Best Small Cap Stocks To Invest In 2019

Do you think penny stocks are best left to amateur traders who don’t understand that cheap stocks are cheap for a reason? It’s not an entirely unfair assessment. Many of these young (and doomed companies) are the beneficiaries of great sales pitches, but their investors often end up suffering buyer’s remorse.

It’s a misnomer, however, to think all penny stocks — let’s quantify them as equities priced at less than $5 per share — aren’t worth owning. Thanks to factors ranging from prolonged weakness in the commodities market to strategic stock splits to poorly-timed IPOs, a handful of these low-priced equities are actually compelling prospects.

In fact, here’s a run-down of four of the best penny stocks to mull for 2018, and maybe beyond, none of which aren’t exchange-listed names.

Best Small Cap Stocks To Invest In 2019: Lockheed Martin Corporation(LMT)

The most important key to identifying great dividend stocks is finding companies that fall into the six "Unstoppable Trends."

The trick to making huge profits is to find "must-have" companies that fall into what Keith calls the six "Unstoppable Trends": medicine, technology, demographics, scarcity and allocation, energy, and war, terrorism, and ugliness (also known as "defense"). The Unstoppable Trends are backed by trillions of dollars that Washington cannot derail, the Fed cannot meddle with, and Wall Street cannot hijack.

Lockheed Martin Corp. (NYSE: LMT), one of the world’s largest and most profitable defense contractors, is a solid "defense" trend company and one of our favorite dividend stocks.

The company has an annual revenue of $47.2 billion and a profit margin of 10.37%, which means the company is raking in a profit of almost $5 billion a year. And last year, Lockheed increased its profit projection by another 5%.

These numbers allow LMT to pay out a hefty dividend of $2.00 a share. That’s $2 per share every quarter for just owning the stock.

And that’s before the significant growth of LMT’s market value…

Analysts are projecting that LMT will jump to $457 a share. With a current market price of $352, that’s almost a 30% gain in just 12 months.

Best Small Cap Stocks To Invest In 2019: American Water Works(AWK)

For the same reason consumers can’t turn off their electricity, they can’t turn off their water no matter how unaffordable it feels. That’s good news for American Water Works Company Inc(NYSE:AWK), which operates water utility services in sixteen different states.

Calling a spade a spade, water utilities are a legalized monopoly … even more so than electric utilities or natural gas utilities are. Although all markets are theoretically open to competition, in reality the barriers to entry in the water delivery market are enormously high. That’s how water prices for consumers have steadily risen for the past ten years even though consumption has fallen.

These companies generally get whatever price increase they want, as local regulators are generally terrified to put up a fight that could prove disruptive. (Try going without clean, potable water for just one day.)

American Water Works Company shareholders aren’t complaining, of course. The stock has more than doubled over the course of the past five years, and that’s not counting the dividends it has paid along the way.

Best Small Cap Stocks To Invest In 2019: Mastercard Incorporated(MA)

Mastercard Stock

Source: Håkan Dahlström via Flickr (Modified)

 

 

Last, but by no means least, we have online payments giant MasterCard Inc (NYSE:MA). Can this company do no wrong?! Our data shows that MasterCard has 100% support from the Street right now. In the last three months, this breaks down into 11 back-to-back buy ratings. These analysts have an average MasterCard price target of $204 (8% upside potential). Mastercard is the “most innovative and competitively advantaged payments ecosystem participant” with an “impressive” core business trend, writes SunTrust’s Andrew Jeffrey.

Right now analysts are digesting the latest set of positive earnings results. “We like Mastercard’s ability to grow faster than peers and its potential to expand margins. Results for 1Q18 were above expectations, with solid growth across all segments,” cheers Cantor Fitzgerald’s Joseph Foresi. MA reported solid growth across all segments with gross dollar volume growth of 19% year-over-year. For comparison, rival Visa reported 15% y-o-y dollar growth. On the back of these results, MA increased its 2018 revenue guidance range to high-teens from the mid-teens.

This isn’t some kind flash-in-the-pan success either. Foresi states that: “We remain attracted to Mastercard’s card network and strong products and solutions, which should continue to drive solid performance.” Accordingly he boosts his price target from $198 to $213 (13% upside potential).

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