In this article, we will look at the 8 Cheap Penny Stocks to Buy Right Now. Let’s look at where Silvercorp Metals, Inc. (SVM) stands against other cheap penny stocks.
The economy of the United States has stabilized, with inflation continuously cooling down and the risk of recession overruled. The Federal Reserve cut interest rates on September 18, slashing them by half a point as a start to its first easing cycle in four years. The Federal Reserve statement said:
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
However, Fed Chair Jerome Powell announced on September 30 that the recent aggressive half-percentage point interest rate cuts should not be interpreted as a sign that future rate cuts would also be as aggressive. Instead, they are likely to be smaller. Talking to the National Association for Business Economics, he said:
“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course. The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
Powell expressed confidence in the country’s economic strength, claiming that inflation is expected to continue cooling. He also indicated that if the economic data shows consistency in the coming days, two more rate cuts would likely materialize in 2024. These, however, are expected to come in smaller quarter percentage point increments. This trend goes against market expectations for more aggressive cuts and easing.
During a Q&A session after his speech in Nashville, Tennessee, he said that:
“This is not a committee that feels like it’s in a hurry to cut rates quickly. If the economy performs as expected, that would mean two more rate cuts this year, a total of 50 [basis points] more.”
Sustainable Growth Expected in Small Caps Amidst Market Shifts
On July 26, Nathan Moser, Managing Director and Senior Portfolio Manager at Impax Asset Management, discussed some long-term possibilities for small-cap stocks on Schwab Network. Talking about the recent changes in small stocks, he discussed the positive shift and noted that the recent rise in small caps appears more sustainable after years of struggle. This trend is primarily driven by strong inflows into ETFs and passive investment vehicles.
Despite short-term volatility, Mooser believes the market’s current move could last for years. He thus encouraged buying on market dips, while highlighting the need to focus on profitable, high-quality companies due to the potential risks typically associated with lower-quality stocks in small caps.
Our Methodology
We first consulted stock screeners from Finviz and Yahoo Finance to create an initial list of 15 publicly traded penny stocks with forward P/E ratios of less than 15 as of October 1, 2024. From this list, we selected the 8 stocks with the highest number of hedge funds holders as of Q2 2024, and used that as our ranking metric. The stocks we identified are profitable, have positive EPS growth, and are expected to remain profitable in the future as well.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Cheap Penny Stocks to Buy Right Now
Silvercorp Metals, Inc. (NYSE:SVM)
Share Price: $4.40
Forward P/E: 12.85
EPS Growth This Year: 65%
Number of Hedge Fund Holders: 13
Silvercorp Metals (NYSE:SVM) is a Canadian mining company that produces gold, silver, lead, and zinc. It operates several silver-lead-zinc mines in China, including the Ying Mining District in Henan Province and the GC silver-lead-zinc mine in Guangdong Province. While the company’s producing mines are in China, its development and exploration projects are in Mexico and China.
The company owns seven underground mines in the Ying Mining District and two processing plants with a combined capacity of 2,500 tpd. The GC silver-lead-zinc mine is 200km west of Guangzhou, while the BYP Mine lies 220km southwest of Changsha. Silvercorp Metals (NYSE:SVM) also focuses on the Kuanping and La Yesca projects.
The company recently announced the completion of the acquisition of Adventus Mining Corporation. The acquisition positions Silvercorp Metals (NYSE:SVM) to gain a competitive advantage by promising benefits such as geographic diversification into a new and promising mining jurisdiction. A significant part of this acquisition is El Domo, Adventus’s flagship asset and an advanced copper-gold project in Ecuador. Adventus’s advanced stage and permit status means the project is well-positioned for immediate improvement and advancement toward production.
Besides geographic diversification, Silvercorp Metals (NYSE:SVM) stands to benefit from substantial metal diversification, growing its capabilities in key metals such as silver, lead, zinc, copper, and gold. It is set to increase its production growth in the short and long term.
According to the company, the acquisition is also likely to improve its precious metal exposure significantly. The combined resources are expected to increase the company’s silver-equivalent ounces to 473 million, a substantial increase from the current 217 million ounces. In addition, the acquisition will likely result in growth on a copper-equivalent basis, increasing company resources from 361 million tons to 667 million tons.
Silvercorp Metals (NYSE:SVM) is thus on the path to increasing its scale and expanding its growth profile. Its strategic alignment positions it as a significant player in the green metals sector, enabling it to take advantage of the global demand for diversified metal resources. All these factors make it one of the best cheap penny stocks to buy right now.
Overall, SVM ranks third among the 8 cheap penny stocks to buy right now. While we acknowledge the potential of SVM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SVM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
