Penny stocks tend to be the most profitable under volatile economic conditions. That's why our pick for one of the top penny stocks to buy now has the potential to gain 162%.
As trade wars with China and other global tensions escalate, the stock market continues to be a roller coaster ride for investors. In May and early June, the Dow swung hundreds of points in either direction.
But these swings provide windfall chances for penny stock investors. This is because a small change in the share price of a penny stock can double or triple your investment.
During the volatile May, General Moly Inc. (NYSE: GMO) surged 100% higher. That's just one example.
But if you're looking for a repeat performance from the same stock, it's not as likely. The top penny stocks change on a regular basis, and they are difficult to predict.
There are thousands to choose from, but there are also ways to narrow down your search and maximize your prospective stocks to buy.
That's why we've done the work for you to find the next penny stock to pop.
And this one could surge 162% higher...
Picking the Top Penny Stocks
Due to the risk involved with penny stock investing, Money Morning recommends that you limit your investment in these stocks to less than 2% of your overall portfolio.
You should also limit your investments to those that trade on the major exchanges such as the Nasdaq and New York Stock Exchange. The SEC has stronger controls in place for these companies than those on the pink sheets or over-the-counter networks.
Next, look for stocks receiving positive attention from analysts. There should be reports analyzing the company and its financials. You should be able to find price targets above the current trading price so that you have an upside target for your investment.
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Finally, choose a company that has growth or breakout potential. This might be a company in a booming industry such as cannabis, energy, tech, or biotech. It can also be a company that is a candidate for a takeover.
Uncovering these types of investments can be a challenge, and Money Morning can help. We use our proprietary stock VQScore™ system to locate penny stocks with the greatest potential.
And we've found the best penny stock to buy right now, with a perfect 4.75 VQScore. This is a domestic oil company taking full advantage of the booming energy market.
It's trading at just $2.29 per share - but it's poised to add 162%.
One of the Top Penny Stocks to Buy Now
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Hi-Crush Partners LP (NYSE: HCR) is our pick for the best penny stock to buy now.
This is an oil industry company based in Houston that provides logistics solutions to North America's petroleum industry.
The company was founded in 2012 and operates more than a dozen locations throughout Texas, Ohio, Pennsylvania, New York, and Colorado.
Hi-Crush's primary focus is on creating and distributing monocrystalline sand, which is a key component used in the construction of oil wells. Currently, it produces roughly 17.3 million tons of this product annually.
The company has a 971-acre mining facility with integrated rail services in Wyeville, Wis. It has similar facilities in Eau Claire County, Blair, Independence, and Whitehall, Wis. It also has a 1,200-acre reserve in Kermit, Texas.
These production levels place Hi-Crush in an ideal position to capitalize on the boom in oil production across the United States.
Analysts at World Oil report an expected 2.5% increase in oil drilling in 2019, which will outpace the 1.6% growth in this sector last year.
Oil price spiked just recently, in the middle of May. WTI hit over $63, and Brent Crude topped $72. But even with the recent dip in prices, oil is up over 12% on the year.
According to experts with CNBC this week, oil prices could hit $100 if a conflict breaks out with Iran. U.S. tensions with other nations have already impacted oil prices over the past year and opened up new opportunities for domestic drillers. This also increases the demand for the products that Hi-Crush delivers.
The shale drilling sector in the United States alone is expected to produce 20,000 new wells. These are going to require a lot of monocrystalline, much of which will come from Hi-Crush.
Over the past year, the company has transitioned from a partnership structure to a corporation, which resulted in a unique buying opportunity for investors considering the potential for continued growth.
In just the past four years, Hi-Crush has boosted its gross profits by 164%. This trend isn't expected to slow anytime soon.
Analysts have given Hi-Crush a 12-month price target as high as $6 per share, which would provide today's investor with 162% in potential returns.
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