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3 “Strong Buy” Penny Stocks That Could See Outsized Gains

3 "Strong Buy" Penny Stocks That Could See Outsized Gains

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4 years ago

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Penny stocks are controversial, to say the least. When it comes to these under $5 per share investment opportunities, Wall Street observers usually either love them or hate them. The penny stock-averse point out that while the bargain price tag is tempting, there could be a reason shares are trading at such low levels like poor fundamentals or insurmountable headwinds.

However, the other side of the coin has merit as well. Naturally, with these cheap tickers, you get more bang for your buck in terms of the amount of shares. On top of this, other more expensive and well-known names aren’t as likely to produce the colossal gains that penny stocks are capable of.

Given the nature of these investments, Wall Street analysts recommend doing some due diligence before pulling the trigger, noting that not all penny stocks are bound for greatness.

With this in mind, we’ve dipped into the TipRanks database to find three penny stocks that offer a solid combination of risk and reward. With a low point of entry, and at least 30% upside potential, these stocks offer investors a chance to maximize their possible share appreciation while minimizing their initial outlay.

Montage Resources Corporation (MR)

We’ll start in the oil and gas sector, where Montage Resources is a small-cap player in Appalachia. The company engages in hydrocarbon exploration, production, and transport, with natural gas and crude oil operations in Pennsylvania, Ohio, and West Virginia. Montage boasts 325 actively producing wells and over 195,000 undeveloped acres.

The company finished 2019 with a gangbusters quarter, seeing EPS come in at 85 cents and revenues hit $174.1 million. EPS was a whopping 608% over the forecast. Both numbers were also up significantly year-over-year, by 67% and 34% respectively. Looking ahead to the Q1 report, due out in May, MR is projected to show an EPS of 25 cents.

Despite the strong finish to 2019, MR shares are down 40% in 2020. That share depreciation has brought MR down to an attractive point of entry, just $4.82 per share. It’s not often that investors will find an oil play with so low a share price. Given the industry’s ability to generate both cash and profits, even when prices are down, it points to high potential from this company.

Roth Capital analyst John White agrees. He writes, “We estimate MR will generate $32 million of free cash flow in 2020… We note the bulk of this free cash flow, $20.4 million, occurs in 1Q due to robust production and much higher commodity prices versus the remaining quarters.”

But cash flow isn’t the only reason to buy into Montage. White also notes that while the world’s major oil suppliers are moving to cut production and boost prices, the cuts may not last – and if they resume their crude oil price war, Montage is well-positioned to gain: “Assuming OPEC+ continues to add incremental crude oil supply into a market with declining oil demand, we think gas weighted names have a positive outlook compared to oil weighted names and MR is 81% gas…”

In line with his outlook on the company, White gives MR shares a $6.50 price target implying an upside of 35%. He has also upgraded his stance on the stock, moving from Neutral to Buy. (To watch White’s track record, click here)

In general, the rest of the Street has an optimistic view of MR. The stock’s Strong Buy status comes from the 4 Buy ratings and a single Hold issued in the past 3 months. The upside potential lands at 25%. (See Montage stock analysis on TipRanks)

McEwen Mining (MUX)

From the black gold, we’re on to the yellow variety. McEwen Mining, based in Toronto, is another small-cap company in the natural resources sector, this time mining for both gold and silver in North and South America. The company pulled 174,420 gold equivalent ounces out of the ground last year, and generated a gross profit of $9 million.

In an unfortunate note, McEwen last month announced that it would scale down operations at two major mines, the Black Fox in Canada and Gold Bar in Nevada. Mexican operations would be unaffected by the scale back. The Black Fox mine was brought back to full capacity, starting on April 14. The mine scale backs coincided with the company’s withdrawal of forward guidance for 2020 production. The company cites the ongoing COVID-19 epidemic as the reason – and associated mine shut-downs at two sites in Argentina. McEwen did not issue new production guidance for the year.

Gold and silver, however, remain highly sought-after commodities, and the long-term outlook for the stock remains upbeat. Heiko Ihle, writing from H. C. Wainwright, says of the stock, “While the firm previously encountered a tumultuous FY19 that involved several operational issues, we note that the problems faced in FY20 thus far are mostly out of its control. In short, we continue to believe that we are on the cusp of a bull market for gold and that the current share price represents an attractive entry point."

Ihle reiterates his Buy rating on MUX shares. While he did lower the price target from $2 to $1.75, he still sees an impressive 73% upside potential here. (To watch Ihle’s track record, click here)

McEwen has a unanimous analyst consensus rating, with 4 recent Buy reviews adding up to a Strong Buy. The company is a true penny stock, selling for only $1.01 per share in New York. The average price target shows the reward potential of a fundamentally sound penny stock: at $2.29, it indicates room for an incredible 127% upside for this year. (See McEwen Mining stock analysis on TipRanks)

Quantum Corporation (QMCO)

We’ll wrap up this list with another small-cap company, this time in the tech sector. Quantum Corp offers storage and archiving solutions for data streams, in both digital and virtual environments. The company’s products allow customers to store, preserve, and protect digital data for the long term.

Digital data storage is an essential service in today’s information age, and QMCO showed that in its last fiscal third-quarter report. The company turned a profit – its second in a row – and beat the earnings forecast by a wide margin. EPS came in at 7 cents, against estimates of only 1 cent. Net income nearly doubled, rising form $4.7 million to $9 million, derived from total revenue of $103.3 million. Gross margin was the best metric reported, at 45.6%, reflecting a value approach to selling a favorable product mix.

Craig Ellis, who reviewed the company for B. Riley FBR, notet: “We reflect sustained near-term business disruption in lower F1Q product sales, but then increase F2Q-4Q growth. Second, we believe relaxed F4Q loan amendments augur well for similar forward adjustments, noting MCHP (Neutral, $70 PT) recently achieved similar with key covenants. Third, we are unsurprised with logistics impacts to near-term product deliveries, an issue AMAT conveyed two weeks ago. We materially reduce near-term Product revenue but now expect a stronger snap-back beginning in F3Q20, for a v-shaped downturn and recovery for QMCO.

In line with his positive assessment of the company’s status, Ellis gives QMCO a Buy rating with a $6.25 price target, suggesting a 60% growth potential for the stock. (To watch Ellis’ track record, click here)

QMCO is another stock with a unanimous analyst consensus rating. The Strong Buy rating is based on 3 Buy reviews. The average price target, $5.75, indicates a premium of 47% from the current share price of $3.90. (See Quantum stock analysis at TipRanks)

To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

The post 3 "Strong Buy" Penny Stocks That Could See Outsized Gains appeared first on TipRanks Financial Blog.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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8 hours ago

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March 12, 2024

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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March 12, 2024

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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March 12, 2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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