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Don’t Waste Money on Penny Stocks: These 3 Stocks Offer More Upside

Christopher Liew, CFA
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

When you invest in the stock market, it should be clear at the onset that losing is a possibility.  However, the biggest heartbreak is when investors lose their money on penny stocks. You can invest in cheap stocks that offer substantial gains. Just because you have meager cash to invest doesn’t mean that you’re prepared to lose.

Investing in penny stocks is an all-or-nothing gamble because it is very difficult to sell them when prices drop. You might as well say good-bye to your investment.

However, investing in affordable stocks like Baytex Energy Corp. (TSX:BTE), Calfrac Well Services Limited (TSX:CFW), and Corus Entertainment Inc. (TSX:CJR.B) can offer substantial gains as they’re not dubious companies.

Energy stocks at bargain prices

The shares of Baytex Energy and Calfrac are currently trading at bargain prices, with former priced at $2.12, while the latter selling at only 2.02. You won’t be deceived into buying the stocks because there are fundamentals and actual financial data to evaluate the investment.

Baytex Energy has been around since 1993. The $1.18 billion company operates acquires, develops, and produces oil and natural gas in the Western Canadian Sedimentary Basin as well as in Eagle Ford in the United States. BTE is also traded on the NYSE, which makes it a legitimate, not bogus, investment.

Calfrac Well Services is also an energy stock. The 293.5 million Oil & Gas Equipment & Services Company has subsidiaries that provide specialized oilfield services. The client base is in Canada, the United States, Argentina, and Russia.

The hydraulic fracturing, coiled tubing, cementing, other well stimulation, and pressure pumping services Calfrac provides are essential in the oil and natural gas industries. A company that’s been in existence for 20 years now is also not a disreputable investment option.

Shares of Baytex have soared as high as $4.73 and have dropped as low as $1.87. On the other hand, Calfrac shares have risen to $6.16 and have fallen to $1.69. Historically, the gains are higher compared to losses.

Judging by analysts’ forecasts in the next 12 months, BTE’s price can potentially increase by 183%, while CFW has a potential upside of 392%. These are, however, forecasts and so they aren’t 100% accurate. The point here is that the stocks can be traded to realize gains and avoid losses.

Interesting media stock

Corus Entertainment is another inexpensive stock with a current price of $6.38 at writing. CFW is not among the popular stocks on the TSX, yet investors with limited investment budgets can derive substantial windfall. The stock used to trade at a high of $8.11 and fell steeply to $3.62 before.

The $1.3 billion media and content company operates specialty and conventional television networks, and radio stations in Canada and internationally. Corus’ television segment consists of 44 specialty TV networks and 15 conventional TV stations, while the radio segment has about 39 radio stations.

All three stocks are tried and tested. Unlike penny stocks, the chances of gains far exceed the odds of losing.

More reading

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

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