Top 10 Growth Stocks To Own Right Now

Penny stocks are a great way for investors to chase triple-digit gains without a huge initial investment. That’s why we’re bringing you the three penny stocks to buy in July 2018.

You see, penny stocks can generate significant returns for retail investors. Just last month, we identified a little-known education company that jumped 267% in just one week.

Stocksmoneymorning.com/wp-content/blogs.dir/1/files/2018/05/coins_showing_growth-75×50.jpg 75w, moneymorning.com/wp-content/blogs.dir/1/files/2018/05/coins_showing_growth.jpg 550w” sizes=”(max-width: 300px) 100vw, 300px” title=”Stocks” style=”font-size: 18.0018px; box-sizing: border-box; margin: 0px 0px 24px 24px; padding: 0px; border: 0px; vertical-align: middle; max-width: 100%; height: auto; float: right; text-align: right;” />In order to identify penny stocks with this kind of potential, we use the Money Morning Stock VQScore™ system to find the best stocks under $5 – the SEC’s official definition of a penny stock.

Our favorite penny stocks for July have the potential to generate considerable return. In fact, our top penny stock to buy could jump over 60%.

Here are our top penny stocks for July…

Top 10 Growth Stocks To Own Right Now: Digital Realty Trust Inc.(DLR)

It can be difficult for dividend investors to find an income payer that offers a high yield, the opportunity for growth, and a level of security. One way to narrow the field is by looking among a group of companies that have qualified for special tax treatment known as real estate investment trusts (REITs). These tax-advantaged businesses are required by the IRS to pay out at least 90% of their profits to investors as dividends.

One such REIT with a long runway is Digital Realty Trust, a company focused on the growing field of data centers, which are large, specialized buildings that house the servers and other network equipment used in cloud computing. These locations require highly reliable and secure environments that contain redundant backup systems for mechanical, cooling, electrical, and network connections — all necessary to protect the data stored on the servers. 

Several bar charts showing high growth rates in artificial intelligence, the internet of things, self-driving cars, and virtual and augmented reality over the next several years.

IMAGE SOURCE: DIGITAL REALTY TRUST.

The market is large and growing, with worldwide public cloud revenue expected to grow to $411 billion by 2020, up from just $260 billion last year. Ongoing developments in the areas of artificial intelligence, the Internet of Things, self-driving cars, and virtual and augmented reality are expected to accelerate the need for additional data centers in the coming years. 

Digital Realty provides over 200 data centers in 12 countries and 32 metropolitan areas, totaling 32 million rentable square feet. The company has built in annual rent increases of between 2% and 4%, and its average remaining lease is 4.9 years. 

Even more impressive is the company’s growth. It has increased its FFO (funds from operations — the REIT measure for earnings) by 12.3% annually over the past 12 years. Digital Realty Trust has grown its dividend at about the same rate, and its payout currently yields 3.6%. 

The company’s customer list reads like a Who’s Who of the tech and telecom industries, boasting IBM, Facebook, Verizon, AT&T, and Comcast among its top clients.

With a high yield, a significant runway for growth, and a stable and growing payout, Digital Realty Trust is a top stock to buy now.

Top 10 Growth Stocks To Own Right Now: Match Group, Inc.(MTCH)

Match Group’s stock also easily crushed the market with a 125% gain over the past 12 months. Match owns several well-known dating apps, including Match, Tinder, OKCupid, and Plenty of Fish, and generates revenues from display ads and paid subscriptions. Its total paid subscribers grew 26% annually to 7.4 million last quarter, with Tinder’s premium members accounting for 3.5 million of that total.

Match, which was spun off by internet media company IAC in 2015, is the 800-pound gorilla of online dating. However, Facebook’s recent introduction of a dating feature caused many investors to question the width of Match’s moat. Match subsequently struck back by launching a new "gamified" dating app called Crown, acquiring a stake in NYC-based dating app Hinge, and introducing new interest-based features for Tinder.

Match’s revenue rose 19% last year, but its adjusted earnings dipped 19% due to tax reform-related charges. Wall Street expects its revenue to rise 27% this year as its earnings rebound 106% from that temporary dip. That’s a solid growth rate for a stock that trades at just 29 times this year’s earnings, but analysts expect its earnings growth to decelerate to 19% next year.

Top 10 Growth Stocks To Own Right Now: Sage Therapeutics, Inc.(SAGE)

Sage Therapeutics isn’t profitable and has no products on the market. But with the biotech’s market cap standing at more than $7.3 billion, investors are obviously expecting the situation for Sage to change dramatically in the not-too-distant future. I think those expectations will be met.

The U.S. Food and Drug Administration (FDA) is set to make an approval decision for Sage’s lead candidate, an intravenous (IV) version of brexanolone, by Dec. 19, 2018. If all goes well, the drug will become the first therapy approved by the FDA for treating postpartum depression.

I think the chances for FDA approval are quite good based on the phase 3 clinical results for brexanolone. And if the IV formulation of the drug is successful, that bodes well for Sage’s followup — SAGE-217, an oral drug that’s similar to brexanolone. The biotech is moving forward with a pivotal phase 3 study of SAGE-217 as a major depressive disorder treatment and expects to announce results in the fourth quarter of this year.

Sage could be looking at peak annual sales of $775 million for brexanolone and $2.5 billion for SAGE-217. I think the potential for these two drugs makes this biotech an attractive acquisition target.  

Top 10 Growth Stocks To Own Right Now: Tencent Holdings Limited(TCEHY)

Tencent Holdings Ltd (OTCMKTS:TCEHY) is a true stock legend. The tech giant is the first Chinese company to be valued at over $500 billion. This puts it in the same league as major U.S. stocks like Facebook. And according to the Wall Street Journal, TCEHY “isn’t yet a household name in the U.S., but it should be.”

The company has its fingers in many pies from a hugely successful gaming business to music and videos. But Tencent wouldn’t be Tencent without WeChat. This is an extremely popular Chinese messaging app with almost 1 billion users. Think of a juiced-up version of WhatsApp that includes payment systems, smart city offerings such as the ability to schedule appointments, pay traffic fines or make visa applications.

“Tencent dominates consumer engagement and has a variety of tools for businesses to reach consumers,” writes KeyBanc’s Hans Chung. “It has been cautious about monetization, but we believe the opportunity is huge and achievable given the largest scale and engagement in China.” Indeed, Wells Fargo’s Ken Sena is particularly enthusiastic about the potential in video revenue and predicts a surge of video subscribers in the next five years.

From our data we can see that this ‘Strong Buy’ stock scores three recent Buy ratings from the Street. This is with an average price target of $65 (29% upside potential).

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