In this article, we will look at the 8 Cheap Penny Stocks to Buy Right Now. Let’s look at where Dynagas LNG Partners LP (DLNG) 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).
Dynagas LNG (NYSE:DLNG) operates in the seaborne transportation industry through its subsidiaries. It owns and operates liquified natural gas (LNG) carriers and operates in Greece and internationally. Its vessels are employed with international energy companies on multi-year charters. The company’s current fleet comprises six LNG carriers with an aggregate carrying capacity of around 914,000 cubic meters. All six LNG carriers operate long-term charters with esteemed international gas companies. These contracts have an average remaining term of 6.4 years, meaning that the Partnership does not expect any vessel to become available until 2028, assuming no unforeseen events occur. Dynagas GP LLC serves as Dynagas LNG’s (NYSE:DLNG) general partner. Incorporated in 2013, the company is headquartered in Athens, Greece.
Q2 2024 saw a reported net income of $10.7 million and adjusted net income of $12.4 million for the company. Dynagas (NYSE:DLNG) has a solid operational model in place. It successfully concluded new lease financing agreements with China Development Bank Financial Leasing, securing financing worth $344.9 million. The Partnership used this funding, along with $63.7 million from its existing cash reserves, to fully repay amounts outstanding under its previous credit facility of $408.7 million on June 27, 2024. This took place ahead of its scheduled maturity in September 2024.
After a sustained period of strategic deleveraging, the company has secured a more flexible financing structure while significantly slashing debt levels. Two LNG carriers are now operating completely debt-free, positioning Dynagas (NYSE:DLNG) to continue the next phase of growth and development.
Dynagas (NYSE:DLNG) has stable operations and maintained 100% schedule fleet utilization in Q2 2024. During the three months ending on June 30, 2024, it generated $22.5 million in net cash from operating activities, up 155.7% from the $8.8 million generated in the corresponding period of 2023. This growth was primarily driven by working capital changes. As of June 30, 2024, the Partnership’s estimated contracted time charter coverage for 2024, 2025, and 2026 stood at 100%, 100%, and 99%, respectively.
Overall, DLNG ranks eighth among the 8 cheap penny stocks to buy right now. While we acknowledge the potential of DLNG 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 DLNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
