Penny stock investing
is exciting because these investments by nature have tremendous
profit potential. Low priced small cap stocks don't have to move
the needle very far to see a huge jump in share price and deliver
big gains to investors. What's more, penny stocks are often agile
and quick to adapt because of their small operations and can see
groundbreaking changes that deliver big returns in a matter of
months - as opposed to blue chip stocks that take years to roll out
There's no doubt that the energy sector is in rough shape right
now, with the BP crude oil spill wreaking havoc in the Gulf of
Mexico. But don't count the entire industry out. There are penny
stocks to buy right now in the sector that have big investment
Simple trading strategies
apply to penny stocks too, and one of my favorite rules of thumbs
is to "follow the money." As you will see, many of these penny
stock picks have seen huge buying pressure recently. That said,
other trading strategies aren't as good of an indicator for penny
are helpful when it comes to blue chips, try not to put too much
stock in them for these small stocks. They simply don't have the
raw size in their earnings or share price to make comparisons
But enough talk! Here are four of my favorites right now, all of
which get a B grade or "buy" in my proprietary stock grading tool,
BioFuel Energy Corp.
) is a perfect example of my
penny stock strategy
. BIOF produces and sells ethanol and its byproducts through its
two production facilities located in the Midwest. Each site has a
capacity of approximately 115 million gallons per year, giving
Biofuel Energy Corp. a big foothold in the emerging ethanol
marketplace and green energy industry. BIOF stock has flopped in
2010, down about -40% year-to-date - but this penny stock is still
up almost +150% since September 2009! If BIOF stock rebounds from
its current valuation of around $1.70 to the $4 share price it saw
at the beginning of the year, investors would more than double
their money in this penny stock. BioFuel Energy gets a B grade in
Portfolio Grader overall, and highest marks for its strong cash
) is another green energy pick, cashing in on its patented Rentech
Process and the Rentech-SilvaGas biomass gasification technology.
It's a dirty business, producing biofuel, fertilizers and other
chemicals from organic waste products. This penny stock is trading
for $1 a share, down considerably from its peak of nearly $2.50 in
2009. But a turnaround could be in the works and RTK stock may be
near the bottom right now. My Portfolio Grader tool gives the stock
a B grade or "buy" based on strong buying pressure from investors
and improving sales growth.
Magellan Petroleum Corporation
) is a more conventional energy stock, and is engaged in the sale
of oil and gas, as well as exploration. The company primarilty owns
interests in Australia and the United Kingdom. Shares are up +20%
year to date and still going strong, giving this penny stock +76%
gains in the last 12 months - over three times better than the
broader market. I give MPC top marks for its earnings growth, and
rate the stock a buy overall. In May, MPET reported that its fiscal
Q3 profit quadrupled - so though up the
of this stock may appear big right now, it appears MPET is creating
enough growth to drive share prices even higher.
Abraxas Petroleum Corp.
) is an independent energy company primarily engaged in the
development and production of oil and gas across the U.S. The
on-shore oil company hasn't had to deal with as much of the fallout
of the Gulf oil disaster. And with my top rating in Portfolio
Grader for sales growth and for buying pressure, AXAS appears to
have the wind at its back. Shares of this penny stock are up a
stunning +50% so far in 2010 and +150% in the last year, but are
still cheap at just under $3 a piece as of this writing.
Simple trading strategies
that involve following the money would really connect well with the
performance of AXAS.
Editor's note: A previous version of this story had highlighted
OMNI Energy. The stock has been acquired by Wellspring Capital and
is being taken private.
As of this writing, Louis Navellier did not own a position in
any of the penny stocks named here.
About Portfolio Grader: Every Sunday, renowned growth stock
expert Louis Navellier runs a fundamental analysis on the top
5,000 Wall Street companies. Armed with this research, Navellier
offers a rating for each company reflected as a simple letter
grade, with A being "strong buy" and F being "strong sell."
Portfolio Grader's stock data is free and open to the
public and can be accessed online here