The best penny stocks to buy for 2015 have something many penny stocks don't give investors. They all belong to solid companies.
You see, penny stock investing is full of risks. Shell companies masquerade as profit machines. Pump-and-dump scams can leave investors penniless. And over-the-counter (OTC) and Pink Sheets stocks don't report financial information.
You won't find any of that here. These five stocks all trade on the New York Stock Exchange or Nasdaq. They have strong 2015 guidance figures. Some operate in a high-growth industry.
These stocks don't trade for fractions of a penny. But they also won't liquidate after selling all of their worthless shares to unwitting investors.
Here's our list of the five best penny stocks to buy for 2015, and the case for each...
The Best Penny Stocks for 2015
Penny Stocks to Buy No. 1: Novavax Inc. (Nasdaq: NVAX) is a biopharmaceutical company that develops vaccines for pandemic flu viruses, rabies, and respiratory syncytial virus (RSV). Right now, the stock is on the pricier side for a penny stock at $5.15 (the typical cut-off is about $5 a share - which NVAX traded below as recently as Nov. 20).
The key for NVAX stock is the company's strong pipeline of drug candidates. Its vaccine for the H7N9 virus was fast-tracked by the Food and Drug Administration, which speeds up the approval process. It also has an RSV vaccine in mid-stage development. Not to be overlooked, the company is also performing trials on an Ebola treatment.
Approvals or strong updates on any of these drugs would be big catalysts for the stock. And a strong pipeline gives the company multiple chances. NVAX is up 23.5% since Oct. 1, and analysts predict a 29% jump in revenue in 2015.
Penny Stocks to Buy No. 2: Halcon Resources Corp. (NYSE: HK) is an oil and gas company with strong operations in the Bakken Shale formation of North Dakota and the Eagle Ford Shale of Texas.
Despite low oil prices, HK increased third-quarter production 16% year over year. For 2015, the company expects to operate fewer rigs while prices stay low. However, it's still expecting a 15% to 20% jump in production for the year.
The firm has strong financials, with expected EPS growth of 29% over the next five years. The rest of the industry has a five-year growth outlook of 16%. Revenue is expected to jump 11% in 2015.
The oil-price drop has hit HK stock hard. It's now trading at a discount, down 44% in three months to $3.10.
Penny Stocks to Buy No. 3: Data I/O Corp. (Nasdaq: DAIO) develops programming device systems used in flash memory devices and microcontrollers.
DAIO is a very small company, with a market cap just under $25 million. In its Q3 earnings report, DAIO reported a 16% year-over-year increase in revenue and an 11% increase from Q2.
Importantly, the company is now targeting the "Internet of Things" (IoT) industry. The IoT is an evolution of the Internet in which almost all of our day-to-day items become "smart" devices with Internet connectivity. The IoT market could be worth $19 trillion in 10 years, according to Cisco Systems Inc. (Nasdaq: CSCO).
Right now, DAIO trades at $3.15 and is up 22.6% in 2014. Finding a way into the IoT market would be a huge catalyst for this penny stock.
Penny Stocks to Buy No. 4: Plug Power Inc. (Nasdaq: PLUG) provides alternative energy fuel systems for industrial off-road vehicles like forklifts and other material handlers. Its biggest customers include FedEx Corp. (NYSE: FDX), Daimler, BMW, Honda, and Volkswagen.
Last quarter, PLUG reported a year-over-year revenue increase of 427%. For 2015, analysts predict EPS growth of 67%.
Plug Power stock has had an eventful year. It boasts a 52-week range of $0.53 to $11.72. It's clearly a volatile stock. Despite a year-to-date return of 153%, PLUG is trading at a discounted price compared to its March highs. Right now, shares hover just under $4.00.
Currently, analysts polled by Thomson/First Call have an average price target of $8.00 per share for PLUS. That's just over double yesterday's closing price of $3.94.
Penny Stocks to Buy No. 5: United Microelectronics Corp. (NYSE ADR: UMC) is a semiconductor foundry company that develops wafers and other products used in the production of microdevices.
The biggest story with UMC is its involvement in the semiconductor industry. The Semiconductor Industry Association reported worldwide sales of semiconductors reached $78.47 billion during the first quarter of 2014 - the highest-ever total for the first three months of a year.
That $78 billion was spurred by the growth of the smartphone market. The number of smartphones purchased globally is expected to jump 70% to 1.68 billion by 2017.
UMC trades at $2.15 and is up 8% since the start of October. The penny stock has a 52-week range of $1.91 to $2.58.
What to Read Now: Money Morning's Chief Investment Strategist Keith Fitz-Gerald made the rare move of releasing one of his subscriber stock recommendations to the public last week. But according to him, the profit opportunity from this discounted stock is too good not to share...