Penny Stocks to Buy: Gerdau SA (ADR) (GGB)
[5 Stocks to Buy Now] GGB Market Cap: $1.37 billion
GGB Stock Price: 95 cents
Gerdau SA (GGB), Brazil’s largest steelmaker by market value, is like Job these days. Brazil is in a depression, there’s a global glut of steel and Moody’s recently downgraded its credit rating.
Oh, and (cough), police raided the company Thursday and issued an arrest warrant for the CEO for alleged tax fraud and graft.
So why the hell should you mess around with GGB stock? You shouldn’t, but potential upside remains nonetheless.
Trading is thin, so even a hint of good news can send shares soaring. The balance sheet and cash picture aren’t terrible, either. GGB has more assets than liabilities and it generated $126 million in unlevered free cash flow last quarter.
Penny Stocks to Buy: Castle Brands Inc (ROX)
ROX Market Cap: $137 million
ROX Stock Price: 84 cents
Castle Brands Inc (ROX) has lost more than 30% for the year-to-date, which put it into penny stock territory. That doesn’t mean it’s preordained to stay there.
Castle Brands is in the booze business, with brands including as Jefferson’s Bourbon, Knappogue Castle Irish Whiskey and Gosling’s Rum, all of which get high marks from connoisseurs. So it’s got that going for it.
ROX believes Jefferson’s is the fastest growing premium small-batch bourbon in America. True, margins are a big problem — it has never reported a profit — but they are improving dramatically.
Penny Stocks to Buy: Star Bulk Carriers Corp. (SBLK)
SBLK Market Cap: $126 million
SBLK Stock Price: 57 cents
Buying a shipping stock these days is kind of like taking out a mortgage on a house fire.
The blame lies with a global glut of iron ore and coal. (Thanks, China.) The rout in prices means dry bulk shippers can’t operate their ships at a profit — if they can even sail them at all.
Star Bulk Carriers Corp. (SBLK) is struggling like them all. It’s even sold vessels to bring in cash. Forced asset sales are about as big a red flag as you can get.
That said, SBLK is a buy because the industry is going to have to consolidate, and it has a shot at coming out on top in such a scenario. It’s controlled by Howard Marks’ Oaktree Capital hedge fund, and he’s kind of a genius.
Penny Stocks to Buy: StemCells Inc (STEM)
STEM Market Cap: $37 million
STEM Stock Price: 33 cents
The market of penny stocks is littered with biotech stocks, so StemCells Inc (STEM) is hardly the only name for which you can make a highly speculative bull call. Still, we’re going with STEM.
In STEM’s case, all eyes are on 2017. That’s when investors will get an idea if StemCells’ concoction of human neural stem cells are effective in treating spinal cord injuries.
It’s a swing for the fence move. If trials show that STEM’s technology is even moderately effective, look out. Analysts say this is a blockbuster of a market.
Penny Stocks to Buy: Aeropostale Inc (ARO)
ARO Market Cap: $15.41 million
ARO Stock Price: 19 cents
Aeropostale Inc (ARO) — a Rip Van Winkle cash-burning machine — is a buy if you want to try for a three-pointer from the cheap seats.
All mall-based teen retailers have been under increasing pressure for years. Mall traffic is down, fast fashion is up and Aero in particular has completely lost touch with its base. But in the spirit of the higher the risk, the higher the reward, ARO deserves a quick glance.
Whatever the opposite of the law of large numbers is, ARO has it. The market cap is so small it takes an electron microscope to see it. Plus, the NYSE gave it a stay of delisting execution.
If ARO’s cost-cutting efforts can keep it alive long enough to find the right fashion mix, it could survive, and then shares will rise like Lazarus.
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