I almost never recommend penny stocks.
Don't get me wrong – I love the idea of buying up shares of small companies with a lot of upside…
But most penny stocks trade under $5 for a good reason. That's why I prefer to broaden my target to “tiny stocks” instead, which may or may not fit the definition of a “penny stock”.
By “tiny stock”, I mean a company with a market cap under $2 billion (often referred to as a “small-cap”).
These are my 3 favorite “tiny” companies to target today.
Let's start with my third favorite…
3. Workhorse Group Inc. (NASDAQ: WKHS)
Workhorse Group Inc. (NASDAQ: WKHS) is an American technology company based in Cincinnati, Ohio.
The company designs, develops, manufactures and sells high-performance pickup trucks and vans with power-train components under the Workhorse chassis brand.
Its powertrain products include E-GEN and E-100.
E-GEN is an electric drive, transmission-free system, which has a gasoline/propane or compressed natural gas (CNG) engine that functions as an auxiliary generator.
E-100, an all-electric, medium-duty truck, is an electric power train. The company generates most of its revenue from sales of any of its E-GEN or E-100 platforms.
Last month, shares of Workhorse Group Inc. jumped nearly 20% in one day after the company announced a $70 million securities purchase agreement from HT Investments MA, LLC.
That’s how quickly this stock can appreciate, with something as relatively small as a $70 million deal.
Workhorse will use the proceeds from the sale of the notes to finance the production of its trucks and for general corporate purposes.
And if the company’s trucks are successful, the stock will likely skyrocket.
From $3 per share on Jan. 2, to $15.40 today, WKHS is up 402% so far in 2020.
And its market cap is only $1.6 billion.
That means the stock could increase 90X and still only be worth half of TSLA.
XBiotech Inc. (NASDAQ: XBIT)
The company discovers and develops “true human” antibody technology to treat a variety of diseases.
XBiotech primarily focuses on developing MABp1 – a therapeutic antibody as a treatment for cancer.
XBIT is my top small cap value stock to buy now because it has one of the lowest 12-month trailing price-to-earnings (P/E) ratios of any firm its size. A low P/E ratio essentially means you’re paying less for each dollar of profit generated.
Since the company has $0 in debt and massive earnings relative to its $426 million market cap, profits can be returned to shareholders in the form of dividends and buybacks.
The company went from losing $21 million in fiscal 2018 to profiting $668 million in 2019.
So that gives it a 12-month trailing P/E of 0.9. And back in January, the firm announced it will use much of those profits to repurchase up to $420 million of its own shares.
XBiotech also has new 30,000 square foot infection disease R&D facility on the way. That will allow the company to develop significantly more monoclonal antibody medicines for cancer patients.
The new facility will in turn boost XBIT’s net income significantly and the stock could easily double once its fully operational. With those extra profits, I expect the company to begin paying a dividend to its shareholders.
New Gold Inc. (NYSE: NGD)
Headquartered in Toronto, New Gold Inc. (NYSE: NGD) is an intermediate gold mining company with operations across the globe.
The company has a portfolio of three producing assets: The New Afton Mine in Canada, the Mesquite Mine in the United States, and the Cerro San Pedro Mine in Mexico.
In addition, New Gold owns 100% of the Rainy River and Blackwater projects in Canada, along with a minority stake in the gold stream on the El Morro project in Chile.
The New Afton Mine is the largest division, contributing roughly 50% of group revenue.
Speaking of revenues, they’ve increased 63% from fiscal 2017 to 2019.
And I think they could increase another 40-60% in 2020 with the price of gold surging.
It wouldn’t surprise me to see NGD stock double again (to $3.20 per share) before the end of the year.
Jeff Bezos' Backs Tiny $6 Silicon Valley Stock?
Jeff Bezos, Owner Of Amazon and the world's richest man, has officially invested $151 million into a tiny $6 Silicon Valley stock.
Could it be because this tiny company is set to end the biggest killer in human history?
All thanks to one tiny, recently filed, United States patent?
Find out why the world's richest investors are jumping in to get in on this company.
