Are These Good Penny Stocks To Invest In?
This year has been one for the history books, especially for penny stocks. We’ve seen some of the wildest moves for some of the biggest companies. It didn’t matter what sector you looked at, almost every stock’s chart looks similar between January and mid-March: the first big drop in a rollercoaster.
However, as we’ve seen, that rollercoaster ride has resulted in very different trends as the year went on. Some sectors and stocks flattened out. Things like travel and leisure depict this trend. Then you’ve got online retail, which has made that ‘v-shaped’ move every bull on Wall Street was looking for. You’ve also got some sectors that have quietly mounted a steady rebound without much fanfare.
While new outlets are talking about how NIO stock price is skyrocketing and discussing renewable energy stocks, there’s a group of penny stocks that haven’t gotten the acclaim. I’m talking about real estate stocks. Specifically, I’m talking about real estate penny stocks. The crazy part is, while all of these new traders are flocking to Robinhood, stressing about the next options trade or penny stocks to day trade, this group has steadily risen in 2020.
Let me be more exact, they’ve risen since the big March sell-off. In fact, investing in penny stocks like these hasn’t been as exciting as these 1,000% movers. But they also haven’t gone parabolic. For the most part, the vast majority are up hundreds of percentage points without much effort. It’s been a pretty boring trade but check out these charts and you’ll see what I’m talking about.
Don’t Forget The Risks Of Investing In Penny Stocks
Let me go further and give a fair warning. Don’t forget about the risks involved with any investments; let alone penny stocks. We’re talking about a shift of 50% or more if a stock increases or decreases less than a few dollars. On top of that, many of these beaten-down stocks (now penny stocks) are going through hard times financially. Many have scraped by through “creative” financial moves.
Refinancing with larger investors, cutting dividends, pushing milestone payment dates back years in certain circumstances. All of these moves and others were done to stay afloat in this turbulent market. All it takes is one missed payment and bankruptcy could quickly become part of the conversation.
We’ve seen this with countless penny stocks this year. What’s even worse is that some have gone further in going completely out of business entirely. So keep this in mind when you’re looking for penny stocks to invest in or simply day trade. Also, we’re still not “out of the woods” with COVID-19 either. That’s even in consideration of Pfizer’s (PFE Stock Report) vaccine news.
Best Real Estate Penny Stocks To Watch
- New York Mortgage Trust Inc. (NYMT Stock Report)
- Ashford Hospitality Trust Inc. (AHT Stock Report)
- Invesco Mortgage Capital Inc. (IVR Stock Report)
- MFA Financial Inc. (MFA Stock Report)
- Colony Capital Inc. (CLNY Stock Report)
With more cities proposing lockdown measures, stay-at-home orders, and other restrictions, it’s yet to be seen how the markets react by this time next year. Needless to say, even amid all of the adversity companies have faced, several real estate stocks have performed admirably since March. Will that continue into 2021?
Best Real Estate Penny Stocks To Watch: New York Mortgage Trust Inc.
Market Cap: $1.11 Billion
New York Mortgage Trust Inc.(NASDAQ:NYMT) is a REIT for federal income tax purposes. It’s in the business of buying, financing, investing in, and managing mortgage- and residential-related assets. These are things like multi-family commercial mortgage-backed security loans. The company also handles second mortgages and residential mortgage loans among other things.
In March, NYMT stock fell from over $6 to lows of $0.98. However, since then, the penny stock is up over 200%. You can look at the chart to see how unexciting the day-to-day has been for this penny stock. However, the fact remains, investors have more than doubled their money between mid-March and November of 2020.
New York Mortgage recently posted its Q3 earnings. The company recorded an Earnings Per Share beat coming in at $0.30 a share compared to estimates of $0.07. The company also paid its last remaining repurchase agreement to finance investment securities in the amount of approximately $87.6 million. The company completed the quarter with more than $600 million in cash.
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“We continue to believe that volatility around the election and the ongoing COVID-19 pandemic will present compelling investment opportunities during the fourth quarter and the early part of next year,” said Steven Mumma, Chairman, and Chief Executive Officer.
Best Real Estate Penny Stocks To Watch: Ashford Hospitality Trust Inc.
Market Cap: $43.88 Million
Ashford Hospitality Trust Inc. (NYSE:AHT) is one of the REIT stocks we’ve discussed recently. The company invests in full-service upscale and upper-upscale hotel properties in the U.S. This includes operating under the Marriott, Hilton, Hyatt, Crowne Plaza, and Sheraton flags. Obviously, social distancing and lockdown measures this year put a cap on the momentum that leisure and hospitality companies could achieve.
While there haven’t been many big updates this month, Ashford had been fighting with its larger shareholders over the last few months. This lead to offering 126 million shares; a highly dilutive event. The move shook some of its larger investors, specifically Cygnus Capital. The investor eventually called upon Ashford to eliminate the offering since it wasn’t able to obtain enough votes in the eyes of Cygnus.
The proposal to issue these shares was technically approved by stockholders. However, based on the lower threshold, the proposal to amend the company’s corporate charter, which, if passed, would force the conversion of all preferred stock into common stock, did not receive enough votes. Ashford extended the previous exchange offers to November 20th (for now). Will this leave a bad taste in investors’ mouths or will we finally see AHT stock make a comeback. AHT has been a top performer recently but has underperformed among this list of real estate stocks, overall.
Best Real Estate Penny Stocks To Watch: Invesco Mortgage Capital Inc.
Market Cap: $571.33 Million
Invesco Mortgage Capital Inc. (NYSE:IVR) was discussed toward the end of October in light of some irregular trading volume. The company invests in residential mortgage-backed securities, commercial mortgage-backed securities including ones guaranteed by a US government agency or federally chartered corporation. In March IVR dropped from over $17.50 to lows of $1.82. Since then, the penny stock has climbed back by roughly 73% to date. It even caught a spark in June with hype fueling reopening momentum for real estate stocks. IVR popped to highs of $8.40 before falling back in line with its “boring” uptrend.
Similar to New York Mortgage, Invesco also posted a Q3 EPS beat recently. The company’s $0.06 earnings per share beat the 1 cent estimate of Wall Street. Furthermore, sales beat by more than $2 million ($28.84M vs $26.47M estimate).
“We remain focused on restoring meaningful core earnings for distribution to stockholders and increased our third quarter dividend to $0.05 per common share. Over the coming quarters, we intend to increase our equity allocation to Agency RMBS as the asset class offers an attractive return profile, benefits from substantial liquidity and funding and is supported by ongoing purchases by the Federal Reserve,” said John Anzalone, Chief Executive Officer. The company also intends to increase its equity allocation to Agency residential mortgage-backed securities in the fourth quarter of 2020.
Best Real Estate Penny Stocks To Watch: MFA Financial Inc.
Market Cap: $1.52 Billion
MFA Financial Inc. (NYSE:MFA) is one of the real estate stocks we’ve covered since March. At the time, MFA stock was trading around $0.72. It had just bounced back from a new low of $0.32. While that interim bounce was worth over 100%, it came after a massive drop from levels of more than $7 earlier in the month. As is the trend with this list of penny stocks, MFA’s “boring” trade has seen shares climb by 950% to date. Similar to most other real estate stocks in June, MFA stock jumped. In this case, it was to highs of $3.70 before falling back into the trend.
MFA specializes in residential mortgage assets on a leveraged basis. This means it looks for things like government-sponsored agency mortgage-backed securities. It also seeks out residential mortgage loans, and credit risk transfers that divert risk from residential mortgages securitized by government-sponsored enterprises.
Like other names on this list, the company also posted an earnings beat for the third quarter. MFA recorded earnings per share of 17 cents which beat the Street’s 6 cent estimate. Furthermore, the company authorized the repurchase of up to $250 million in stock through the end of 2022. The company also reinstated its dividend payments. Shareholders of record on September 30th received a $0.05 dividend on common stock.
Best Real Estate Penny Stocks To Watch: Colony Capital Inc.
Market Cap: $1.93 Billion
Colony Capital Inc. (NYSE:CLNY) mimicked a similar move as nearly all real estate stocks on this list. In early Q1, it made its inaugural debut as a penny stock dropping from over $5 to lows of $1.33. Since then, CLNY stock has been in a relatively consistent uptrend. However, its hasn’t been as clear as other penny stocks like MFA and IVR. This real estate stock has been more volatile. After pulling back from the big move in June, things seem to have settled down a bit. It’s also worth noting that CLNY stock is the only one on this list to have now made new highs compared to its highs in June. March lows to Friday’s current trading levels has seen CLNY bounce back by over 200%.
However, its earnings weren’t as upbeat as some of the others on this list. Colony missed by a large margin on EPS coming in at a loss per share of 44 cents compared to an estimate of a 22 cent loss. Despite avoiding forward-looking guidance CEO Marc Ganzi was optimistic about the future of the company.
“Bringing high-quality digital assets onto the balance sheet, growing our digital investment management franchise, and harvesting value from our legacy assets are our key priorities. We accomplished all three this quarter, supporting DataBank’s acquisition of zColo, closing the Vantage hyperscale data center acquisition, raising over $1 billion of new third party capital, and reaching an agreement to sell our hospitality business.”
The company manages a $46 billion portfolio of real assets including over $20 billion in digital real estate investments through Digital Colony, its digital infrastructure platform.