3 Stocks Under 5 with HUGE Growth Expectations

Three stocks, all under $5, that are expected to grow a lot in the next year. MarketFeed's Chris Markhodge joins us now to break down these three different companies, again, that are low cost stocks, but what's really exciting about them is the projected earnings growth. Let's talk about this metric a little bit and why that's what you're focused on with this list today. As investors know, if they've been involved with the markets for any length of time, one of the key predictors of future stock price growth is what the company's earnings growth is. Now this earning season, you've been seeing a little bit of a change in that in the sense that you've had some companies beat on earnings, but they don't beat strongly enough and the stocks have been getting punished for this. But in the case of these three stocks, analysts have set a very high bar. They have expectations for very high earnings growth. And if these companies deliver on that, you could be seeing a significant jump in the stocks from where they are currently. Yeah, I think it's important differentiating here. We're not talking about like analyst consensus price targets on where they expect the stock price to go. This is on those analysts projections of how much earnings they expect these companies to bring in, right? Correct. The projection about price target is going to lag the earnings projection because analysts are going to want to see the company deliver on that. But nevertheless, they are optimistic that all of these companies are going to deliver significant earnings growth. And when we say significant, investors will hear as we get into the stocks, we're talking about significant earnings growth. Yeah, the last stock on our list today, we're saving it for the end, and that one has 150% projected earnings growth. So excited to dive into this list today. It's an interesting concept. And again, we're talking about smaller companies today, which is always an area some of our viewers really enjoy seeing. So let's dive right into the list, Chris. What is that first company that's under $5 right now with a lot of projected earnings growth? Right. So the first company we're looking at is a company called Transocean. The ticker symbol is RIG, R-I-G. In total transparency here, the stock actually this morning is trading a little bit above $5. And the interesting point here is that the stock is up about 6.8% in a week when the market has been basically getting dragged. So that should be an indicator to investors. You've got a stock that's outperforming, especially a penny stock when a lot of the bigger names in the market are being dragged down, that's something to clue in on. So Transocean provides offshore contract drilling services for the oil and gas industry. They're specialists in really difficult drilling operations, specifically in deep water drilling. And they've got a fleet that's particularly suited for those complex deep water projects that other companies might struggle with. Interesting. Is there any particular reason why a company like this in that oil drilling sector might be getting a boost right now? Are they still up and coming? Is there any kind of catalyst that could be helping to grow their projected earnings? Right now, oil prices have been slowly ticking upward. And the belief would be that if oil prices keep ascending, then that's going to make oil companies more interested in not just drilling to maximum capacity with the wells that they have, but also to do some more exploration, that's where RIG would come in. So I think what we're starting to see is speculation, perhaps right now, that would be delivered on in the future, that some of the oil companies are going to get more involved in actively looking for new locations and actually trying to drill in new sites. All right, let's dive into this one a little bit more because I think it's interesting. Transocean is not a new company. It's been around for a while. Has it been profitable? Why has it stayed such a small stock? Yeah, well, I think you just hit on a really interesting point about profitability. So in its last quarter, so that was the quarter where they reported at the end of October, they delivered the first positive adjusted EPS that they had delivered in like six quarters. So the issue here is not revenue growth. Revenue has been growing steadily, not only sequentially, but year over year, but they haven't been able to convert that into profit. They did in the last quarter, and analysts are expecting that to continue. Analysts are projecting this company to grow earnings 100% from last year. Now, that was a negative number last year, but they're projecting that to turn positive this year in a big way. That would be very bullish for the stock price growth. Okay, so analysts are bullish on its earnings actually growing. How about on the stock price itself? What do they have to say about price targets for this one? The interesting thing about the stock right now is it's trading a little bit above the consensus because it's surged so much this week, but there's a couple of things to note here. First of all, BTIG Research just earlier this week increased their price target on the stock from $5 to $6. The second thing to remember is that the company reports earnings on February 19th, so not for a couple of weeks yet. That's generally the time when you're going to see analysts sort of sharpen their pencils, wait till the results come in and see, and oftentimes you can start seeing significant revisions, especially if RIG's earnings results support the main thesis, which is there's going to probably be more activity for the rest of the year. So that 100% earnings growth, is that expected to show up on that earnings report coming out in the next two weeks, or is that kind of expected by the end of the next year? I think what you're going to probably want to see is they're going to want to hear what the company's guidance is. So obviously they're going to want to see adjusted earnings per share come in positive again. They're going to probably want to see that number growing, and then they're going to want to hear the company sort of confirm in their full year guidance that yes, we are projecting an earnings per share number that would support that 100% growth. Yes. All right. Such an interesting story for this stock that's been around for a while. Could it actually grow? I think it's the question that a lot of people have. And now this one isn't quite in the robotics sector, but it does remind me of a stock we talked about recently in the robotics world on this channel. If you're interested in some other names like that, we have a new article out on five robotics stocks that are catching momentum after some policy tailwinds. This one is for our YouTube viewers only. If you want to get a free look at that five stock list, you can scan the QR code or we'll drop a link in the comments and in the description so you can find that five robotics stock list. That's just a little bonus if you want some other names to look at in this sector. But let's move on to the second stock on this list today, Chris, which is another stock right under $5 that has a really big expectations for earnings growth. The company is B2Gold, ticker symbol is B-T-G. So if Transocean is a speculative bet on the direction of oil prices and oil production, B2G is a speculative bet on the price of gold and gold production. It would basically be considered about a mid cap company, but this is still considered a junior mining company. They're based in British Columbia. They have mining operations all over the world. When I use the term junior miner, I'm talking about a company that's typically more gross focused than maybe some of the major established gold miners like a Barrett Gold or a Newmont. Okay. This is interesting timing for this one because we just had a new guest on the show yesterday who was kind of bearish on the outlook for gold miners, silver miners saying that that sector might have gotten ahead of itself a little bit. What are your thoughts on that? Are you still bullish on the outlook for gold this year? I am. This is one of those examples of two things can be true at the same time. I think the price of gold and silver got ahead of itself. It was almost inevitable. You saw that $5,000 number for gold. You saw that $100 number for silver. And those were the big shiny numbers and it was almost inevitable that traders were going to drive up the price to see if they could hit those numbers and they did, but those numbers were, were high. And you saw the, you know, the parabolic move in both gold and silver that usually doesn't end well for people that are looking at this as a short-term trade and tried to catch it and ride that wave higher. But if you look at some of the, um, the fundamental catalysts that have been pushing precious metals higher, those catalysts are still in place. You're seeing limited supply. You're seeing central banks, which will at least put a floor on the price of gold for the year. I'll stick with gold for right now. Silver's sort of a different story, but the fact that central banks are still buying gold, still having demand for gold, that sort of puts a floor on the price for gold, and I still think there is uncertainty when you start looking at the value of the U S dollar gold went down. Yes, because it made a parabolic move higher, but also because for a brief moment, the U S dollar kind of spiked and the U S dollar and the price of gold have an inverse relationship. Well, just in the last few days, the U S dollar was starting to soften a little bit and lo and behold, the price of gold is starting to is starting to go up a little bit. I think there's a fundamental case for gold. And if that's the case, a junior miner like B2 gold is going to be part of a pretty massive catch-up trade because the miners didn't grow as fast as the price of gold last year. That's where that trade has to start catching up. Yeah. Is that expectation really a part of the reason why BTG's earnings outlook is so high? Is it really all riding on the fact that the price of gold stays high and that these miners are able to get more profit? Absolutely. And, and, you know, like I said, if you're looking at rig, you're looking at a speculative bet on oil prices. If you're looking at B2 gold, you're looking at a speculative bet on gold prices. My opinion on gold is I still think gold is going to move higher. I don't think it's going to move parabolically higher like it did at the beginning of this year, but I think it is going to grind higher. I just think that the fundamental drivers and the catalyst for gold are still there. And I think it's, and I think those catalysts go beyond the shores of the United States. Well, let's look at some numbers before we move on to the last stock. Let's talk about how much earnings growth are analysts projecting for BTG. And then let's also compare that with what they're expecting for price targets for this. What's the outlook for both? Yeah. So we're talking about 76% increase in earnings, which is massive. That would go back to this idea of if the company can start really generating revenue coming from the mine and that's going to generate the profit. So that's, that's where we're looking at there. Gold miners are going to follow the price of gold. So if gold goes higher by a percentage, many people believe mining stocks will go higher by an even larger percentage. So if you believe we're at $6,000 gold by the end of the year, which I think is a realistic possibility, then you could see gold miners going higher by that percentage or probably even more. So definitely some expectations for BTG, but there are so many of these small minor companies out there. We talked about one a couple of weeks ago when we had a penny stock video on, and that one has grown tremendously. We talked about TRX when it was just under a dollar. And right after we talked about it, that stock had quite a surge. I'm just curious how BTG compares to other small companies like TRX, like we mentioned on the show, again, a couple of weeks ago. They compare very favorably. We're talking about two junior miners. TRX gold actually is another stock that I could have put on this video because analysts are projecting that company to have about 50% earnings growth. And again, that's just a reflection of what they believe is going to be happening with gold prices. However, both BTG and TRX, you saw a similar pattern in the last few days where they both surged as gold did, and they both sold off a little bit this week. However, the drop-off in TRX has been a little bit steeper than the one in BTG. BTG is coming out of this week, still up about 2% for the week. Whereas TRX is down about 4.6%. So it looks like BTG has found its footing a little bit at a little bit higher level than where TRX is at. Yeah, both two stocks that are very dependent on the price of gold still going up this year, or at least staying strong where it's at. I know that you were bullish on the outlook of gold. Others are questionable on where it could go. It's hard to choose and this feels risky too, but I am going to add this one to my Virgin Spies watch list. It's my paper trading watch list where we help follow along with the price movements on all of the stocks we talk about on this channel. I pick one stock per video. It's always a hard one to choose, but for this one, I'm going to choose BTG to add to Virgin Spies. If you haven't checked it out yet, scan the QR code or click the link in the description. Like many of your portfolios, this watch list was hit pretty hard this week when the market went down. I think some of my stocks were down 20 to 30% on the list. So hopefully with the recovery that we're seeing on Friday, those odds get a little bit better on that watch list. But this last stock that you have for us has the greatest earnings growth prediction, and it's an interesting one. Let's get to it, Chris. We're going to the biotech sector. We love the biotech sector here, and we're going to go into it again. A lot of the viewers on this channel love it when we talk about some of these penny stock biotechs, and that's what this company is. The difference between this company and some of the ones that we talk about is this isn't a clinical stage company. This is a company that actually has drugs in the market. They're actually generating revenue. They're not profitable yet, but they are generating revenue. So the catalyst for this company right now is they've got a drug that's in stage three trials. So that means it's the step before they could potentially apply for FDA approval and have this drug on the market. They recently increased their revenue projections for the, for the next 12 months, they raised them by 40%. And as you said, Bridget, this is a company that analysts are already thinking earnings growth is going to grow by 125%, and that could be a key reason why they're looking and saying, if revenue is going to go up that much, then that should lead to something big with, with the earnings story. Company's going to have to execute. However, knowing that they already have products in market should take away some of that risk, but it never goes away completely. The stock that we're talking about specifically is a company called Ironwood Pharmaceuticals. The ticker symbol is IRWD. Interesting. What field are they in specifically? They're in the area of gastrointestinal diseases. All right. A popular growing area. Lots of research. Now it's not the GOP one. I want to make sure people understand that, but this is another area of that. Yes. All right. Another good, interesting name to look at on a list of stocks at under $5. If these are the kind of stocks that you're looking for, the names that are still up and coming, still small enough where you can buy a pretty good stake in the company, make sure to check out the penny stocks video that we mentioned earlier. Chris and I were on just a couple of weeks ago talking about penny stocks. There's other names on the list that are still great to consider if this is the kind of stocks you're looking for.