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The stock market just notched its best quarter since 1987, and it has plenty of room to run higher in July. Stocks have continued to gain despite a spike in coronavirus cases across the United States, a sign this rally is here to stay.
And you can turn this trend into cash by finding the right penny stocks to buy. That's why we've done the research on the penny stocks with the best chance to break out higher in July.
While stocks have gained, volatility is still double what it was this time last year, which is creating new opportunities for penny stock investors to get positioned for huge long-term gains.
We're still seeing companies that trade well above the $5 penny stock cutoff trading well below their true value since the March crash. Many institutions can't own stocks that trade for less than $5, so they were forced to sell, which drove prices down even further.
This creates a massive opportunity for huge profits.
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As the economy and the markets improve, many of these companies will rise above the price barrier and attract institutions back into the stock. This large amount of buying power can often lead to fast moves higher, allowing fallen angel penny stock investors to double, triple, or even quadruple their investment.
Now that the market's rally is solidifying, July is the prime opportunity to get into some of these companies before the institutional money comes flooding in.
Here are the best summer penny stocks to buy, offering upsides of 400%…
The Classic "Fallen Angel" Penny Stock
Pitney Bowes Inc. (NYSE: PBI) is a classic example of a fallen angel penny stock. It's a 100-year-old company that provides shipping and commerce solutions for businesses worldwide. They are best known for their postage machines that, once upon a time, were one of the essential office machines. While they are not as necessary today, Pitney Bowes still sells these machines, but that's not the whole business anymore.
The world is going digital, and Pitney Bowes is going right along with it. It is transitioning to the world of e-commerce and expanding its financing business beyond equipment financing into global payment solutions. It has also moved into the data business, offering clients critical information about their customers and potential customers.
Management has made all the right moves. They opened new distributions centers on both coasts. As those centers reach full capacity, the cost savings should blow profit margins to 10% or more from the current breakeven levels. Their global e-commerce business is growing rapidly. Debt is being refinanced or paid down, and that is going to add to the bottom line.
That's a great story for this company and a reason for investors to back it, but the reason we're keying in on this company as a July breakout candidate is that it was swept up in panic selling in June.
The stock has been hammered by the pandemic and now trades below $3. This was a $10 stock at the start of June, and it's easy to see it shooting back to that mark and higher once investors buy back in this July.
This Penny Stock Is Cashing In on Work from Home
BGC Partners Inc. (NASDAQ: BGCP) is a leading global brokerage and financial technology company. BGC's offerings include fixed-income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commodities, futures, and structured products. Its business has been excellent with the first quarter showing robust revenue growth.
The work from home phenomenon is partly to thank for its growth. Its fully electronic trading services are continuing to experience high growth rates as professional traders look for digital solutions in this environment.
The stock got smashed in the early stages of the COVID-19 sell-off. Traders were concerned that trading volumes would drop as the market fell. The Fed rode in to save the day, but BGC is a partnership and is not in any of the indexes that investors flocked to buy. As a result, the shares have not recovered along with the market.
That won't last for long, especially as investors start to look for these gems hiding outside of their passive funds.
This is a well-run company with a growing business. Management is discussing converting to a C-corporation from, and if they make that decision, we should see a one-day pop in the stock price. Long term, this could easily surge 400% or more.
This Stock Under $5 Is Making Moves in July
Comstock Resources Inc. (NYSE: CRK) is an independent energy company that engages in the acquisition, exploration, development, and production of oil and natural gas properties, primarily in Texas, Louisiana, and North Dakota. Oil and gas stocks have been hit hard this year, especially those like Comstock that focus mainly on natural gas.
The liquidity situation was getting tight for Comstock, making a stock offering of 40 million shares. The offering was priced at $5 a share, raising about $200 million. Comstock used proceeds from an equity offering with cash on hand to redeem the $210 million Series A convertible preferred shares. In April and May, Comstock exchanged $5.6 million of 7.5% Senior Notes due 2025 for common equity. Comstock intends to use the net proceeds of the recent $400 million senior notes offering to repay borrowings under the credit facility and to enhance its financial liquidity.
Management is positioning the company for prolonged survival and eventual profits.
Wall Street likes the moves they have made. In the last few months, four major brokerage firms changed their rating to buy.
Insiders expect the moves to pay off. Several of them, including the CEO and CFO, have been buying shares in the open market.
When natural gas prices eventually firm, this stock could easily double or more. It's already recovered from its June lows and is trending higher, making July the right time to buy in.
Jerry Jones, the Dallas Cowboys owner, is betting the stock has a huge move ahead. Over the past two years, he has put more than $1 billion into the company and has a controlling interest of more than 80% of the company.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.