While Penny Stocks aren’t necessarily advisable for long-term (2 to 3-years) holdings, a patient investor (few months) or a nimble trader (few days to a week) could be handsomely rewarded. However, picking a “winning” penny stock isn’t a sure thing. Penny stocks have their pitfalls – just like picking a large cap name has. You need to do your diligence, and constantly be watchful of good entry and exit points.
Here are two penny stock picks that we believe have great short-term potential. Our analysis indicates that, not only do these two names offer great technical, but they also have compelling fundamentals to match.
A quick entry and exit from these two positions, over the last 10-days, would have netted you an average return of 6.82% (before taxes and fees). However, if you are a believer in the fundamental opportunities highlighted below, you might end up with much better returns – including a more than generous dividend from one of these names.
Find other top stocks to invest in here.
1) Office Depot, Inc (NASDAQ: ODP)
This one may not be a household pick, but it isn’t exactly an unheard-of name either. With over 1200 outlets North America-wide, this retailer of office stationery and supplies has a list of well-known names under its umbrella, including and Grand & Toy, OfficeMax, Office Depot, Ativa, Viking Direct and Foray, amongst others.
Recently, this stock soared as a result of the company’s transformation strategy unveiled at an investor conference. And the hope is that as it becomes into an online force to reckon with, investors will be rewarded. In the interim, you get paid a healthy (4.5% plus) dividend while you wait. With a Beta of 2.64% (intra-day as of this writing), ODP also offers a compelling case for traders to nimbly step in and out of the stock for a quick profit.
Also Read: 3 Best Oil and Gas Penny Stocks for 2018
But there’s one other aspect to owning this penny stock. All signs indicate that there are green shoots appearing across most segments of the economy. While the Trump tax-cuts spurred growth, it has also encouraged small and medium-sized businesses to invest in their operations. That could potentially mean more spending on business supplies and tools. Another fundamental reason to own ODP.
2) AK Steel Holding Corporation (NYSE: AKS)
The steel industry is usually associated with big, strong names – think Nucor Corporation (NUE) (Market cap: $20.77B) and United States Steel Corporation (NYSE: X) (Market cap: $6.55B). So, who would think that a producer of steel and steel-related products would make a great penny stock. Yet AKS may be a great name to add to your portfolio if you are looking for a promising penny stock to own.
With the announcement of President Trump’s steel tariffs, imported steel and aluminum products will become more expensive for local (American) consumers of this commodity. As a result, steel consumers (from household appliance manufacturers, to auto and auto-part producers, and from home builders to the defense industry) will be looking to “Buy American”. Clearly, when that happens, AKS is likely to be a clear winner!
And if you are inclined to trade AKS, you may find ample opportunity to do so. The stock has a Beta of 2.88 (intra-day as of this writing), which means you could make a quick profit from getting in and out of this name quickly – if you are nimble enough.
But the company has improving fundamentals to match as well. In 2015, AKS had $6.69B in revenue, with earnings of -$509M. Those figures were $5.88B in revenue, and -$7.80 in 2016 revenue and earnings respectively. However, last year (2017), the company reported $6.08 and $6.20M in revenue and earnings respectively. The added opportunity that the tariffs offer, could potentially improve the company’s bottom line this year (2018).
On a YTD price momentum basis, both these stocks seem to be embracing an upward trend – albeit just barely. The coming days should show us whether that trend is real, or whether the fundamentals deteriorate and drag the price down.
Author does not have investment in stocks discussed in this article. Sign-up for our bi-weekly newsletter so you don’t miss any hot investment opportunities. Also don’t forget to get our recently published Best Blockchain Stock To Invest In Right Now report absolutely free.