Penny stocks used to be stocks that actually sold for less than $1 a share. But those days are over, especially after the massive run in stocks we’ve seen in the past decade.
The concept now is basically small stock that have a low market capitalization – at least under $1 million or often smaller – and a low price. The highlighted stocks here have these two characteristics in common. They’re also all “A”-rated in my Portfolio Grader.
That means they are both fundamentally and technically strong right now.
Most institutional investors won’t invest in stocks with less than $500 million or $1 billion market caps. That means they can be a bit volatile since momentum traders can drag them up and down since they don’t trade large volumes of shares regularly.
But the payoffs can be big. Sometimes penny stocks climb the ladder. Sometimes they get bought out. This is a quality selection and a good time to step in, just don’t chase them.
| SALM | Salem Media | $2.94 |
| PVL | Permianville Realty Trust | $3.39 |
| GTE | Gran Tierra Energy | $1.61 |
| DOGZ | Dogness | $4.95 |
| ARC | ARC Document Solutions | $3.68 |
| CIG | Companhia Energética de Minas Gerais (CEMIG) | $2.54 |
With just a $63 million market cap, it would be hard to believe that Salem Media (NASDAQ:SALM) has been successfully doing business since the mid-1980s. That’s a very good sign of its durability and focus on proven strategy.
Ironically, media companies that focus on one political perspective usually do worse when their favored candidates are in power. And since SALM focuses on conservative politics and Christian themes, this is a very good time for them.
Advertising revenue increases and there’s greater demand for these voices when those leaders aren’t in power. Plus, it’s a good opportunity to grow their viewership and listeners.
It’s no surprise then that SALM stock has risen 51% in the past 12 months. It’s down just 3% year-to-date (YTD) and it’s trading at a price-to-earnings (P/E) ratio of just below 2.
This stock has an “A” rating in my Portfolio Grader.
Even before Russia invaded Ukraine, energy was becoming an issue. At first it was because there was growing demand post-pandemic. But now there are serious supply issues due to Russia and its partners in OPEC.
They’re enjoying oil prices that are consistently topping $100 a barrel at this point. The U.S. is opening up domestic operations to try to thwart some of the supply issues and Pemianville Realty Trust (NYSE:PVL) is a key beneficiary of this drive.
Basically PVL operates as a holding company for net profits on assets that are used for conventional and unconventional drilling in the Permian and Haynesville basins. It also has other properties in Texas, New Mexico, and Louisiana.
As a trust, it pays investors a cut of the net profits which right now are high. PVL currently has an 8.8% dividend, and that’s after the stock has risen nearly 50% YTD. But even now, its market cap is still in the penny stocks category, at a hair over $105 million.
This stock has an “A” rating in my Portfolio Grader.
Most U.S. citizens know that oil prices have risen dramatically in the past year. And in recent months that has led to a lot of pressure put on the U.S. government to do something about it.
Well, the government has responded but it’s still not enough to change the global market forces at play here. Russia and OPEC are happy with high energy prices, China is in another lockdown, so it’s not using as much energy now. Europe and North America are the ones struggling, Europe in particular.
Even opening up drilling or increasing drilling in the U.S. doesn’t do much for the current situation since it takes a while to get drilling operations up and running. That’s why Gran Tierra Energy (NYSE:GTE) is an interesting play here.
GTE gets its oil in Ecuador and Colombia. Ecuador is a former OPEC country and Colombia has been a recognized South American oil producer for decades. This is a unique competitive advantage right now for this penny stock.
Given its recent popularity, GTE is now one of the bigger penny stocks in this article, with a market cap now approaching $600 million. But that’s after 108% run YTD.
This stock has an “A” rating in my Portfolio Grader.
Penny stocks and niche retail go hand in hand. Dogness (NASDAQ:DOGZ) is a prime example.
You know by now that the pandemic saw huge amounts of people buying “pandemic puppies” and “Covid kittens” to deal with the isolation. Well, this China-based company specializes in pet products — leashes, harnesses, LED toys, etc — particularly for dogs and cats.
And as pet owners well know, while puppies and kittens are certainly cute, they do grow up. And they live a long time. That all makes for a long-term financial commitment that gets overlooked in the passion of the moment. DOGZ has been a big winner in this situation.
DOGZ stock has gained 170% in the past 12 months, but has been under significant pressure as talk of Chinese stocks delisting from U.S. exchanges heated up earlier this year. The stock has lost 48% YTD. But the delisting concern isn’t a significant issue, so it’s a good time to step in.
This stock has an “A” rating in my Portfolio Grader.
Before we hit the Digital Age, printers were part of a thriving sector. They were all over the country, sending out everything from newspaper sales inserts to magazines. My investment newsletters and advertising was available exclusively as paper products for decades.
But now that most of our information comes from electrons channeled into pixels, printers have had to adapt or fold up shop. Given the expenses involved in printing versus digital dissemination, most companies now opt for digital distribution to better control margins.
ARC Document Solutions (NYSE:ARC) has a niche engineering, construction, and facilities management market and has been catering to it since the late 1980s. Paper is still king when it come the blueprints and other documents these sectors demand, as well as the local, county, and state governments that demand copies.
ARC also offers an impressive 5.4% dividend. And the stock has gained 63% in the past 12 months, almost 4% YTD yet still trades at a P/E of 17.
This stock has an “A” rating in my Portfolio Grader.
With a market cap of more than $5 billion, usually Brazil-based Companhia Energetica de Minas Gerais-Cemig (NYSE:CIG), better known as CEMIG, wouldn’t be in a list of penny stocks. However, since CIG stock is selling at around $2.60 a share, I’ve put it in this list.
CEMIG is headquartered in the Brazilian state of Minas Gerais. This state encompasses the capital of Brasilia to the west and borders Rio de Janeiro to the east. It was the state where the gold mining boom of the 18th century took place that fueled the fortunes of this South American country.
Since 1952 CEMIG has been a key part of the energy infrastructure for the country, and that continues to this day. While Brazil still tends to go through its boom and bust cycles, the fact is, CEMIG is still generating power for the citizenry, come what may.
This stock has an “A” rating in my Portfolio Grader.
Original Post Can be Found Here