We hear a lot about the major averages on a day-to-day basis. But what we don’t hear about nearly as much are the low-priced stocks and the small-cap stocks to buy that are primed to do well in this kind of market.
Assuming all works out in the trade wars, we have going now and we don’t pick any more trade fights with major trade partners, the U.S. economy should do well this year.
And small cap companies can leverage growth far better than big ones, so this will be an ideal time for small caps in general, especially now that the Federal Reserve has announced it’s will to err on the side of growth and lower interest rates if necessary, to keep growth moving.
What’s more, these stocks are all in strong growth sectors that won’t be harmed by the current trade wars. That also makes my Portfolio Grader’s seven A-rated stocks to buy under $10 attractive buyout targets for larger companies that can borrow at very low rates for acquisitions.
Recro Pharma (REPH)
Recro Pharma (NASDAQ:REPH) is a biotech that is in phase 3 trials for a non-opioid drug for acute post-operative pain. That has garnered it a great deal of attention over the past couple of years.
With a market cap of $250 million, it has the wherewithal to mount a good effort in getting this drug over the finish line. Once it finishes trials successfully, it then can either shop the big drug firms for a licensing agreement, go on its own or get acquired by a pharma firm looking to diversify its portfolio.
But the fact that taking a drug through drug trials can cost around $2 billion today means that small firms with good ideas can find it hard to keep generating revenue until they make it through trials.
REPH is generating revenue now as it works on getting its Meloxicam through phase 3 trials. It has two other drugs in the pipeline as well. And its Q1 earnings report was very encouraging.
While earnings were negative, they beat estimates by 87% and revenues were positive. It looks like it will break even by the end of this year and once Meloxicam gets through its hurdles, it may well be off to the races.
Paysign (NASDAQ:PAYS) is a leader in the prepaid card business. Whether it’s a phone card, rewards card or payment card, it does it all.
This has become a very hot sector recently for temporary and unbanked workers. Instead of dealing with all the issues around delivery a check to workers, they can be given a prepaid card with their earnings on it to use as they please.
Many of the big pharmaceutical firms are also using prepaid cards to give to patients as co-pay help for name brand pharmaceuticals. Local and state governments are also choosing prepaid cards rather then issuing checks to citizens as well as vendors.
In the past year, PAYS is up a whopping 344%, 184% of that is year to date performance. Given that massive run, the stock is already at the $10 mark, but it’s close enough and its potential is big enough that it makes this list.
India Globalization Capital Inc (IGC)
India Globalization Capital Inc (NYSE:IGC) is an odd combination of businesses. On the one hand, and as its name implies, it has a heavy-duty construction business and an industrial commodities trading business that has been in operation in India for 35 years.
And then recently, it has added a cannabinoid therapeutics business, looking for and delivering alternative therapies for Alzheimer’s and Parkinson’s diseases.
It was delisted from the NYSE after the price fell below $1 last year. But it won a relisting in February and the stock rose 234% on its first day of relisting. For the year, the stock is up 64% and year-to-date it’s still up 232%. Its cannabis business is likely attracting much of the attention since many companies in the sector are getting purchased at massive premiums. At current prices, this isn’t the stock to bet your retirement on, but it’s certainly worth some fun money.
Pedvco Corp (NYSE:PED) stands for Pacific Energy Development Corp. It’s an independent exploration and production company (E&P) that looks for oil and natural gas in Colorado’s Niobrara Shale and Eagle Ford Shale in Texas.
This is a good time to be an E&P, as the U.S. begins to ramp up energy exports. Not only does the solid economy bode well for demand growth, but overseas markets are paying premium prices for energy supplies, especially natural gas.
There are new natural gas export facilities opening in the next few years, which will make natural gas an even more valuable commodity.
What’s more, the consolidation underway in the E&P sector bodes well for PED prospects of getting bought out by a bigger E&P or a diversified player. Up 560% in the past year, the stock is still trading a P/E below of 0.5. Yowza.
Flexible Solutions International (FSI)
Flexible Solutions International Inc (NYSE:FSI) is a Canada-based firm that has some interesting products built to conserve water and energy. One of its key products is a liquid blanket that you put over open water sources like swimming pools or fracking ponds to inhibit evaporation and maintain a stable temperature.
Its other big product line is used by energy, utility, chemical and mining firms to prevent scaling and corrosion in water piping.
This is an increasingly important aspect of the unconventional drilling methods that are used to get oil and natural gas out of the U.S. and Canadian shale regions. As those operations expand, so does FSI’s potential business.
The stock is up 94% year to date and still delivers an impressive 4.6% dividend. And its Q1 earnings report shows that growth is continuing. Sales were up 108% compared to the same quarter last year, and that includes a payment of $250,000 in U.S. tariffs. Net income was up almost 15%. And the P/E is still around 13.
Sachem Capital (SACH)
Sachem Capital Corp (NYSE:SACH) is a regional mortgage originator and lender of short-term loans (1-3 years) secured by first mortgage liens in the Connecticut, Massachusetts, New York and Rhode Island area.
SACH primarily lends to acquire or renovate residential properties, acquire or construct properties or simply buy and hold existing properties. Given the short-term nature of the loans, much of the lending is to developers who build out properties and then sell them within the window.
Given the low interest rate environment we’re in currently, business is going to get even better since this is a great time to take on debt and lending is easier than it has been.
This is borne out SACH’s recent Q1 earnings in mid-May. Revenue was up 23% and net income was up 4%. The stock is up 33% for the year and it’s still delivering a whopping 9.2% dividend.
DHT Holdings (DHT)
DHT Holdings Inc (NYSE:DHT) is an independent crude oil tanker company, with more than two dozen ships in its fleet.
Most of these tankers are leased out to integrated oil companies to ship products around the world. Given the general growth in the global economy, and the expansion of export efforts in the U.S. market, tankers as a sector are doing well now. Usually, the summer is a slow time for them since much of the summer oil was delivered earlier for refining and in tanks for the summer demand season.
The thing is, lower oil prices always mean that import-dependent countries stock up on oil and that keeps tanker fleets busy as well. DHT is up 47% YTD and that momentum should only increase if the trade wars dissipate. Plus, DHT also sports a 2.9% dividend, which comes in handy.