The historic gains of the market have investors wondering when this record-breaking Bull market is going to end. With debt levels soaring, and interest rates too low to cover this debt, some investors are looking to cheap stocks to get at a bargain. Always keep in mind that penny stocks are cheap for a reason, often indicating poor fundamentals or overwhelming headwinds for a company. However, because of the bargain price an investor can potentially experience big gains in this risky sector.
Penny Stocks’ Volatility
Penny stocks are volatile, and often disliked by investors for this reason. But if you do your due diligence on a penny stock, you could potentially see huge gains as these stocks spike quickly. While the start of the new year saw record highs for the market, 2020 is a year rife with political uncertainties that can affect market confidence. It’s an election year in the United States, the United Kingdom is set to exit the European Union, and many market watchers are looking to the record-high debt levels and low interest rates with increasing worry.
With talks of an economic downturn or a recession, here’s a look at three examples of penny stocks to explore in 2020.
Three Penny Stocks in Mining to Consider
Great Panther Mining (AMEX: GPL)
A gold and silver mining and exploration company in Brazil and Mexico, this stock comes in at $0.60 per share. GPL announced soaring Q4 2019 production at 146,853 gold equivalent ounces on January 13, beating analysts’ expectations. The company also announced it was raising cash flows in early Q1 2020 to support the increased production. Roth Capital analyst Jake Sekelsky is bullish on GPL, bumping up the price target from $0.80 to $1, suggesting shares could experience a 67% gain in the next twelve months. Investors tend to flock to gold in recessions, which is something to keep in mind as this commodity can be considered a safe haven in tumultuous times.
Auryn Resources, Inc. (AMEX: AUG)
Another penny stock in the metal mining and exploration space, Auryn Resources, Inc (AUG) has a price per share of $1.27. With important discoveries in Peru, particularly the “Sombrero” copper-gold project in Southern Peru, analysts are watching this stock carefully. A total of three analysts on Tipranks see the stock as a Buy, and an average price target of $2.49 suggests 96% upside potential.
Yamana Gold (NYSE: AUY)
The beginning of 2020 saw gold soar to seven-year highs amid global uncertainties such as military tension in the Middle East between Iran and the United States. Yamana Gold (AUY), which has mining zones in Argentina, rose to highs of $4.15 earlier this month. In Q4 2019 it increased its annual dividend for shareholders by 25% to $0.05 per share, a bullish sign for the stock. Yamana Gold also stated that it will begin reporting dividends on a per gold equivalent ounce of production. This latest increase brings the dividend to $50 per gold equivalent ounce.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
