With the dog days of summer now upon us, what better time to find a nice cool space (say, an air-conditioned room, or a seat next to a fan, or maybe even just a shady spot outside) and add some new, inexpensive stocks to your investment portfolio?
Below, my team and I have updates on some of the penny stocks we've featured here, as well as a few new trading ideas for you to explore. Keep in mind that these are intended to be longer-term investments rather than swing trades, and remember that patience is one of the most underrated skills a trader can possess.
Some of the set-ups I describe below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds Newsletter. Peter may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. Please note that penny stocks are notoriously volatile.
First, Some Updates
Ceragon Networks Ltd. (CRNT)
A few weeks ago, Ceragon Networks Ltd. (CRNT) announced follow-on orders from India totaling $35 million, which in turn followed an announcement a week previous that the group had inked a deal providing services over multiple years to a "Leading US Service Provider." Did the stock skyrocket on this great news? Nope. It responded with a mere 4% climb.
This Israeli 5G play is looking even more undervalued to me right now than it did when I included it in this list one month ago. The next set of earnings—due on Aug. 2, right around the time this article will appear on the internet—could prove to be a catalyst for higher prices, however.
As I mentioned at the beginning of this article, my "Penny Stocks to Watch" ideas are typically longer-term trades that take at least six to eighteen months to come to full fruition. Even if the upcoming earnings prove to be uninspiring, I'd like to give this one a few more months to see how things pan out.
Gold Resource Corporation (GORO)
I last talked about Gold Resource Corporation (GORO) in March of this year, when I noted the stock's disappointing performance. Since then, it has lost even more of its value, dropping a shocking 55% over the past year. So I wasn't particularly enthused about the stock when I dipped into its second quarter results and conference call transcripts, which appeared just a few days ago. To my surprise, however, my takeaways were on the whole very positive.
For one, the challenging ground conditions that dogged Gold Resource over the past quarter appear to be behind the company, although notably the silver and base metals production will reportedly not be able to catch up to management's initial guidance for 2021 until next year. I was especially impressed by management's honesty and integrity on the conference call. CEO Allen Palmiere spoke frankly about the mining industry and Gold Resource's problems this year, and made a strong case for his ability to create shareholder value while growing the company.
It seems like the market was pretty positive about the second quarter results and call, too, because the stock is up 7% over the past few days. It isn't a huge gain … but it's a start. It's possible that Gold Resource stock is turning a corner. Keep a close eye on this one. (Please note that I own shares of this stock.)
RF Industries, Ltd. (RFIL)
At the end of my last update on RF Industries, Ltd. (RFIL), back in March 2021, I wrote that the stock was still undervalued even at its relatively elevated prices, and that I would continue holding onto shares. And I hope you did too, because RF Industries stock is up approximately 60% over the past six months. Congratulations to any readers who got in on this trade! It's great to see a high-quality company like this one finally get some recognition.
But I'd be cautious about hanging onto shares from this point forward. The relative strength index (RSI) at 78 suggests that the stock may be overbought, and the current price exceeds the target price of $9.00.
Some New Ones
Alexco Resource Corp. (AXU)
Long-time readers know that I've been bullish on the precious metals (especially silver) miners for a while, and many of these stocks have indeed recorded significant leaps in value—including Alexco Resources Corp. (AXU). The problem? Alexco Resource—and many other junior silver miners I've discussed here—have had trouble holding onto their higher prices. Moreover, they haven't climbed as high as I believe they should have given the extremely favorable supply-demand dynamics and rapidly escalating inflation.
I don't expect Alexco to thrive based on the positive dynamics of the industry alone. It's simply an excellent-quality company, and one of Canada's largest silver miners, with a good track record of delivering on its promises. It also recently announced a 22% increase to its silver reserves and provided details on its Keno Hill mine (in the Yukon, Canada) that make clear the high potential of that property.
A recent article in a popular investment website cited an entity named "The Silver Institute" as projecting a major increase in silver prices to $32/ounce by the end of this year. Given that the "Institute" in question is made up of various silver companies, I have to take this estimate with a huge grain of salt. Nonetheless, if silver prices are able to go even just as high as $30 again, as the economy opens again and industrial demand soars, Alexco Resource stock could see 70%-plus upside, in my opinion. A forward P/E ratio of 6.90 would also seem to confirm my bullish expectations.
Inpixon (INPX) is a dirt-cheap penny stock that's trying with all its might to mount a turnaround … and I believe it just might be succeeding. Basically, Inpixon uses software to help make public spaces and facilities work, whether that be through making our children's schools safer, helping to enable Wi-Fi services in your local mall, or reducing crime.
The group's history is uninspiring to say the least, with a five-year revenue growth track record of -32.60%. You're wondering why Inpixon stock is trading at only $1.03 at the moment? That, plus negative net income of -$35.60 million, is precisely why.
But things have been looking a lot sunnier for Inpixon lately. The past two years have seen annual revenue grow at 68% and 48%, respectively. And the past two quarters have shown sales up 137% and 51%, respectively, before falling 23% in the most recent quarter, which may be somewhat forgivable given COVID-related pressures.
There are some other very promising financials here. Take the excellent P/B ratio of 0.70 and the P/C ratio of 1.21, as well as the surprisingly strong balance sheet with a quick ratio of 8.60 and low debt/equity ratio of 0.04. Meanwhile, earnings per share (EPS) this year are set to be 97.9%, with the gross margin at 71%.
Over the past two months, Inpixon has announced three major contract wins, with a "global social media company," a "multinational mass media and entertainment conglomerate," and an "international banking organization." These deals in particular suggest that Inpixon is gaining some really impressive momentum. Now—i.e., while the company is still trading at bargain-basement prices, and before these contract wins show up in Inpixon's earnings—may therefore be a good entry point for investors willing to assume some risk, in my view.
Best Brokers for Penny Stocks
Interactive Brokers' very low per-share trading commission of $.005 ($1 minimum per trade) and up-to-the-split-second real-time margin calculations are ideal for penny stock traders. IBKR Lite clients can trade penny stocks for $0.
Low commissions, maximum 1% of trade value for IBKR Pro, $0 for IBKR Lite
Streaming real-time data, including account information
IBot, IB’s AI-powered online assistant, can help find features
Data streams on only one device at a time
Traders Workstation a steep learning curve
IBKR Pro customers charged fees to trade, though they are low
Schwab's research pages point out the exchange on which a stock trades, which will keep you informed of the inherent risk. There are a variety of platforms available; the StreetSmart platforms have customizable charting and streaming real-time quotes. Schwab does not charge trading commissions on all stocks (including penny stocks) and ETFs.
Excellent screeners available on StreetSmart Edge
Free access to a wide array of news feeds
Strong customization and personalization options on StreetSmart Edge
The sheer number of features and reports available sometimes overwhelming
Transaction history for just 24 months online
Uninvested cash not swept into a money market fund
Penny stocks are volatile and can generate catastrophic losses. Price levels in this article are hypothetical and do not represent buy recommendations or investment advice. Keep in mind that it's your responsibility to make trading decisions through your own skilled analysis and risk management.
Peter Leeds is the author of several books, including the international bestseller, "Penny Stocks for Dummies." He and his team also issue a newsletter devoted exclusively to penny stock picks and analysis, as well as a popular YouTube channel PeterLeedsPennyStocks.