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For retail investors, penny stocks are one of the best ways to grab 100% returns without breaking the bank. That’s why we’re bringing you the three penny stocks to buy in August 2018.
To find the penny stocks with the best profit potential, we use the Money Morning Stock VQScore™ system. Using the VQScore system, we screen for stocks that trade for under $5 – the SEC’s definition of a penny stock.
Today, we’ve identified three penny stocks with serious growth potential. In fact, our top penny stock to buy could jump over 70% over the next year.
Here are our top penny stocks for August…
Top Penny Stocks to Watch in August, No. 3: Lloyds Banking Group
Lloyds Banking Group Plc. (NYSE: LYG) is a major British financial institution that’s been a staple of the European banking sector for nearly 300 years.
Valued at roughly $60 billion, Lloyds employs 68,000 people around the globe as part of its international financial network.
This includes retail banking, commercial banking, pensions and insurance, and international wealth management.
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Since undergoing a volatile merger in 2009, Lloyds Group has staged a significant turnaround, consistently growing earnings by an average of 20% for the last two years.
In fact, in the last year, Lloyds boosted its earnings growth to a spectacular 29%.
This improvement is especially evident in the returns Lloyds provides to the company’s investors. The bank currently has a dividend yield of 4.7% and a price/earnings (P/E) ratio of only 13 – that’s 30% lower than the industry average of 18.6.
Trading for only $3.31, Lloyds is a steal in this economy’s robust financial sector. However, the bank’s steady returns are nothing compared to our second favorite penny stock to buy in August.
It’s an energy company that’s taking advantage of the world’s increasing demand for oil – and making a killing in the process.
In fact, it could gain over 70% by the end of the year…
Top Penny Stock to Watch in August, No. 2: Advantage Oil & Gas
Advantage Oil & Gas Ltd. (NYSE: AAV) is a Canadian energy company based in Calgary. Operating drilling sites across British Columbia and Saskatchewan, Advantage produces roughly 35,000 barrels of oil per day.
Thanks to the company’s efficient extraction and distribution network, Advantage produces great returns for its investors. As of Q1 this year, Advantage reported a profit margin of 29% – crushing the industry average of 6.1%
Like the international oil industry, Advantage is poised to benefit from a wave of economic stimuli driving demand in the oil industry.
New sanctions on Iran, looming production issues in South America, and increasing global trade instability are driving oil prices through the roof and have driven demand for Canadian oil to new highs.
Earlier this summer, West Texas Intermediate (WTI) crude futures hit $72.72 a barrel, their highest level since 2014. Meanwhile, SPDR S&P Oil & Gas Exploration & Production ETF (NYSE Arca: XLE) is now outpacing the performance of the S&P 500.
Increase demand is having a huge impact on Canadian oil output. In fact, after three years of struggling to generate a profit, the Canadian oil industry is expected to produce $1.4 billion in profit this year thanks to rising global demand.
This demand increase is sure to show up in Advantage’s bottom line. That’s why analysts have given Advantage a price target of $5.90 – a 71% increase over today’s price of $3.45.
While these returns are great, our favorite penny stock to buy for August is promising gains of over 100%...
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Top Penny Stocks to Watch in August, No. 1: PDL Biopharma Inc.
PDL Biopharma Inc. (Nasdaq: PDLI) is a holding company that manages the pharmaceutical patents generated by Facet Biotech, the company’s research and development branch.
Over the last 12 months, PDL’s stock has risen 40% – and for good reason. Since a majority of the company’s original patent holdings expired in 2016, the company has undergone an aggressive restructuring effort to streamline profitability.
Shortly after several of PDL’s holdings expired, the company established a majority ownership position in Noden Pharma DAC, a pharmaceutical company that owns the popular blood pressure drug Tekturna.
This deal was PDL’s first acquisition of a commercial asset that could directly generate income for the company – and it’s been paying off.
In 2017, PDL grew its year over year revenue and beat earnings estimates for every quarter.
And PDL’s current market evaluation makes it an absolute bargain. PDL currently has an incredibly low price-to-book ratio of 0.5. As a result, if the company’s share price rose to equal its book value, it would double – giving investors a 100% return.
As a result, PDL has more cash on hand than the company’s market cap indicates – making the company undervalued by default. At $2.53 a share, that’s an absolute steal.
As PDL continues to stage a dramatic turnaround, this discrepancy with quickly be corrected –and penny stock investors should lock in this profit opportunity now.
Stocks like PDL, Lloyds, and Advantage are easy to identify thanks to the VQScore system.
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