2 Triple Digit Winners For Under $2

Note from Talkmarkets editors: This article discusses one or more penny stocks. Penny stocks are easily manipulated; please do your own due diligence.

I have found over three decades of investing that few areas of the market provide more potential upside than the small cap healthcare stocks that others have given up on but which have catalysts to spur their shares much higher over time. When the market ignores the future catalysts for creating shareholder value it allows investors like us to pick up shares before the major rallies occur.

Small companies in the biotech, medical device, and biopharma spaces are inherently volatile and tend to have many bumps in the road as they try to establish their businesses in a very competitive market. Trial results can be disappointing, FDA approval can be slow and these stocks can move 50% quickly in either direction. These areas also have very high failure rates and can be whipsawed when the market moves into “risk off” mode as well. Although these stocks are volatile, turnaround investing in healthcare can make the diligent investor rich.

Finding stocks in these industries that have promise and whose potential is underappreciated can yield many five and ten bag winners when things work out. My regular readers know that I have been fortunate enough to find many of these winners over the past few years, even developing a strategy for finding the stocks with the most potential.

Two of my best calls over the past three years have been ZELTIQ Aesthetics (NASDAQ: ZLTQ) and Lannett Company (NYSE: LCI).

ZELTIQ was a cosmetic surgery play that at the time was a busted IPO selling at $5 a share and once touted by Jim Cramer. The company was having some temporary problems at the time and investors did not appreciate its “razor and razor blades” business model. That since has changed and the shares now change hands for just less than $30 a share.

Lannett was an even bigger winner. This company develops and manufactures generic versions of branded pharmaceutical products in the United States. I highlighted the shares when it traded at $4.50 a share in November of 2012, a time when it was facing some regulatory scrutiny around one of their main products. Investors were not appreciating their deep pipeline, high cash balances, and minute market capitalization ($125 million at the time). The company has moved past its temporary issues and has experienced huge revenue growth. The stock now trades north of $45 a share.

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Disclosure: None.

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Kate Monroe 4 years ago Member's comment

Any chance you will do a more detailed article on Maestro? I saw it on the news recently and have been trying to educate myself even though weight loss stocks in general make me nervous...

Bret Jensen 4 years ago Author's comment

Have it on my "to do" list. Getting device in channels for reimbursement is going to be company's main task over next year.