In an already volatile year, the month of August saw the stock market reaching ever more dizzying highs and lows. In particular, gold and silver prices went on a wild roller-coaster ride, with many of the junior miners I've featured in this column taking a sizable hit over the past few weeks.
Profit-taking and better-than-expected economic data out of the United States, combined with the Fed's attempts to paint a rosier picture of the economy, were behind the decline, in my view. But I don't see how the charade can hold up much longer. Accordingly, the rush to safety – and the precious metals – should begin anew shortly.
Accordingly, as I explain on my YouTube channel, newsletter, and the Peter Leeds app, my outlook for the mining penny stocks remains bullish, as you'll see reflected in my gold- and silver-centered updates and picks below. This month, I've also included a health care-related play that I believe could see major gains even in the midst of a deep recession.
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 ...
Banyan Gold Corp. (BYAGF)
August started on an excellent note for Banyan Gold Corp. (BYAGF), whose price increased around 15 cents (or roughly 50% of its total) before returning some of those gains over the remainder of the month. Still, even at its relatively lower price of $0.29, Banyan investors are sitting pretty, in my view.
Why? Because the stock has been relatively immune to the general pummeling the junior precious metals miners witnessed last month, and because I believe that – barring any short-term volatility ahead – Banyan Gold will continue to record big gains as gold prices increase. (In case this is your first time joining us, I'm strongly bullish on gold and silver prices.)
This is a high-risk stock, as is reflected in its dirt-cheap price, but it's also potentially a high-reward one.
Avino Silver & Gold Mines Ltd. (ASM)
Note: I personally hold shares in Avino Silver & Gold Mines.
As with most of the other junior gold and silver miners I've been following, Avino Silver & Gold Mines Ltd. (ASM) recorded a somewhat weaker-than-expected August, even if it saw an overall gain of 10.48% over the past few weeks.
Big surprise here: I don't expect the weakness to continue. I think the stock will easily return to the $1.50 levels and beyond once investors start getting nervous about the future of the economy again – which is both inevitable and sensible, in my opinion.
… And Some New Ones (or Ones to Re-visit)
NantHealth, Inc. (NH)
NantHealth, Inc. (NH) is a health care information technology provider. I believe that health-related stocks are one of the smartest ways investors can weather the coming economic storms that I expect. After all, medical care is a non-negotiable for just about everyone.
I like a lot of things about NantHealth's range of services, chiefly the fact that it can save health care providers and patients alike a lot of extra time and costs by rendering all their medical information digital and cloud-based. Once management shows investors that it's ready to stop hemorrhaging cash and start growing revenue more strongly, I expect shares to take off.
Moreover, NantHealth's current ratio of 2x indicates that it shouldn't have any trouble meeting its near-term financial commitments. Its revenue history is also very appealing, showing average growth of almost 25% annually over the past five years.
First Majestic Silver Corp. (AG)
I've been a big fan of First Majestic Silver Corp. (AG) since back in 2018, and in the past six months, it has rewarded me richly for my faith by tripling in value, from around $4 per share to approximately $12.
Now, like most of the other precious metals miners I'm discussing here, First Majestic Silver had a rough August, losing around 16% over the month. As I've said to my friends, family, subscribers, and readers, however, I'm confident that the stock will go soaring once more over the next few months.
Don't expect smooth and steady progress here; volatility is the name of the game with the gold and silver stocks. But overall, I’m still very optimistic.
Turquoise Hill Resources Ltd. (TRQ)
Since I included Canadian miner Turquoise Hill Resources Ltd. (TRQ) as a Hot Pick in my newsletter in mid-August, the stock price has climbed 12 cents for a nice little gain so far of around 14%.
Turquoise Hill's P/E ratio of 5.40, even better forward P/E ratio of 4.58, and its P/B ratio and P/C ratios of 0.19 and 1.19, respectively, make me believe the stock is still oversold, even at its relatively higher price. Add a profit margin of 38% and EPS set to climb 180% next year, and you've got a very strong contender for one of the most undervalued junior mining stocks out there right now. Given my view that precious metals prices will only continue to skyrocket in the months ahead, I'm very excited about Turquoise Hill's prospects over the next few years.
I do want to warn readers, however, of an impending reverse stock split that could happen at any point before July 24, 2021. Investors dislike reverse splits, even though they don't implicitly change the value of the company. But because they often indicate that a firm is in financial difficulties, shareholders may get antsy and abandon that stock. On the other hand, a reverse split buys a company some time to get back on track. And I believe this should easily be the case for Turquoise Hill as precious metals prices track higher.
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 puts up a steep learning curve
IBKR Pro customers are 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
Customization and personalization options on StreetSmart Edge are terrific
The sheer number of features and reports available can feel overwhelming
Schwab maintains transaction history for just 24 months online
Schwab does not sweep uninvested cash 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.