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Penny stock investing can be extremely profitable if you pick the right penny stocks. Of course, you may have a couple of busts along the way. But as long as you win more than you lose, the results can be life-changing.
Today, we're going to show you two top penny stocks to buy in July for up to 500% gains.
One of the keys to penny stock success is to follow the money. When institutions begin to move into low-priced stocks, their combined buying power can cause a stock price to surge. That movement then attracts the momentum and pattern traders into the stock. And the race to huge profits is underway.
One of the very best ways to track institutions moving into low-priced stocks is to follow corporate activists' filings. These institutional investors are not just buying the stock. They are also engaging with the company's board and management to push them into taking measures to improve the business and drive the stock price higher. Quite often, they engage in battles for seats on the board and push for change or a company sale.
Activist filings also catch the attention of other long-term investors who are hoping to ride the coattails of the activist to big profits. That new money coming in is another source of buying power that can start the stock moving in the right direction.
We'll start with a penny stock that has been getting a lot of attention from activist investors lately…
Penny Stock to Buy No. 1: Conduent
Conduent Inc. (NASDAQ: CNDT) offers business process services with capabilities in transaction-intensive processing, analytics, and automation in the United States. Its customers are primarily big businesses and government agencies. It also has a transportation division that works with government agencies for toll collection and mobility services.
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This business was spun off from Xerox back in 2017 and should have been a great business. Providing government agencies and big companies with the services they need to collect money should have been like owning a slot machine that always pays off. Carl Icahn certainly thought so when he was buying the stock for well over $10 a share last year. He even added to the stock at over $6 last summer. He now owns more than 18% of the company, and with the shares below $3 has massive losses in the position.
Activist investor Trillium Capital LLC has been accumulating the stock and now has over 2.5 million shares. It is engaging in open warfare with the board and management. It recently sent a letter to management accusing them of missteps and mistakes that have hurt the stock price. Trillium also lambastes the insiders for not owning enough stock in the company they manage.
Trillium wants Conduent split into three separate companies to unlock the value. It believes that doing so would lead to an immediate 200% to 300% increase in the company's value. Further, each division would have the ability to grow at a higher rate as a pure-play company. Failing that, the board should sell the entire company to someone willing to take the steps need to control costs, grow the businesses, and get the stock price higher.
I suspect Mr. Icahn welcomes the assistance and would be willing to work with Trillium to get the changes made the push the stock price higher.
Now, here's one of the best penny stocks to buy for 500% potential…
Penny Stock to Buy No. 2: Clear Channel Outdoor Holdings
Clear Channel Outdoor Holdings Inc. (NYSE: CCO) is another low-priced stock that has lately come under activist fire. Clear Channel is in the outside advertising business, primarily through billboards around the world. It owns 570,000 advertising displays, both traditional and digital, and business has been horrible thanks to the coronavirus.
Restaurants and retailers are big advertisers on highway billboards, and they are not spending any money right now. CEO William Eccleshare described the business's downturn, saying, "The scale and speed with which near-term demand has declined and request to defer or cancel current contracts is unprecedented."
The company was able to rework some of its credit agreements to gain some breathing room as the pandemic works its way through the economy.
The struggles attracted the attention of private equity firm Ares Management Corp. (NYSE: ARES). Back in May, Ares filed a 13D announcing that it had purchased 5.9% of Clear Channel. In the filing, Ares made it clear that it intended to have discussions with the board about business operations, finances, and management incentive programs. Ares also said it would discuss the sale of the entire company or parts of the company.
Either of these actions could be very good for the stock price.
On Monday, Ares reported that it had purchased more shares of Clear Channel and now owns 6.9% of the company.
A return to a more normalized economy could lead to a gain of 500% or more in Clear Channel Holdings shares. With Ares pushing it on, the gains could happen very quickly.
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