The last few days of 2020 saw the stock market roaring to record highs in what’s being called a “Santa Claus rally,” following the signing of a long-awaited COVID relief bill in the United States. It looks like disaster (for the millions of people about to lose their benefits) has been narrowly averted … for now.
Does this last-minute bullishness bode well for investors in 2021? Well, yes and no. In my opinion, the U.S. dollar will continue to be devalued, so I’m reiterating my optimistic call on the precious metals miners. I think readers who took a chance on stocks like First Majestic Silver Corp. (AG) and New Gold Inc. (NGD) will continue to see gains in the year ahead.
Nonetheless, with debt ballooning at all levels of the economy, I can’t help but believe that there will be massive defaults and delinquencies ahead of us. Still, while the times will be tough, canny investors will find that opportunities abound.
Keep reading for some stocks I’ve had my eye on. Not only are they cheap, with prices under $5 (as of the time I first included them in this column), but they’re also likely, in my view, to weather the coming economic storms well.
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 …
New Gold Inc. (NGD)
New Gold stock is up an overall 25% in value since I discussed it in last month’s “Penny Stocks to Watch” column. Readers who were following New Gold’s progress closely would have also noted that it rose at one point from $1.75 to as high as $2.40 (for a 37% gain) in mid-December, before settling back down a little to $2.22 as of the time I was writing this report.
In my opinion, this is just the beginning of New Gold’s rocket shot to the moon. As I stated above, I’m still a strong champion of the junior gold and silver miners – not because I’m a “gold bug” or anything like that, but simply because they seem like the safest bet in a floundering economy.
RF Industries, Ltd. (RFIL)
RF Industries, Ltd. (RFIL) had a pretty ridiculous December, shooting all the way up from the $4.80 levels to $6.50 in the middle of the month in a matter of weeks. Then the stock careened back down to $4.81 after the company released some worse-than-expected results for the fourth quarter of 2020.
I think the drop may be an overreaction to what are some actually pretty strong earnings given the challenging sales environment RF Industries is working in. Furthermore, I like the potential implicit in the firm’s product offerings, which should benefit strongly from the 5G revolution. I’ll be holding onto this one.
Turkcell Iletisim Hizmetleri A.S. ADR (TKC)
Turkcell Iletisim Hizmetleri A.S. ADR (TKC) had a decent December, climbing around 13% (i.e., from around $4.80 to $5.44) since I included it in this column at the end of November. I’m not surprised – in my opinion, telecommunications demand should remain strong even in the midst of economic chaos.
At the same time, Turkcell has some good fundamentals, including strong P/E ratios and EPS figures. Despite my general abundance of caution with regard to all non-mining stocks right now, I believe that it may still have some upside ahead of it.
… And Some New Ones
Karora Resources Inc. (KRRGF)
Canadian gold miner Karora Resources Inc. (KRRGF) is, in a word, great. The company is showing impressive growth and expected reserve growth, paired with a very solid financial position. I included it in the Peter Leeds newsletter’s Hot List right before Christmas, and in the year to come, I expect to see it shooting much higher.
After all, in its last set of results (for the period ending Sept. 30, 2020), Karora turned in an amazing 34% increase in its consolidated cash balance from the previous quarter. Earlier in December, Karora announced the incredible news that its consolidated gold proven and probable Mineral Reserves had increased by a stunning 334% to 1.33 million ounces, while consolidated gold measured and indicated Mineral Resources had increased by 167% to 2.52 million ounces, on the back of some exceptional new drilling results. I’m not going to lie – I’m excited about this one.
ToughBuilt Industries, Inc. (TBLT)
ToughBuilt Industries, Inc. (TBLT) is exactly the kind of company I most love talking about around here: it’s a scrappy underdog within its industry that has been undervalued for too long, and in my opinion, it might have a bright future ahead of it. ToughBuilt is small, with only 24 employees, and a market cap of $29.78 million.
However, thanks to its strong management team and innovative, high-quality products, over the past year it has expanded into the biggest hardware/construction chains in North America, including most recently Lowe’s Companies, Inc. (LOW) and The Home Depot, Inc. (HD). With the home improvement market estimated to be worth around $460 billion, there’s some very good money to be made out there … even if you’re one of the smallest players in the industry.
Make no mistake: this is a high-risk stock, with a cash flow statement that I find not a little concerning. But in my opinion, the reward could be high here, at just around 100% at minimum.
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.