As of the last week of May, when I was writing this report, the S&P 500 had climbed back up to the all-important 3,000 mark, and the Dow Jones Industrial Average had skyrocketed 550 points. Despite massive unemployment and at least 100,000 coronavirus-related deaths in the United States, investor bullishness is at fever peak right now.
I've made no secret – here on Investopedia, as well as on my Peter Leeds YouTube channel and in my newsletter – that I believe stocks must inevitably go down from here. However, my team and I are keeping watch over the following companies, whose low prices could be currently belying their high value, in my opinion, and which may see gains in the coming months.
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 ...
Amyris, Inc. (AMRS)
As of the last few days of May 2020, Amyris, Inc. (AMRS) was clocking a 33% gain over the previous month on the back of some strong results. Specifically, the company is showing investors that it can actually make money on its products … you know, without completely emptying its coffers in the process.
I'm expecting Amyris shares to return some of those gains over the beginning of May. But I maintain a cautiously bullish stance on the stock. The Pipette and Biossance brands are seeing strong growth and consumer interest, and although I expect people to buy less stuff over the tough months ahead, this company's wares – personal care and skincare – tend to sell pretty well even in recessions.
Harte Hanks, Inc. (HHS)
When Harte Hanks, Inc. (HHS) reported a "surprise profit" in the most recent quarter, most investors and financial commentators were taken aback. But I wasn't too surprised, given my belief that marketing firms like Harte Hanks could benefit from their newly captive audiences amid the spread of COVID-19.
Indeed, it was a stellar month for Harte Hanks, which saw a 25% surge in prices over the course of the past four weeks. So will the good times continue? I think it may be time to step back from the stock, as there's simply too much uncertainty in the markets right now. It's very possible that Hartke Hanks stock will continue to soar, but in my opinion, the best course of action right now is to sit most stocks out.
Zovio Inc. (ZVO)
I've been saving the best update for last: one of my May picks, education technology company Zovio Inc. (ZVO), was up around 92% from the previous month as of May 26. While the overall gain has since fallen to 72%, I'm pretty happy with this one.
In my view, the share prices of online education companies like Zovio will only continue to soar as colleges and universities find themselves forced to move their classes online. Accordingly, I think there's a lot of room for Zovio to grow.
... And a Few New Ones
Radiant Logistics, Inc. (RLGT)
Like most publicly traded companies, Radiant Logistics, Inc. (RLGT) has been badly hurt by the global pandemic. Its price is down almost 30% year to date, and as of the most recent earnings results, sales had dropped 14% on a quarterly basis.
I strongly suspect, however, that Radiant Logistics has the right stuff to weather the current economic storm. After all, the group has a nice five-year average revenue growth rate of 20% and some nice-looking financial ratios, like a P/S of 0.23 and forward P/E of 9.23.
I don't believe that the economy will return to "normal" for a long time. However, logistics services like Radiant should return to growth soon enough, in my opinion, as the global flow of commodities that consumers have grown accustomed to is bound to resume over the next few months – second wave or not.
Flexible Solutions International Inc. (FSI)
Canadian chemical manufacturer and environmental technology firm Flexible Solutions International Inc. (FSI) is no stranger to my newsletter's Hot List. We've profiled it twice now. The first time, the stock soared to a high of $4.73 in the summer of 2019 for a stunning overall (theoretical) profit of 143%. Can Flexible Solutions revive its fortunes?
It just might, in my view. I believe that this is a high-quality company, and its success last year was – in my opinion – a reflection of the group's strong product line, not merely random good luck. Just looking over its financials quickly, I see a great P/E ratio of 8.97 and even greater forward P/E of 5.61, both of which suggest that there's a lot of untapped value here.
Silvercorp Metals Inc. (SVM)
As you probably already know, I'm very bullish on gold, but I see even more upside potential in the unloved silver players. And Silvercorp Metals Inc. (SVM) is one of my favorite precious metals miners right now.
It isn't brain science; just look at the company's strong balance sheet (with 4.30/4.50 quick/current ratios and low debt), 38% operating margin, and 25% profit margin, combined with its profitable silver holdings in China. I was also thrilled by the recent news that Silvercorp had acquired a gold mine in Guyana, diversifying its offerings and thereby reducing risk.
This could be a good and cheap entry point for investors looking to enter the precious metals mining complex.
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.