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One of the best tricks to finding the best penny stocks is to take a look and see what analysts are expecting for some of these low-priced potential powerhouses.
If there is an analyst for a reasonably reputable Wall Street firm providing coverage for the stock, there is probably more here than meets the eye. Usually penny stocks aren't worth their time, especially since many of these companies have very little business to speak of and often rise and fall based on hype.
But if an analyst expects incredible earnings growth rates, there may well be a lot more to a given company than its low stock price is revealing right now.
As a service to our readers, we've done the digging to find the low-priced stocks where analysts expect huge growth over the next several years.
We've focused on companies where there is the potential for massive three- to five-year earnings growth that is not based on commodity prices.
These aren't penny stocks trending on social media, and they won't leave you holding the bag when the hype dies down either. These are legitimate companies with verifiable track records that just happen to be trading at a penny stock price.
And that's a fantastic opportunity for traders who know where to look to make a killing.
Take a look at our top penny stocks to buy now...
This Penny Stock Is a Special Situation
MoneyGram International Inc. (NYSE: MGI) is a special situation stock that more than fits the bill. MoneyGram shares popped higher in June on talks that Western Union Co. (NYSE: WU) was going to make an offer for the company. MoneyGram needs to be sold and has been in discussions many times in the past. No final deal has been announced yet, but if one gets done, it should be at a premium to the current price.
If no deal gets done, the international payments company should still see its stock do very well over the next few years. It has landed new cross-border payment arrangements in South Korea, Saudi Arabia, and the United Arab Emirates. It has an agreement in place with Uber Technologies Inc. (NYSE: UBER) to provide drivers and delivery couriers a discount on digital money transfers sent to family and friends in over 200 countries and territories.
Remittances across the world are valued at over $689 billion, so plenty of money is going to be flowing through MoneyGram.
MoneyGram reported a triple-digit earning increase as its digital payment business drove solid revenue and profit growth. There are not many analysts following this stock, but the consensus five-year growth estimate by analysts who do follow the stock is 50% annually.
If there is a takeover, then we should see a nice short-term gain. With no deal, we could see long-term profits of four to five times our original investment based on the growth potential of this business. Shares currently trade for $3.52.
The COVID Bounce-Back Stock
Armstrong Flooring Inc. (NYSE: AFI) is, surprisingly enough, in the flooring business. This company sells flooring products used in the construction and renovation of commercial, residential, and institutional buildings in North America and the Pacific Rim. While Armstrong has struggled in recent years, it should see huge demand due to the still-developing housing shortage in the United States.
Recently, COVID-19 has affected the small retailers that sell Armstrong products with store closures. While it saw some pickup in sales form large home improvement outlets that stayed open, Armstrong also saw a drop-off as many commercial projects were delayed.
These projects are coming back. Not only has the home improvement sector soared as people are staying home and working on projects, but pent-up demand in construction will open up as the crisis ends.
As is the case with many low-priced stocks, not many Wall Street analysts follow this stock. However, the few that do think that as the economy reopens and we see homebuilding activity rise to meet the shortage, Armstrong should see annual earnings growth approaching 50% a year.
The demand that will be created for Armstrong's flooring products over the next few years could net a gain of three to five times the current stock price of $3.02 a share.
The Best Penny Stock to Buy Right Now
The best penny stock pick is in the digital advertising business. It attracts customers to its websites using promotional offerings and employment opportunities. Once consumers find their way to Fluent Inc.'s (NASDAQ: FLNT) website, they can opt-in to receive offers from Fluent's customers.
On average, the company receives over 900,000 first-party user registrations daily, including users' names, contact information, and opt-in permission to present them with offers.
After someone registers on a site, Fluent uses direct marketing technologies and analytics to engage them with surveys, polls, and other experiences, through which they learn about subscribers' lifestyles and purchasing habits. This information is then used to tailor offers for Fluent's customers.
Fluent now has a large, proprietary database of first-party, self-declared user information and preferences. In most cases, it also has permission to contact that individual through e-mail, phone, or SMS messaging services.
Fluent is a 21st-century marketing company, and analysts expect to see very high growth rates going forward. The five-year consensus growth rate estimate is 40% a year.
There is massive insider ownership with this stock. Insiders own 21% of the stock.
Dr. Phillip Frost owns 24% of Fluent share as well. If his name seems familiar, it is because he s the CEO of Opko Health Inc. (NYSE: OPK), a penny stock we told you about at the end of May that has already doubled.
This has the potential to be a huge winner if it meets the growth estimates. Given the potentially lucrative nature of the business and growing value of the database, Fluent could easily become a 10-bagger over time.
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