May’s Top 10 Penny Stocks
Speculative buying increased in April, driving a number of penny stocks to 2017 highs, according to Investopedia. The penny stock list for May includes turnaround plays in biotech technology, chemicals, energy and China. Precious metals missed out in the bullish list, with junior and senior gold miners falling to multi-month lows due to higher U.S. interest rates. Leading benchmarks rallied off multi-week basing patterns in the month’s second half, boding well for small penny stock buying interest into early summer.
Three stocks from April’s list took the first three spots on May’s top 10 list: Southcross Energy Partners, Castle Brand, Inc. and Valhi.
1. Valhi, Inc. (VHI)
Valhi, Inc., a holding company which engages in the manufacture and marketing of titanium dioxide pigments, witnessed a big double top pattern from 2011 to 2014, falling to $10.50. The stock hit a 13-year low in February 2016, then rallied in early November to a 52-week high of $4.10 by January 2017.
The stock fell to $3.00 in February before rallying in the second half of April, where it now trades near a two-month high. The stock has to rally above $3.90 to prevent a bearish descending triangle. A triangle breakout will favor continuing strength.
The company operates in waste management, chemicals, component products, real estate management and development. The chemicals group produces and markets titanium dioxide pigments for plastics, paints, fiber, paper and ceramics. The component products group includes throttle controls, gauges, security products, stainless steel exhaust systems and trim tabs. The waste management group covers the processing, storage, treatment and disposal of hazardous, toxic and other wastes. The real estate management and development group develops land holdings for residential, commercial and industrial purposes.
2. Southcross Energy Partners LP (SXE)
Southcross Energy Partners LP, a provider of natural gas gathering, processing, treating, compression and transportation services, and natural gas liquids (NGL) fractionation and transportation services, gained more than 20% following the Trump administration’s comments about liquefied natural gas. The stock posted a 17-month high on account of the likelihood of continued gains.
The company went public in 2012 in the low 20s and reached an all-time high four months later at $26.49. The stock suffered when the bottom dropped out of the energy market, hitting an all-time low of 38 cents in February 2016.
The January rally pushed the stock to a 17-month high before reversing above $4.75 this month, and is currently trending at higher lows. A test at $4.00 should offer a low-risk buy opportunity, possibly giving way to a firmer barrier above $6.30.
The company also sources, purchases, transports and sells natural gas and NGLs to its power generation, industrial and utility customers mainly under fixed-spread contracts.
3. Castle Brands Inc. (ROX)
Castle Brands, Inc., which imports, markets and sells premium and super premium brands of whiskey, rum, whiskey, liqueur, vodka and tequila in the United States, Canada, Europe and Asia, fell from a record high of $9.15 in 2006 to 1 cent in 2009, then trading below 50 cents for four straight years. In 2013, the stock rallied to $2.03 in the fourth quarter of 2014, breaking support near $1.25 in January of 2016.
A downward trend took the stock to 65 cents in late December before rebounding to $1.45 in February. The April rally lifted the stock to a two-year high, and it now tests resistance at the 2014 high above $2.00.
4. Sequans Communications S.A. (SQNS)
Sequans Communications S.A., which builds chips for wireless broadband, rallied to a record high at $19.50 after listing on the Nasdaq exchange at $8 in 2011. In 2012, the stock fell to $1.30 before rebounding in 2014 to $3.40. The price began testing that high in January of 2017 and was at $3.86 in early May.
The company provides single-mode, 4G LTE semiconductor solutions for the Internet of Things and a range of broadband data devices. Founded in 2003, Sequans developed and delivered seven generations of 4G technology, and its chips are certified and shipping in 4G networks worldwide.
5. Pingtan Marine Enterprise, Ltd. (PME)
Pingtan Marine Enterprise, Ltd., a China-based ocean supplier of seafood staples and delicacies to local and world food markets, plunged from $10.10 to $1.31 in 2013 before testing deeper lows from 2014 to 2016. The stock rallied in November 2016, gaining momentum in January 2017.
The rally fizzled at $5.18 in March, giving way to a symmetrical triangle for seven weeks. Lows are tracking 50-day EMA support at $4.25, with a pair of breakout attempts facing selling pressure above $5.00. A breakout is possible with a tight stop loss.
The company engages in ocean fishing through its wholly-owned subsidiaries, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing. Pingtan Fishing primarily engages in ocean fishing with many of its own vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia.
6. Office Depot Inc. (ODP)
The market was shocked in May 2016 when the U.S. Federal Trade Commission denied Office Depot, Inc. and Staples, Inc. a request to merge over monopoly concerns. Office Depot’s stock rebounded in April 2017 when it announced it is exploring a sale to prevent having to lose many of its stores due to the fallout in brick and mortar office product sales to e-commerce retailers. While the uptick did not compensate for the loss it suffered over the longer term, speculation could lift it past $9.00.
Office Depot is a leading provider of products, services, and solutions for every workplace.
7. Delta Technology Holdings Ltd. (DELT)
Delta Technology Holdings, Ltd., a China-based manufacturer of specialty chemicals, hit a record high at $38.25 in June 2015, then fell in the first quarter of 2016 to a low that carried into June before rebounding. The rally stalled just above $3.00, then doubled on Jan. 19, 2017 in one session. It spent the next three months consolidating its gains.
In April, the stock hit a 9-month high at $2.54, setting the stage to test the 2016 high.
Founded in 2007, the company provides its products for agrochemical, automotive, aerospace, pharmaceutical, food additive, dye and pigments, ceramics, coating-printing and clean energy applications. Its products include organic compounds, such as para-chlorotoluene, ortho-chlorotoluene, PCT/OCT downstream products, unsaturated polyester resins, maleic acid and other by-product chemicals.
8. CytRx Corp (CYTR)
CytRx Corp., a Los Angeles-based company developing compounds for cancer treatments, has been listed since the 1980s on national exchanges. It topped out at $329 in 1992 following a 2012 reverse split. The stock traded as high as the mid-40s from 2000 to 2010 before falling significantly to single digits where it has remained ever since.
The stock plummeted in July 2016 to 74 cents from $2.51 and remained there for the year. It rebounded in April, doubling in price in four sessions, and is now consolidating its gains. A rally over $1.00 will likely attract more interest.
9. Internap Corp. (INAP)
Internap Corp., a provider of Internet infrastructure services, saw a six-year growth trend lose steam at $10.75, leading to a fall that reached an all-time low of 80 cents in December 2016. The stock rebounded in January 2017, posting three rally waves to a 52-week high of $3.86 in March.
The stock has consolidated its first quarter gains for five weeks and recently hit the 50-day EMA, sitting at 25 cents over a rising trendline. Oversold technical readings indicates the current price zone will mark the low, leading to a recovery wave that could surpass last month’s high and find resistance at the January breakdown through the September 2015 low of $5.80.
The company provides Internet infrastructure through both colocation business and enterprise services (including network connectivity, IP, bandwidth, and managed hosting) and cloud services (including enterprise-grade AgileCLOUD 2.0, Bare-Metal Servers and SMB iWeb platforms).
INAP’s global network connects 15 company-controlled tier 3-type data centers in major markets in North America, 34 wholesale partnered facilities, and points of presence in 26 business districts worldwide.
10. Globalstar Inc. (GSAT)
Globalstar, Inc., a provider of satellite-based voice and data communication services, topped out around $15 in 2007 before falling to 15 cents in the bear market. The stock found its way to $4.53 in 2014 before falling again to 63 cents in June 2016. It rebounded to $2.31 just before the end of the year.
The stock spent the last four months consolidating its late 2016 gains and establishing support at $1.40 and the 200-day EMA. It has rallied within 25 cents of resistance near the previous high, raising a likelihood for a breakout reaching the 2016 $3.00 high. Such a gain would make a high percentage rally from the most recent closing price.
The company’s products include mobile and fixed satellite telephones, the Sat-Fi satellite hotspot, Simplex and Duplex satellite data modems, tracking devices and flexible service packages. Customers worldwide in industries such as government, emergency management, marine, logging, oil and gas and outdoor recreation rely on Globalstar. Its data solutions are suited for various asset and personal tracking, data monitoring, SCADA and IoT applications.
May’s top penny stock list points to turnaround plays in biotech technology and China. The list intentionally lacks a single junior mining play since that particular group looks weak heading into the summer months.