5 MicroCap Penny Stocks to Watch [Stocks under $5]
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Look to these Smallest Penny Stock Companies for the Highest Returns!
Hey Bow Tie Nation, Joseph Hogue here with the Let’s Talk Money channel and another penny stocks list that could make you A LOT of MONEY!
Two of our best penny stocks picks from the prior video are up 18- and 20% in just the last two weeks and today I’m going even deeper into the smallest companies for the highest returns.
In this video, I’ll show you why penny stocks under $5 could be your best opportunity. Then I’ll reveal five penny stocks to watch for 2021!
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Why Regular Investors Need to Buy Penny Stocks
Nation, the IPO market was red hot last year…but regular investors didn’t make a dime. Companies are waiting for so long to go public that all the profit is sucked out of the stock before it’s shares are traded.
Case in point, AirBnB was founded in 2008 but waited until it was a $40 billion company to list shares last year. The venture capital investors and angels made their money. Then the pre-IPO investors, the brokers and investment bank clients that got shares at the IPO price of $70 each and doubled their money instantly when the shares opened at $140!
But Main Street investors have gotten nothing since!
Nation, the IPO market is broken. The only place you’re going to make those kind of triple-digit, 5- and 10-times your money anymore is with penny stocks. These small companies with room to run.
Why Invest in Penny Stocks
Penny Stocks trading prices are relatively low because they are low valued businesses, and that's why it's an advantage. Investing in these businesses can bring about high returns in a short span of time. Although they can be really risky because their prices can jump so high overnight only to fall back without any signals.
The real good thing about investing in penny stocks though comes when you dig into the financial reports and industry research of those companies. Since penny stock investing marks about the market equivalent of venture capital funds and angel investing communities, then they can be highly promising. These professional investing groups seek novice companies in their early stages with inconsistent funds but profitable futures. Not every penny ends up in success though, but if there's no risk, you cannot discover bigger profits.
How to Find the Best Penny Stocks
Now we’ve covered penny stocks to buy on the channel before but today I want to highlight the smallest of the small, the microcap stocks. These are companies with market caps between $50 to $300 million, companies that would be multiples on your money even if they get to a billion-dollar market cap.
I’m going to jump right into that list but there are two things you absolutely have to remember about these types of penny stock investments. First is you have got to do the research here. Many of these penny stocks trade on the pink sheets where they aren’t required to report as much information as you get with larger cap companies on the Nasdaq or the NYSE. So you need to dig into the financial statements and investor presentations yourself.
A Penny Stock Investing Strategy
Also though, you really do need a venture capital approach to these investments. Put together a portfolio of ten- or 15 penny stock companies you really like and plan on holding them for at least three- to five-years.
The idea here is that, you’ve got to expect twenty- or even thirty percent of these to be flops. Be dead money at best or to lose money. Another three out of ten will be decent returns but nothing special. But then it’s the few moonshots, the two or three out of ten penny stocks that hit that five and ten-times your money in five years, those are the ones that are going to give you an average portfolio return in the high twenty or thirty-percent range annually.
Nation, I spent almost a decade as a venture capital analyst and even with the research into these stocks, that’s just how the numbers play out. The ones you really like can turn out to be flops and the ones that drop ten or twenty percent right after buying, those might be the ones that rebound for the huge returns in the future. You just don’t know until you give them time to run.
5 Penny Stocks to Watch in 2021
Our first pick here is the smallest, $58 million PlantX Life, ticker VEGA on the Canadian exchange and PLTXF here in the U.S. markets.
PlantX has developed a digital one-stop-shop for the plant-based community and is opening retail locations to sell products. More than 5,000 plant-based products are available through the website and soon at retail locations, the company’s meal delivery service is available in Canada and expanding to San Diego.
And nation, I’ll tell you, I was a holdout on the plant-based meat trend but this could be one of the biggest themes over the next decade. Retail sales of plant-based products jumped as much as 240% during the lockdown and 23% of consumers have now eaten a plant-based alternative.
Another third of those that haven’t tried it say they’re open to it, which means 51% of the $950 billion global meat industry is susceptible to market share loss to plant-based. Now take that with the fact that even the largest plant-based meat company, Beyond Meat, is only an $8 billion market cap and you’ve got some massive growth waiting for the industry.
PlantX announced last month a purchase agreement with Hillcrest San Diego for the first U.S. store and a purchase commitment of $25 million in products. Another acquisition of Bloombox UK marks the European expansion but I think what I interested me most about the company was the business model set up around a community network.
Besides an active online forum, the company has a solid social media following on Facebook and a channel here on YouTube.
I see very few other companies building a community like that and think it’s going to pay off big time over the longer-term. Check out the details in this PlantX Life Investor Presentation.
Join the PlantX Life Community on YouTube!
Byrna Technologies, ticker BYRN, is a $218 million company making non-lethal protection and munitions like its flagship product that shoots a small 68-caliber ball of chemical irritants to neutralize a threat without the consequences of a conventional firearm.
Nation, I don’t know if it is or just seems that way but the last couple of years it seems chaos is all around us and the demand for self-protection is another of those universal trends I’m watching for the next decade.
The less-lethal market is expected to double from $5 billion a year to $10 billion by 2025 and Byrna is well positioned in the civilian and law enforcement market with its 68-caliber product. It’s lower cost compared to Tasers and BolaWrap and has a longer range than pepper spray.
Revenue surged 16-fold last year to $16 million the company has more than $4.6 million in balance sheet cash and cash flow turned positive. Shares aren’t cheap at 13-times on a price-to-sales basis but with that kind of growth, this is one to put on your radar.
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Resonant, ticker RESN, is a late stage development company designing RF filters for non-mobile devices.
With all the talk around 5G mobile it’s easy to forget that the majority of devices will be non-mobile, all those Internet of Things connected devices that will also need filters. Resonant is on target with a strategic partnership of manufacturing and scheduled to complete its first production volume this year.
Revenue jumped to $1.4 million last quarter, double the previous quarter and a 14-fold increase from the same quarter 2019. So at a price to sales ratio of 48-times, not cheap here but the market for this is huge as 5G starts ramping up in non-mobile devices.
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Next here, T2 Biosystems, ticker TTOO, is a medical diagnostics maker to detect bacterial and fungal infections in the blood.
The company has two products with FDA clearance that can reduce diagnostics times from days to less than five hours and another product in process of FDA clearance.
Revenue grew to $5.2 million in the most recent quarter, three-times the year prior’s sales, and double revenue from the quarter before. The company has just over $61 million in balance sheet cash and a burn rate of $11 million per quarter, so plenty of runway for sales to keep growing. At $13.4 million in sales over the last four quarters, this one is trading at 13.8-times on a price to sale basis.
Fortress Biotech, ticker FBIO, is one we highlighted last month at $3.20 a share and I still like this one, even after the wild ride up to $3.60 then down to $3 a share.
The company is a biotech with most of its established products in dermatology but a strong pipeline of products across oncology, gene therapies and rare diseases as well.
Fortress already has five commercial products, which is rare for a small biotech, but these are driving $43 million in annual sales while the company develops the rest of its pipeline.
Revenue increased 17% over the last year and the dermatology segment, it’s largest producer, is growing sales at a 29% pace over 2019. The company has two candidates in phase three trials with potential revenue of $790 million from Tramadol alone. Some other standouts here, a $175 million market on its CUTX candidate for Menkes disease and two others with sales potential in the hundreds of millions.
The pipeline is there and the company has over $218 million in balance sheet cash. That’s against just $55 million in debt, so plenty of cash survivability here for development.
Penny stock investing is risky, especially in these microcap stocks, but it offers some of the best returns you'll find. Do your research to narrow down a penny stock list and use that long-term strategy for 10X and higher returns!
Read the Entire Penny Stocks Series
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