- Penny stocks provide excellent secular growth prospects, which could bypass the current bear market. There are a few oversold penny stocks on the market, and I’d urge investors to take advantage!
- Aurora Cannabis (NASDAQ:ACB) – Aurora has achieved economies of scale, allowing it to dominate the market. Additionally, the stock is undervalued after an unjustified sell-off.
- Gaslog Partners (NYSE:GLOP) – A 99.4% quarterly fleet uptime is well deserved. The firm is well-positioned to take advantage of lucrative contracts. Also, GLOP is significantly undervalued on a normalized basis.
- Platinum Group Metals (NYSE:PLG) – Insider buying is heating up! Furthermore, PLG’s Waterberg project could yield life-changing results as it aims to tap into the renewable energy space.
I personally know a few penny stock millionaires. Then again, I also know a few investors that lost most of their money after investing in penny stocks. First of all, diversifying into a bunch of penny stocks won’t work; that’s just gambling. What you should be doing is looking for diamonds in the rough.
The best way to explain this would be by considering skewness. Penny stock returns are more asymmetrical than mature stocks, thus, providing significant upside potential but also downside risk.
The approach I use when screening for penny stocks is to look for secular growth. How does that work? Well, fundamental change is the primary indicator of secular growth. From there onwards, you need to look for “best-in-class” stocks that you believe will dominate the given business environment via a solid business model.
I discovered three excellent penny stocks that are oversold; let’s take a look at them.
|PLG||Platinum Group Metals||$1.34|
Penny Stocks: Aurora Cannabis (ACB)
The pessimism surrounding Aurora Cannabis (NASDAQ:ACB) stock is astounding. I mean, here we have a company that’s achieved economies of scale with a gross margin of 53%, yet investors are doubting its ability to produce future profits.
Aurora’s dominating the local and international markets with a full-on vertically integrated business model, which could see it reign supreme for years to come.
ACB stock is trading at a bargain. The stock’s price-to-sales and price-to-book ratios are trading at normalized discounts of 43.27% and 31.98%, respectively. Additionally, the stock’s trading at a 1-month relative strength of 29.60, which suggests that it’s oversold.
Gaslog Partners (GLOP)
Gaslog Partners (NYSE:GLOP) stock is trading at a massive discount; it’s as simple as that. The company’s midstream exposure to the liquified natural gas industry leaves it in a strong position as the barriers to entry are high. Additionally, GLOP is receiving systemic tailwinds from rising profitability in the energy space. Thus, prompting me to believe that it could form a medium-term momentum pattern.
The company beat its fourth-quarter earnings target by 6 cents per share. Behind its quarterly success was 99.4% in fleet uptime, exploitation of an 11-month charter for GasLog Sydney, and rising demand for its carriers amid an ex-Russia trade infrastructure. Furthermore, the company retired $37 million of its debt during the quarter, subsequently increasing investors’ residual worth.
GLOP stock is undervalued on a normalized basis. First off, Gaslog’s forward price-to-earnings ratio is trading at a 56.64% discount, implying that the market underscores its earnings potential. And in addition, Gaslog stock is trading at a 42.75% discount-to-book value, meaning that the company’s fair equity value exceeds its market value.
Penny Stocks: Platinum Group Metals (PLG)
Platinum Group Metals (NYSE:PLG) is a South African-based precious metals exploration company.
The firm’s primary objective is to serve the development of the renewable energy space with low-cost PGM group deposits. Furthermore, the company’s seeking exposure to gold deposits to diversify its risk.
PLG is still in early-stage exploration, meaning this is a binary play for investors. If its Waterberg project lives up to expectation, we’ll likely see its stock erupt.
Lastly, PLG stock is receiving lots of insider activity. The company’s management has secured $5.9 million worth of the firm’s shares during the past three months, indicating that there’s much internal optimism about the firm’s financial prospects.
On the date of publication, Steve Booyens did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.