Penny Stocks to Watch 2014: Cash In on These Three Breakout Opportunities

penny stocks to watch 2014Penny stocks to watch 2014: Cheap stocks can have huge profit potential, and investors who buy in at the right time stand to net double- or triple-digit gains in a matter of days.

But first, investors need to know where to look...

Some of the biggest penny stock winners have been in on the ground floor of burgeoning markets, while others have been the takeover targets of large corporations. Pharmaceutical companies working on breakthrough drugs can also be big winners.

We've identified three of the best penny stocks to watch in 2014 - and they're already up 1,097.76%, 54.06%, and 97.87% in the last 12 months...

Best Penny Stocks to Watch 2014: Three Picks to Profit Today

Penny Stocks to Watch No. 1: Plug Power (Nasdaq: PLUG) is an alternative energy company that designs, develops, commercializes, and manufactures fuel cell systems for industrial off-road devices like fork lifts. The company is headquartered in Latham, N.Y., and has a market cap of just $710 million.

PLUG stock has been on an absolute tear in the last year, up more than 2,456% since the beginning of last May. More recently, the stock is up 158.72% in 2014.

In February, PLUG signed a huge deal with Wal-Mart Stores Inc. (NYSE: WMT), which purchased more than 1,700 of Plug's signature GenDrive fuel cell units. Wal-Mart also agreed to purchase the required hydrogen from Plug Power for six years. Before that, PLUG had agreed to provide FedEx Corp. (NYSE: FDX) with hydrogen fuel cells to run 20 electric trucks. Those partnerships sent the stock soaring.

PLUG reached a 52-week high of $11.72 in mid-March, but has since pulled back to $4.02. The Wal-Mart news was huge for the stock, and if the company continues to partner with other major corporations, its stock could soar again. For now, this penny stock is a trading at a discounted price.

Our second penny stock to buy in 2014 is a tech company working in a $26 billion market - and it just notched an earnings beat of almost 17%...

Penny Stocks to Watch No. 2: Smart Technologies Inc. (Nasdaq: SMT) designs, develops, and sells "SMART boards" and has already sold more than 2 million worldwide. The company has expanded its product line and now offers audio enhancement products and student response systems.

SMT's products are integrated into high-tech classrooms and corporate settings, which Money Morning's Defense & Tech Specialist Michael A. Robinson sees as highly profitable markets.

"To further fatten its revenue stream, Smart Technologies is moving more deeply into the corporate e-learning market," Robinson said. "It's still a relatively new field, but market forecaster IBISWorld already estimates the global size at around $26 billion."

SMT stock has gained 97.87% in the last 12 months. The stock currently trades at $2.78 per share, down from a 52-week high of $5.28. The company recently beat earnings expectations by nearly 17% and is looking at Q2 earnings projections of $0.03 per share. That's up from a loss of $0.05 per share last quarter.

Penny Stocks to Buy No. 3: Idenix Pharmaceuticals Inc. (Nasdaq: IDIX) currently trades at $6.66 per share - on the expensive side for a penny stock. But just a few weeks ago it was trading under $5 a share. It's a small-cap stock with a market capitalization under $1 billion.

Idenix is a biopharmaceutical company that develops drugs for the treatment of viral diseases. It focuses primarily on hepatitis C treatments, which the company recently described at financial service firm UBS's Global Healthcare Conference as a $200 billion global market. Company officials have noted that its drug candidate IDX21437 recently showed potent antiviral activity in a proof-of-concept study. And lead candidate samatasvir is currently in phase 2 trials for hepatitis C treatment.

Because IDIX has such a small market cap and is developing a drug pipeline (in a lucrative market), it's a perfect candidate for a takeover by a larger pharmaceutical company. It's frequently the case that large companies will buy smaller firms to replace revenue from drugs whose patents have expired. And shareholders of these smaller companies stand to cash in.

IDIX stock is up 54% in the last 12 months and 20.51% since the start of May.

Which penny stocks do you think are "must watch stocks" in 2014? Join the conversation on Twitter @moneymorning using #PennyStocks

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