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Top 5 Best Penny Stocks To Buy Now (2019 Review)

Ah, the Siren’s Call of a quick buck. That’s the allure of penny stocks. These low-priced equities confer the potential of exponential gains. But like the sweetly singing Sirens of ancient Greek myth, they can also leave you shipwrecked.

Are penny stocks right for you? Yes, if you pick the right ones.

I’ve rolled up my sleeves to pinpoint the five best penny stocks on the market today. These equities offer huge potential, with reasonable risk.

However, by their very nature, penny stocks can be dangerous. They key is to navigate the right balance between risk and reward.

best penny stocks to buy right now

Our Best Penny Stocks for 2019

Below are my top five picks for penny stocks:

  1. Globalstar (NYSE: GSAT): A play on leading-edge technology in satellite communications, a booming field fueled by population growth.
  2. Torchlight Energy Resources (NSDQ: TRCH): An oil and gas producer with interests in the prolific shale regions of Texas.
  3. Denison Mines (NYSE: DNN): One of the few publicly traded producers of uranium, hence a play on the renaissance in nuclear power.
  4. Conformis (NSDQ: CFMS): This manufacturer of customized knee and hip replacements is tapping demographic trends that favor medical device makers.
  5. Zynerba Pharmaceuticals (NSDQ: ZYNE): A biopharmaceutical company that develops cannabinoid-based therapies, one of the hottest sectors in biotech today.

Let’s begin by getting a better understanding of penny stocks.

What are Penny Stocks?

What exactly is a penny stock, anyway?

A penny stock usually trades outside the main market exchanges at a relatively low price per share (often below a dollar, hence the name penny stock). It’s viewed as highly speculative because of small market capitalization, low liquidity, large bid-ask spreads, and limited following by analysts.

Penny stocks often (but don’t always) trade over-the-counter (OTC) through the OTC Bulletin Board and the pink sheets.

Pink sheets are daily publications compiled by the National Quotation Bureau with bid and ask prices of OTC stocks. Unlike companies on a major stock exchange such as the NYSE or NASDAQ, companies quoted on the pink sheets aren’t required to meet minimum exchange requirements or file with the SEC. Accordingly, these stocks are easier to manipulate and they’re often the center of pump-and-dump schemes. Buyer beware.

This video summarizes the ins and outs of penny stocks:

Penny stocks aren’t for risk-averse investors. However, in a broader stock market riven by volatility and sharp sell-offs among large-caps, penny stocks beckon. For traders who desperately seek growth, these small fry are appealing.

How Do You Determine What Qualifies As The Top Penny Stock?

The company must have strong fundamentals and quality management. Look for a solid balance sheet, growing earnings and revenue, and a competitive edge against industry rivals. A common red flag is excessive debt, without sufficient revenue to cover liabilities.

Insider ownership is always a plus; it shows that management has “skin in the game,” which lessens the chance of financial gimmickry. The company’s industry should be rapidly expanding.

Companies that are developing breakthrough technologies are particularly promising. These entrepreneurial firms are poised to transform the status quo, which means they’ll probably survive and thrive over the long haul.

Now that we have a better understanding of penny stocks and how to find the best ones, let’s look at the top penny stocks to buy in 2019. It’s a good sign that our picks trade on the major exchanges.

Globalstar

What is it?

With a market cap of $503 million, Globalstar provides mobile satellite voice and data services around the world. The company offers two-way voice and data products, for businesses and individuals in remote areas. A growing area for the firm’s applications is search and rescue.

Based in Covington, LA, the company serves rural villages, ships, industrial and commercial sites, and residential sites in areas where communications infrastructure is either minimal or nonexistent.

Globalstar does not compete with terrestrial networks. Instead, it complements them. The firm sells access to its system to regional telecom service providers.

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Why is it a good stock?

Globalstar should benefit from population growth and the rising affluence of consumers in remote areas within emerging markets. The company boasts a profit margin of 52.7% and quarterly revenue growth (most recent quarter) of 17.2%.

The average analyst expectation is that Globalstar’s year-over-year earnings growth will reach 125% in 2018, and 15% over the next five years on an annualized basis.

Torchlight Energy Resources

What is it?

With a market cap of $52.5 million. Torchlight Energy Resources engages in the exploration and development of oil and natural gas properties in the U.S.

Based in Plano, Texas, the company holds interests in four oil and gas projects in high-producing shale fields in Texas and Oklahoma.

Why is it a good stock?

If you’re looking for a hot energy stock but nervous about the sector’s volatility, consider Torchlight Energy Resources. The firm recently completed a debt financing of $6 million and will use the funds to drill three new wells in its Orogrande Basin Project in West Texas.

What separates Torchlight from many of its beleaguered competitors? The firm has been able to make ambitious but methodical and sustainable investments in Permian Basin and Eagle Ford projects in Texas. These shale deposits are among the most promising in the world.

The stock’s forward price-to-earnings ratio is -25, which means the firm has been losing money in recent quarters. But in future quarters, that red ink should soon change to black gold.

Torchlight has racked up quarterly revenue growth of 603.3%, a whopping number with more growth to come as new projects get up and running. The average analyst expectation for year-over-year earnings growth in 2019 is 50%.

Denison Mines

What is it?

Denison Mines (market cap: $321.6 million) is a uranium exploration, development, and production company. It is known for its profitable projects in Blind River and Elliott Lake in the Athabasca Basin area of northern Saskatchewan, Canada, and has diversified into other minerals such as coal and potash. The company also offers mine decommissioning and environmental services.

Why is it a good stock?

Toronto-based Denison holds key uranium deposits and is constantly growing. It recently acquired an additional 24% interest in the Wheeler River Uranium Project in northern Saskatchewan, taking its interest to 90%.

Nuclear power enjoys several tailwinds, as concerns grow over carbon emissions from fossil fuels. Climate change appears to be worsening, compelling developed and developing nations alike to embrace nuclear energy. Even environmentalists, once opposed to nuclear, are rethinking their stance due to global warming.

China continues to make a big bet on nuclear, in large part to wean itself away from coal and to mitigate a horrendous air pollution problem that’s becoming a safety as well as political crisis. The country has 26 nuclear power reactors in operation and 25 under construction, with nearly 100 on the drawing boards for 2030. The upshot: multiyear demand for uranium.

The average analyst expectation is that Denison will rack up year-over-year earnings growth in 2019 of 33.3%.

Conformis

What is it?

Conformis (market cap: $32.2 million) is a medical technology company that manufactures customized knee and hip replacements made specifically for each patient.

Based in Billerica, Mass., along the Route 128 Technology Corridor, the company uses 3D imaging technology, along with the latest manufacturing techniques, to form implants that meet unique size and shape needs.

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Why is it a good stock?

Conformis is a highly innovative company with a unique concept: customized medical implants created via 3D printing. The company’s products have shown superior clinical outcomes compared to traditional implants.

The medical device industry is booming; companies with breakthrough technologies will reap the lion’s share of the spoils. Aging populations around the world should fuel demand for Conformis’ products. At the same time, the 3D printing sector continues to generate rapid growth.

The average analyst expectation is that the company’s year-over-year earnings growth will reach 39.9% in 2018 and 32.5% in 2019.

Zynerba

Based in Devon, Pennsylvania, Zynerba (market cap: $91 million) is poised for the sort of outsized growth that often eludes mega-cap, blue-chip drug makers.

The medical marijuana industry is in the midst of a “green rush,” fueled by the escalating legalization of marijuana in U.S. states and in countries around the world. The stock market has witnessed a proliferation of risky marijuana penny stocks, but Zynerba stands above the penny stock herd.

Zynerba is a clinical stage specialty pharmaceutical company. The firm is developing transdermal synthetic cannabinoid treatments for both pediatric and adult epilepsies, putting the company in direct competition with Big Pharma.

Without a doubt, medical marijuana is one of the hottest corners of the biotechnology sector for investors. The potential this apparent wonder-herb packs for alleviating symptoms of countless diseases, as well as its curative properties, makes biotech companies developing cannabis-based treatments among the most exciting and potentially lucrative investment opportunities today.

With total cash on hand of $66.1 million, Zynerba has sufficient resources to fund ongoing research in medical marijuana. The average analyst expectation is that the firm’s year-over-year earnings growth will hit 13.7% in 2019.

John Persinos is the managing editor of Investing Daily.

 

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