Penny stocks give an investor the opportunity to reap a massive profit with very little initial investment. That's why we're bringing Money Morning readers the five top penny stocks to buy in April 2018.
Take Cartesian Inc. (OTCMKTS: CRTN), an American management consulting company. Last month, Cartesian rocketed from $0.15 to $0.38 - a gain of over 170%.
Cartesian's gains are impressive. However, the overnight surge in price also illustrates the risk inherent in investing in penny stocks. You see, if Cartesian stock can rocket upward 170% in just three trading sessions, it can drop to $0.00 just as quickly.
In an effort to avoid these kinds of losses, we follow five rules for investing in penny stocks - take a look at them on the right.
While there are a few great investments that are undervalued, the truth is that many of these low-cost stocks have very little growth potential. In an effort to avoid painful losses, it's important to identify penny stocks that have strong financials and a shot at explosive appreciation.
That's why our team uses the Money Morning Stock VQScore™. Developed from our proprietary valuation system, the VQScore identifies undervalued stocks with the highest profit potential by using a blended analysis of a company's earnings potential, growth rate, earnings-per-share acceleration, and market volume.
The VQScore system runs on a scale of 1 to 4, with 4 indicating a stock with strong growth potential.
Our top five penny stocks for April 2018 all have a perfect VQScore of 4, meaning that they have strong underlying value and a solid chance of providing significant gains.
In fact, a few of them are slated to provide returns of over 70%, according to Wall Street analysts.
Here they are...
Top Penny Stock to Buy in April, No. 5: Anworth Mortgage Asset Corp.
Anworth Mortgage Asset Corp. (NYSE: ANH) is a mortgage real estate investment trust that operates out of Santa Monica, Calif.
Anworth's primary business is borrowing money through short-term repurchase agreements and investing in asset- and mortgage-backed securities.
For the last two years, Anworth has been pretty successful. The company beat earnings in five of the last six quarters and is on track to do the same again in the first quarter of 2018.
However, the company's real attraction is its earnings - Anworth pays out a massive dividend of 12.5%.
This means that, on top of their initial investment, investors can collect a hefty 12.5% return from the company's earnings no matter how the stock performs in the market.
Anworth currently trades for around $4.80. As a rare mix of penny and dividend stock, Anworth is a sound investment for the enterprising investor.
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Top Penny Stock to Buy in April, No. 4: Rite Aid Corp.
Rite Aid Corp. (NYSE: RAD) is a national drugstore chain known for providing both over-the-counter medicine and prescription pharmaceuticals.
Shares of the company have dropped over 60% in the last year due to bearish sentiment about the company's odds of holding on to its market share in the face of increasing competition from CVS Health Corp. (NYSE: CVS) and Wal-Mart Stores Inc. (NYSE: WMT).
However, Wall Street leaving Rite Aid out in the cold allows us to pick up the company at bargain prices.
In fact, now many be the perfect time to jump in.
Last Wednesday (March 28), Rite Aid received federal approval to move forward with a proposed merger with Albertsons Companies Inc., a privately owned American grocery conglomerate.
Albertsons is currently the second-largest supermarket chain in North America, controlling 1,075 stores under various brands across the United States.
Merging with Albertsons will give Rite Aid access to a far larger system of distribution and resource allocation than the company has had access to previously - a move that is likely to bolster its bottom line once the merger is complete.
In fact, analysts believe Rite Aid's market price is likely to spike to $2.50 after the merger is complete - a gain of over 50%.
Top Penny Stock to Buy in April, No. 3: DHT Holdings Inc.
DHT Holdings Inc. (NYSE: DHT) is an independent crude oil tanker company that currently maintains a fleet of 27 crude oil tankers that move crude internationally.
The company's stock price has experienced significant volatility in recent months, as the global geopolitical landscape has thrown the oil market into flux. Increasing surplus from NATO members and the recent discovery of new oil deposits in the Middle East have driven the price of oil down and slowed shipping rates.
However, DHT's large tanker fleet is well-positioned to take advantage of any significant spike in demand or unexpected shortage in the near future.
And it's increasingly likely that a shortage is imminent. According to the International Energy Agency, oil production growth could stall due to a lack of aggressive investment by 2020.
When this shortage does occur, analysts see the company's stock heading to $6.00 - a gain of over 77% from the stock's current price of $3.38.
Top Penny Stock to Buy in April, No. 2: Fortuna Silver Mines Inc.
Fortuna Silver Mines Inc. (NYSE: FSM) is a Canadian silver mining company based in Vancouver, Canada.
The company operates two mines, one in Mexico and one in Peru, which produce a combined 8.4 million ounces of silver per year.
Over the last month, Fortuna's stock has risen 17.8% - largely in response to increased demand for silver in the face of growing geopolitical uncertainty.
According to Money Morning Resource Specialist Peter Krauth, this instability is a key part to driving up the value of both silver and silver stocks.
"Geopolitics, stock markets, and central planners are helping to provide a floor for silver prices as uncertainties rise, stocks become volatile, and budget deficits explode," he says.
In fact, Peter sees these uncertainties pushing silver stocks ahead of silver itself, indicating that silver stocks like Fortuna may be on a bullish trajectory for the near future.
"Silver stocks are also starting to look like they may be outpacing the gains in silver itself, further suggesting a new run higher for the precious metal," he says.
Analysts are calling for Fortuna to hit $9, as geopolitical conflict continues to stoke demand for silver. That's a gain of over 70% from the stock's current price of $5.25.
While our first four stocks offer some exciting profit opportunities, our top penny stock in April 2018 is offering immense returns in a fast-growing market.
We're talking about gains of over 140%.
Here's our top penny stock to buy in April 2018...
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Top Penny Stock to Buy in April, No. 1: Entravision Communications
Entravision Communications Co. (NYSE: EVC) is a Spanish-language media company based in Santa Monica, Calif.
Entravision's profit potential lies with the nation's rapidly expanding Latino community, which makes up the majority of Entravision's customer base.
From 2000 to 2014, Latino immigration accounted for more than 50% of the nation's total population growth. In the same period, the nation's total Latino population expanded to roughly 55 million people.
Over the next 10 years, the American Latino population is expected to expand by another 24 million Latino Americans - an increase of over 30%.
This growing audience is already showing in the company's growth. Over the last year, the company had a return on equity of 49.84%. That's over 350% higher than the industry average of 11.99%.
With an expanding consumer market continually seeking new content from major Hispanic media outlets, it's likely that Entravision will experience sustained growth well into the future.
And Wall Street agrees with us...
Analysts have put a high price target of $11 on the company's stock, which is a 142% increase from today's price of $4.54.
Entravision and April's other top penny stocks offer an immense profit for penny stock investors.
But you don't have to stick with penny stocks to find great profits in the stock market. We can show you how...
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