. When prices rise, E&P companies make more money off their oil. And they can produce more at higher prices.
In the global markets, it can get a bit more complicated since there are higher and lower cost producers and some countries that have far more supply to tap into than others. But fundamentally, upstream firms’ fortunes are leveraged to the price of oil. And that means we’re in good time now for E&Ps.
TGA is a Canada based E&P that has operations in Canada as well as Egypt. Its $236 million market cap puts it in the penny stocks club. But it’s very well placed to see more growth in coming years.
TGA stock has boomed 182% in the past 12 months, yet it still trades at a current P/E of just below 8x.
Target Hospitality (TH)
One sector of the U.S. energy patch that gets overlooked is the fact that in all these shale drilling areas in the country there’s usually no housing infrastructure for the crews. That’s especially true in remote areas where E&P work continues to expand.
TH specializes in building rental housing and amenities for these “shale cities.” It has facilities in the Permian Basin in Texas and New Mexico, as well as the Bakken Shale in North Dakota. This allows E&P firms to keep its workforce close to the wells and transport operations instead of relying on workers to trek in from far-flung locations. And given the often extreme weather conditions this is crucial for efficient operations.
TH also provides various housing for governments, infrastructure sites as well as humanitarian resources. It also provides food services, janitorial and maintenance and housekeeping services.
It’s smart operation but TH stock has just a $347 million market cap. That means lots of room to grow as the infrastructure projects and the energy patch heat up. The stock has gained 114% in the past 12 months, but it’s best quarters are ahead.
A-Rated Penny Stocks: Sensonics (SENS)
In 2020, it was reported that 34 million people in the U.S. have diabetes and another 88 million have prediabetes. That’s 122 million people out of population of around 332 million, almost 1 in 3 people.
That’s a stunning number. And it continues to rise. Of those with diabetes, 89% are overweight.
While we wait for a cure, the best option for now is to find effective ways to manage the disease. And that’s where SENS comes in. It develops and sells implantable glucose monitoring devices for diabetics so they can better monitor their blood sugar levels in real time.
Obviously this is a huge potential market and SENS has a solid foothold in it already. It’s certainly the leader in this list of penny stocks that’s already heading into small-cap territory with a current market cap of $1.2 billion.
SENS stock is positioned for a growth track or to get bought out a premium.
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.
On the date of publication, Louis Navellier has a position in SB in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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