10 Top Penny Stocks of July 2017, with Gains as High as 76.5%

This list provides an updated ranking of the top penny stocks of July 2017. After the list, we'll show you one of the best small-cap stocks to buy today...

Penny Stock Current Price July 2017 Gain (as of July 17)
Danaos Corp. (NYSE: DAC) $3.00 +76.5%
Monster Digital Inc. (Nasdaq: MSDI) $0.86 +76.2%
Verastem Inc. (Nasdaq: VSTM) $3.56 +62.9%
Bon-Ton Stores Inc. (Nasdaq: BONT) $0.68 +61.1%
Cerecor Inc. (Nasdaq: CERC) $0.87 +51.9%
Qualstar Corp. (Nasdaq: QBAK) $7.60 +48.4%
Halcon Resources Corp. (NYSE: HK) $6.62 +45.8%
Cerulean Pharma Inc. (Nasdaq: CERU) $0.65 +42.6%
BioLife Solutons Inc. (Nasdaq: BLFS) $3.40 +42.5%
Sito Mobile Ltd. (Nasdaq: SITO) $5.24 +41.2%

The biggest penny stock gainer of the month so far is Danaos Corp., a company that owns a fleet of 53 containerships used to store and transport goods around the world. The DAC stock price has skyrocketed 86.7% from $1.58 on July 11 to $2.95 today after two sets of analysts offered positive outlooks on the stock...

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On Monday, July 10, analysts at Jefferies Group reiterated the "Hold" rating on the stock that they initially released back in March. And on Friday, July 14, analysts from BidaskClub - a Luxembourg-based research group - upgraded DAC stock from a "Sell" rating to a "Hold" rating.

These confirmations of the stock's long-term potential likely enticed investors to buy into Danaos stock, thus sending the price to a 2017 high of $2.95 today.

While DAC's 76.5% return over the first two weeks of July looks attractive, we aren't recommending DAC or any of the stocks listed above. That's because their double-digit gains this month show now may not be the best time to buy in. Investing in these stocks now could lead to losses if investors who already own them decide to take their profits and sell their shares.

But buying penny stocks in general can be risky for investors who haven't done their research too. It's imperative to dig into a company's financials - including SEC documents like annual 10-K filings and quarterly earnings reports - to ensure the firm isn't fraudulent.

For example, some penny stocks can be nothing but shell companies. These are firms that have never reported any revenue or physical assets. They're created just for the purpose of scamming investors out of their money.

top penny stocks of july 2017

A notable shell company that was the source of a $300 million penny stock scam was Cynk Technology Corp. (OTCMKTS: CYNK). This firm, which passed itself off as a social media company, had no product and was merely the creation of a fraudulent stock promoter named Gregg Mulholland.

In June 2015, Mulholland was arrested for stock fraud after CYNK soared 24,900% from $0.06 in June 2014 to $15 in July 2014. It then crashed to $0.20 by September 2014, which was suspicious enough to prompt an SEC investigation into Cynk and Mulholland. The federal government sentenced Mulholland to 12 years in jail this past February.

To avoid falling victim to scams like this, Money Morning Small-Cap Specialist Sid Riggs likes to do the stock research for you. And now Sid - whose April 19 pick has given readers a 37.9% return since then - is recommending one of the best small-cap stocks to buy in 2017.

Today's pick is a medical device firm with a great track record of U.S. Food and Drug Administration (FDA) approval. In fact, three of its products were approved between 2010 and 2012, with one of them being the first of its kind sold over the counter. That means the company will have a profitable edge over other companies trying to sell a similar product.

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But even better proof of the stock's potential is this firm's stunning earnings over the last four quarters. It has smashed analysts' expectations by an average of 57.6% over that period.

In other words, Wall Street banks have consistently lowballed this firm's profitability. That makes now one of the best times to buy the stock, before the big banks catch on.

Here's Sid's small-cap stock to buy right now...

The Best Small-Cap Stock to Buy That Keeps Beating Wall Street Expectations

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Sid recommends OraSure Technologies Inc. (Nasdaq: OSUR), a developer of medical devices that detect conditions like HCV, HIV, and influenza. The firm also sells drug-screening products that can detect narcotics or alcohol in a person's system.

But OraSure's most popular products include its line of portable cryosurgical devices. These let people apply intense cold to lesions, warts, and other spots on the skin to remove the unwanted or infected tissue.

The company has seen a number of its products quickly receive FDA approval in recent years. In 2010 and 2011, the FDA approved OraSure's blood and fingerstick HCV tests, respectively. And in 2012, the company received FDA approval for its in-home HIV test.

According to the OraSure website, it's the first oral fluid over-the-counter HIV test approved in the United States. And on June 27, OraSure teamed up with the Bill & Melinda Gates Foundation to expand the HIV test's availability in 50 developing nations across Africa and Asia.

The deal involves the foundation donating $20 million over a four-year period to help OraSure provide the test for a reduced price in the countries to make it more affordable to those who need it. In the United States, the test costs upwards of $40 depending on different retailers.

This high-profile deal will help promote the brand-new test across the world, which we expect will lead to increased sales and growth in OSUR stock.

And OSUR's ability to outperform the market is already showing this year.

The OSUR stock price is up 117.7% so far in 2017, crushing the Dow Jones' 9.5% gain and the Nasdaq Biotechnology Index's 19.1% return. Since Sid first recommended OSUR to Money Morning Members on June 12, shares have already climbed 26%.

And Sid expects those gains to keep coming despite analysts' conservative projections.

Thomson Reuters analysts predict shares of OSUR will rise as much as 9.7% from the current $19.15 price to $21 by next July. However, the company keeps growing while analysts keep underrating it, and that means it's a value buy right now...

Since Q2 2016, OraSure has smashed earnings estimates by an average of 57.6%. During the last quarter of 2016, the firm posted $0.13 per share, exceeding the $0.05 analyst estimate by 160%. It kept that streak going in Q1 2017, when it earned $0.21 per share and beat the $0.18 projection.

"That tells me analysts have almost perennially underestimated the company's potential - something they won't do for long," Sid said. "Which is why you don't want to delay for a New York minute if you're as interested as I am."

The Bottom Line: Despite many of the top penny stocks listed above posting gains as high as 76.5%, we at Money Morning don't recommend buying any of them. Since they've already seen double-digit returns, buying shares now could leave you with losses since they currently trade at high prices. That's why we recommend investing in OraSure stock instead for a potential minimum profit of 9.7%. With its revolutionary at-home HIV test and reputation for beating Wall Street projections, OSUR could very well end up climbing higher than that 9.7% projection.

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