These diamonds in the rough could deliver triple-digit gains.
Penny stocks are not for the faint of heart, and can often be a bit dangerous for individual investors. The SEC defines a penny stock as all shares trading below $5. These stocks are often considered speculative and high risk for a variety of reasons.
But among all the fallen angels and stocks that may never reach their full potential, there are sometimes diamonds in the rough with bight futures that could deliver solid returns – if you’re patient and can stomach some volatility.
Two such stocks are discussed below. Analysts say both have the potential to deliver triple-digit gains this year.
Here’s what you need to know about these two stocks.
Limelight Networks (NASDAQ: LLNW)
Current Price: $3.03
Limelight Networks (NASDAQ: LLNW) fell hard at the end of 2018 amid small cap and tech weakness and a double guidance cut. However, the stock has rebounded nicely in 2019 and is currently up nearly 30% year-to-date.
2019 could prove to be a pivotal year for the content delivery provider as the company focuses on the development and implementation of high-quality media delivery services with unique selling points such as low latency and scalable video streams in multiple different formats.
The company has turned its attention to more demanding services like video streaming, and counts Amazon (NASDAQ: AMZN) Prime Video as one of its clients.
Management expects adjusted earnings to come in between $0.10 and $0.20 per share this year, up from $0.12 in 2018. The company is turning to clear profitability boosts after years of focusing on reducing losses. For 2018, full year revenue increased by 6% to $195.7 million, the company’s highest reported revenue ever, and Limelight expects a 12% year-over-year revenue gain in 2019.
If Limelight is able to deliver on its guidance for double-digit growth, the company could move out of the penny stock category altogether.
Four analysts rate LLNW a Buy and their average price target for the stock is $6.38, indicating possible upside of 110.4% over the next twelve months.
Plug Power (NASDAQ: PLUG)
Current Price: $1.69
Plug Power (NASDAQ: PLUG) has had a rough couple of years. The hydrogen fuel-cell company was trading around $10 per share in 2014, and is now trading just below $2.
But don’t count Plug out. The company has shifted its focus to industrial applications in the last couple of years, and has already signed deals with Walmart (NYSE: WMT), and Amazon (NASDAQ: AMZN).
In its deal with Amazon, Plug is providing the retail giant with its GenKey technology to power forklifts and other machines in Amazon’s vast fulfillment centers. The company says that this will allow for faster charging, reduced costs, and will support energy efficiency.
Plug has also partnered with FedEx (NYSE: FDX) and Workhorse, best known for its battery-powered electric vehicles, on a Class 5 van with a hydrogen powertrain and fueling station provided by Plug that will operate on a standard FedEx delivery route in Menands, New York.
The fuel-cell company estimates that this will provide a range of more than 160 miles per delivery cycle, which they claim is 166% better than what an equivalent battery-powered delivery van could achieve. If this partnership proves successful, and Power Plug is able to break into the larger vehicle—delivery vans, buses, and light rail systems—space, its share price could skyrocket. But that’s a big if, especially considering how batteries have dominated the alternative energy landscape and considering the advances being made in the battery space.
Still, Plug’s revenue is growing quickly, with gross revenue growth of around 40% expected in 2019. The company is unprofitable, though its cash burn is slowing and it is guiding for profits in the second half of this year.
Plug isn’t for the faint of heart, but patient investors who can stomach the volatility could be well-rewarded should the company finally gain some traction.
Six of the analysts covering PLUG rate the stock a Buy. Their average price target for the stock is $3.19, suggesting possible upside of 88.5% over the next twelve months. Last month, HC Wainwright reiterated its Buy rating on the stock and set their price target at $4 – 137% higher than the price as of this writing.