I’m more certain than ever that a great reckoning for global equities is here. The past few months have witnessed the creation of the single biggest bubble of my multi-decade-long career thanks to the Fed’s massive influx of cash to the markets.
As I describe in my latest video on the Peter Leeds YouTube channel, our economy has termites – and stocks are looking unsustainably frothy. I’m expecting huge losses for pretty much all of the equities, save for the precious metals (PM) miners.
The list of equities below reflects these observations, with my outlook for any non-PM stocks that have appeared in this column turning thoroughly bearish. I first investigate the performances of some older stocks I’ve profiled here previously before turning to some PM favorites you may recognize.
Some of the set-ups I describe below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds Newsletter. Peter may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. Please note that penny stocks are notoriously volatile.
First, Some Updates …
Harte Hanks, Inc. (HHS)
Digital marketing firm Harte Hanks, Inc. (HHS) was up 37% over June in what I believe is further evidence of the irrational exuberance characterizing the stock market right now. Indeed, as of the time I was writing this article, it looked like Harte Hanks stock may already be starting to return some of the gains it accumulated over the past couple of months.
While its certainly possible that Harte Hanks stock will continue to be buoyed by investors’ exuberance, I don’t believe that the company’s revenue history merits the higher prices at which it’s now trading. In short, I would steer clear of this one and instead channel my resources toward the precious metals miners.
Flexible Solutions International Inc. (FSI)
Chemicals manufacturer Flexible Solutions International Inc. (FSI) was up 17% over the past month and 47% over the past quarter as of the time I was composing this report. I’m not surprised; the company is a strong performer that has brought substantial triple-digit profits to my Peter Leeds newsletter subscribers before.
However, given my bearish views on the stock market, I would be extremely cautious with Flexible Solutions International stock right now. Looking at the stock as a very long-term performer, I think prices will continue to track higher, but in the shorter time frame, I’m expecting a decline.
Silvercorp Metals Inc. (SVM)
Finally – a stock whose future I can be bullish about! Silvercorp Metals Inc. (SVM) was up 20% over June, and I believe that the uptrend will continue strongly over the remainder of 2020 and into 2021.
Silvercorp’s bullet-proof balance sheet (with high quick and current ratios) cements my faith in the firm’s strong management and good prospects. Silver stocks have been unloved for a long time, and I’m delighted to see high-quality junior miners like Silvercorp finally getting the respect they deserve.
… And a Few Stock Ideas to Revisit
IAMGOLD Corporation (IAG)
IAMGOLD Corporation (IAG) was one of my “Penny Stocks to Watch” for May 2020. However, because the stock is, if anything, even more oversold than when I last discussed it, I’m including it here again.
With gold prices soaring amid rising coronavirus rates and expectations of more Fed money being pumped into the system, IAMGOLD still has so much untapped potential. The recent news of a project approval is the cherry on the ice cream sundae. I’m excited to follow IAMGOLD’s progress over the rest of the year and into 2021.
Americas Gold and Silver Corporation (USAS)
One of my selections for the April 2020 “Penny Stocks to Watch,” Americas Gold and Silver Corporation (USAS) has yet to live up to its abundant potential … although I do note that the stock is up 54% over the quarter.
In my opinion, that’s just the beginning, folks. I wouldn’t be surprised to see Americas Gold and Silver stock double in price over 2020. A spectacular forward P/E ratio of 8.20 suggests the same.
Fortuna Silver Mines Inc. (FSM)
Another of my “Penny Stocks to Watch” from April 2020, Fortuna Silver Mines Inc. (FSM) has risen a meteoric 97% over the past quarter. Again, I think this is just the beginning.
News that the Mexican mine has reopened is of course excellent. In addition, a forward P/E ratio of 13.67 combined with EPS growth this year of 169% are cementing my highly optimistic stance on this Canadian silver miner.
Best Brokers for Penny Stocks
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Streaming real-time data, including account information
IBot, IB’s AI-powered online assistant, can help find features
Data streams on only one device at a time
Traders Workstation puts up a steep learning curve
IBKR Pro customers are charged fees to trade, though they are low
Schwab’s research pages point out the exchange on which a stock trades, which will keep you informed of the inherent risk. There are a variety of platforms available; the StreetSmart platforms have customizable charting and streaming real-time quotes. Schwab does not charge trading commissions on all stocks (including penny stocks) and ETFs.
Excellent screeners available on StreetSmart Edge
Free access to a wide array of news feeds
Customization and personalization options on StreetSmart Edge are terrific
The sheer number of features and reports available can feel overwhelming
Schwab maintains transaction history for just 24 months online
Schwab does not sweep uninvested cash into a money market fund
Penny stocks are volatile and can generate catastrophic losses. Price levels in this article are hypothetical and do not represent buy recommendations or investment advice. Keep in mind that it’s your responsibility to make trading decisions through your own skilled analysis and risk management.
Peter Leeds is the author of several books, including the international bestseller, “Penny Stocks for Dummies.” He and his team also issue a newsletter devoted exclusively to penny stock picks and analysis, as well as a popular YouTube channel PeterLeedsPennyStocks.