In a previous post, we discussed the impact that the mid-terms could potentially have on your portfolio. Back then, we proposed certain scenarios under which we believed that the stock market in general could greatly benefit from a split-government structure. In that post we also suggested some specific stock picks that might be ideal choices to add to your portfolio now.
In today’s post, we’ll take a close look at a few more recommendations. Only this time we’ll provide a few picks that Penny Stock investors might take a closer look at.
Our Penny Stock picks come from a diversified set of industries. However, each of these names have been assessed for positive impact from the resulting mid-term-elections. We believe that, if our base case thesis – that neither the Democrats nor the Republicans will do anything to jeopardize the state of the U.S. economy – materializes, we could see significant up-side potential in all these four names.
However, like all stock pick ideas, investors should also be aware that there is down-side risk too. Any economic instability – domestically or globally – or geo-political disturbances could easily send shock waves to these names.
ECA Marcellus Trust I (ECT)
ECT is a great addition to any Penny Stock investor/trader that wants a 100% natural gas play in his/her portfolio. The company has royalty interests in 14 fully-functional wells, as well as in 40 wells that are in varied states of development. As a royalty “harvester”, ECA collects 90% of all revenue from production and sale of natural gas from its producing wells, and 50% of all proceeds from its development wells interests.
The great thing about owning royalty plays is that they are low-risk way of playing a volatile commodity like oil and gas. With the recent recovery of the energy sector, ECA is likely to be a net beneficiary of further post-mid-term price appreciation.
Danaos Corporation (DAC)
Greece-based DAC is a great way to play the global economic recovery story. The company owns and operates a fleet of over 55 container ships that it lets out to clients across the globe, including Australia, Asia, Europe and the United States. So how does DAC fit in with a post-mid-term scenario?
Well, with less than “absolute” power to wield now, the Trump administration is less likely to press ahead with a global trade war agenda. The result: More trade will flow through container ships, which is a positive thing for DAC.
Insignia Systems, Inc. (ISIG)
The U.S. economy is strong – and getting stronger each quarter. And it is the U.S. consumer that contributes a significant portion to the nation’s GDP. There are signs of recovery in other markets too, including parts of Europe, where consumer spending is expected to pick up. Post the mid-terms, we expect that neither party will do anything to significantly impact this ecosystem.
ISIG is a direct play on consumer confidence, with the company offering a host of in-store advertising programs, products and services to consumer-packaged goods producers and retailers. The company’s clients are able to customize and localize their own offerings to their consumers, thereby improving their own bottom lines. And that can only be a good thing for ISIG!
Kelso Technologies Inc. (KIQ)
KIQ is yet another play on the recovering global trade and business confidence picture. The company produces and supplies equipment used by railroad and trucking companies that helps them load, unload and safely ship their products – including hazardous commodities.
If we believe that the newly structured U.S. government is likely to force the acceleration of trade and commerce, then KIQ is likely to be a net beneficiary of the mid-term election results. With clients in military, marine and commercial sectors, this is a great way to add diversification to one’s portfolio.
Over the past one month or so, all of these stocks have seen mid to some price appreciation. The rise in stock prices have been especially pronounced just prior to, and in the immediate aftermath of the mid-terms.
While a portfolio of just these four names would have yielded an average of 2.44% in portfolio returns, a short-term trade (of 20 days – covering the period immediately before and after the mid-terms) would have been even more spectacular.
An almost 7% average return for a short-term trade comprising these four names would be more than welcome by many Penny Stock lovers – undoubtedly!
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Author does not have investment in stock discussed in this article.