For better or worse, July was an exciting month for penny stock investors. Uncertainties looming over the manufacturing sector, paired with disrupted supply chains as a result of the U.S.-China trade war, came up against expectations that the Federal Reserve would be cutting interest rates in the last days of the month.
The outcome, of course, has been even more volatility than usual in the already deeply volatile penny stock realm. As I discuss below, the precious metals miners, like Avino Silver & Gold Mines Ltd. (ASM), one of last month's stock picks, saw significant gains, and I think this is just the beginning of what will be a big climb for the junior gold and silver miners.
August will be marked by even more turning points for investors, in my view. A number of current events, which I discuss at my YouTube channel, will have repercussions both good and bad for just about every listed company out there, no matter their country of origin.
This month's edition of Penny Stocks to Watch contains some updates on a few of our picks from over the past four months, as well as some new penny stock ideas that we believe could prevail or even flourish in the tough economic conditions ahead.
Many of the stocks mentioned below were also profiled, traded, or otherwise discussed in the Peter Leeds Newsletter. As well, Peter may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. (See below for an additional disclaimer regarding penny stocks.)
Rekor Systems, Inc. (REKR)
I'm delighted to report that security technology firm Rekor Systems, Inc. (REKR), one of the Penny Stocks to Watch from my May list, managed to continue its spectacular performance through June and July, with a 167% rise over the past month alone.
My team and I had included Rekor Systems in my Peter Leeds.com newsletter's Hot List back on May 7, when the stock was trading at a mere $0.69. As of the morning of July 29, Rekor Systems stock was trading at $5.08, for an incredible overall 635% climb in value.
Full disclosure: Rekor's price appreciation has had me feeling a little apprehensive back at the beginning of July, when I noted that the company's debt ratios were unsustainably high and the stock's relative strength index (RSI) was at 82. The latter in particular could suggest that the stock is intensely overbought, and indeed it has been that way for the past month.
But none of this has stopped Rekor share prices from hiking sizably over the past few weeks – to a high of 1,075% from the stock's 52-week low, in fact.
NOTE: Just a day before this report was set to go to publication, Rekor prices suddenly sunk almost 20%. I wouldn't be surprised if Rekor's bull run was taking a pause for now, only to pick up again in the medium term.
Avino Silver & Gold Mines Ltd. (ASM)
Since I included Avino Silver & Gold Mines Ltd. (ASM) in our Penny Stocks to Watch list last month, it has risen around 35% in value. And while a pullback over the past few days sent the stock spiraling down to $0.72 from its erstwhile high of $0.80, I'm expecting the pain to be both relatively minimal and short lived.
After all, the junior gold and silver miners have mostly started doing what I've been predicting for well over a year now, witnessing massive gains as precious metals finally climb out of their long-time rut. Following the historical trend, over the past month, the market has seen gold prices climb first as economic uncertainty hit a fever pitch. Typically, silver lags behind gold, like a dorky younger brother always tagging along and begging to be included in the fun.
No longer the laggard, it's now silver's time in the spotlight. As of the time I was writing this article, for example, silver prices had transcended their $15.50 resistance level and hit $16.48/ounce.
Time to run a victory lap? Not yet, because my team and I think the junior silver miners' gains are just getting started. Investors who took a chance on the gold and silver penny stocks a month ago should be cheering.
Biocept, Inc. (BIOC)
Cancer testing company Biocept, Inc. (BIOC) was a disappointing performer over the month of July, dropping approximately 9%, even though its performance year to date is still up almost 19%.
Notwithstanding its recent performance, I'm still feeling enthusiastic about Biocept's prospects. Consider its average 90% revenue growth over the past five years, or 25% growth on a quarterly basis. Its liquid biopsy technology isn't unique in the market, to our non-expert eyes, but at a current price of only $1.02, Biocept only stock costs about 10% as much as its closest competitor.
These factors, combined with a new laboratory services agreement, a new patent for the firm in China, and the commercial launch of the liquid biopsy product, have me convinced that Biocept stock is a red-hot bargain at the moment.
Barnes & Noble Education, Inc. (BNED)
In July, I liked the Barnes & Noble Education, Inc. (BNED) stock so much that I included it in both my Penny Stocks to Watch and Penny Stocks to Watch Using Technical Analysis lists for the month. It turns out that this was a good idea, because at one point the stock was trading 30% above its starting point at over $4.00.
What gives? Bay Finance LLP disclosed that it had made several unsuccessful (and unsolicited) attempts to acquire Barnes & Noble Education. The board of Barnes & Noble Education responded that Bay had been rejected on the basis that its offers were "highly conditional and not credible." In other words, Bay wasn't offering enough money for the Barnes & Noble Education shares.
Since then, Barnes & Noble Education share prices have sunk back down to $3.44. I still believe that the stock has a lot of potential, however, and wouldn’t be surprised to see another company (if not Bay itself) recognize what a valuable acquisition target Barnes & Noble Education may ultimately be.
Perceptron, Inc. (PRCP)
Perceptron, Inc. (PRCP) – a leading international provider of 3D metrology solutions – was the Peter Leeds.com newsletter's most recent Hot List pick. My team wrote of the stock, "Up until May of this year, Perceptron was doing fairly well for itself. It has a strong resistance level at the $7 point and even climbed as high as $10 at the end of 2018.
Wall Street was pretty optimistic about the stock's prospects, too, giving Perceptron an average target price of $10. Then Perceptron's third quarter results for 2019 appeared. The company recorded a disastrous decline in revenue to $15.6 million as of March, 31, 2019, from $21 million the quarter before.
Penny stocks are notoriously volatile.
Management's subsequent earnings call did nothing to assuage investors' concerns. The reasons given for the sales drop were troubling ones, including the U.S.-China trade war, unfavorable currency exchange rates in Europe, and significantly diminished demand for Perceptron's products in the Americas.
Most investors aren't fools. They dropped the stock like a hot potato, and Perceptron's share price over the month of May dropped a whopping 31%. While we acknowledge that these traders had good reasons to dump Perceptron, we want to argue today that a narrow focus on explosive short-term profits may have been preventing them from seeing all the longer-term upside potential the company has to offer. Especially at its [then-current] ridiculously oversold price of $3.61."
My team observed that Perceptron's fundamentals were relatively strong and its track record for revenue was actually quite respectable. Meanwhile, earnings per share (EPS) next year are set to climb 105%.
This, in tandem with Perceptron's AccuSite™ technology (which helps companies save time and money), led the Peter Leeds team to conclude that Perceptron may be a high-risk, high-reward proposition. Since our report came out, Perceptron stock has already climbed a decent 8%. I expect it to see even more gains in the month ahead – especially in the lead-up to its next results announcement on Aug. 28.
Technical Communications Corporation (TCCO)
This Massachusetts-based communication equipment company has recorded an annus horribilis so far for 2019, with Technical Communications Corporation (TCCO) stock dropping by more than half of its original value, from $5.50 to $2.50, over the past quarter or so.
To make matters worse, at the end of June, the company announced "that on June 25, 2019, the company received notice from the Nasdaq Listing Qualifications department of the Nasdaq Stock Market ('Nasdaq') that because the company failed to maintain a minimum of $2,500,000 in stockholders' equity, and since the company does not meet the alternatives of market value of listed securities or net income from continuing operations, the company no longer complies with Listing Rule 5550(b) for continued listing."
Not good, right? Investors agree, and the stock has been stuck in a brutal downtrend that is only now showing signs of ceasing. Although I have no doubt that Technical Communications Corporation is – like all penny stocks – a highly speculative trade, I'm nonetheless currently finding it interesting enough to include in my new Penny Stocks to Watch list because of its 137% quarterly revenue growth, zero debt/equity ratio levels, and RSI of 32.
The company's recent SEC filing that the company is retaining a new accounting firm could indicate that Technical Communications Corporation is getting back on track – and that, accordingly, the stock price may currently be at its bottom.
This may not be one for my more risk-averse readers, but investors with guts of steel and patience to burn may want to delve further into research on Technical Communications Corporation and its communications security devices.
Energy Fuels Inc. (UUUU)
American uranium firm Energy Fuels Inc. (UUUU) and its peer Ur-Energy Inc. (URG) had a rough go over the month of July, declining around 35% on the news that the White House wouldn't be imposing restrictions on the quotas of uranium imports to the United States.
On July 13, however, President Trump announced that the challenges facing the American uranium miners are a "national security issue." Over the next three months (i.e., concluding by mid-September), a working group is set to examine ways to promote and support the U.S. uranium mining industry.
This mixed news resulted in only a 6% recovery for Energy Fuels shares to $1.85, revealing that the market is still deeply pessimistic about the company's prospects. (Indeed, its upcoming set of results, for the second quarter of 2019, is widely expected to show a halving of revenue from the same quarter in 2018.)
I don't expect Energy Fuels to leave its penny stock price territory behind for some time to come. At its current low price below the $2 level, however, the stock appears to me to be oversold. This is considering all the potential upside that may eventually emerge from the Trump working group's recommendations—should the president and his staff heed the call to impose a limit on imports this time around.
McEwen Mining Inc. (MUX)
My team included the Canadian junior gold and silver miner McEwen Mining Inc. (MUX) in the Peter Leeds.com newsletter's Hot List back in February 2019. As I discussed in the section of this article dedicated to Avino Silver & Gold Mines, I've been arguing for a long time now that the gold and silver miners are long past overdue for an epic price trend overhaul.
Now, after a long and frustrating wait, gold and silver prices are finally starting to run—and so, consequently, are the precious metals miners that were undervalued for so long.
It may be too late for many investors to get in on most precious metals plays at their previous bargain-basement prices, in my opinion. That said, although McEwen Mining has seen some of the benefits of the upheaval, its gains have not been as substantial as I would have expected. Notably, McEwen Mining stock is trading at only a few cents more than when my team first profiled the stock in our newsletter.
In short, I think the precious metals miners have a lot more room to climb over the next few years—and so, therefore, does McEwen Mining. Granted, the company doesn't have the best fundamentals or prospects of some other miners. (Those ones have already been snapped up by savvy investors, in my view.) Still, I believe that, at its current price, the upside potential for McEwen Mining could be unbeatable.
The Bottom Line
I've often said that recession-driven volatility doesn't necessarily have to be a bad thing for investors. Recently, one of the subscribers to my Peter Leeds YouTube channel asked me why this is so.
The answer is simple. All the money that's currently in the stock markets has to go somewhere, so one billionaire's loss may be my gain. Or it may be yours. Keeping your eyes open to the new opportunities springing up has never been so exciting or so potentially lucrative.
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 — PeterLeedsPennyStock.
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.