It’s always prudent to keep an eye on the stock market and continuously look for new potential investments. Whether it’s investing in penny stocks, emerging markets, or clean energy – knowing the right stocks to watch can be a boost to your portfolio. With the dawn of the new year just broken, there could hardly be a better time to take stock of the new stocks to watch.
Penny stocks to watch
In comments to Forbes, Josh Simpson, of the Lake Advisory Group defined penny stocks as any stock that trades for less than $5 – which is in line with U.S. Securities and Exchange Commission (SEC) classifications. But that definition isn’t universally accepted. Jon Smith of Yahoo Finance considers any stock trading for less than £1 to be a penny stock. Whichever definition we apply, penny stocks can be understood by their name – cheap.
Investing in penny stocks can be a double-edged sword. It’s a high-risk, high-reward proposition. Few penny stocks are traded on the stock exchange, rather they are more commonly traded over-the-counter- or via the OTC Bulletin Board system. Usually involving companies with low market caps, they are prone to high levels of volatility. But knowing the right penny stocks to watch can make all the difference.
Borr Drilling Ltd. NYSE: BORR
Borr Drilling Ltd. is an “international drilling contractor incorporated in Bermuda in 2016 and listed on the Oslo Stock Exchange from August 30, 2017 and New York Stock Exchange from July 31, 2019 under the ticker BORR.”
In the year to date, the drilling companies’ share price has risen from $2.19 to $5.50. The soaring value has prompted Walletinvestor.com to describe Borr as a “very good” investment over a one-year span. The endorsement is echoed by Investopedia who identify that as of December 2022, Borr had a 12-month trailing total return of 107%. They figure Borr as the penny stock with the second most momentum over these past 12 months.
Nordic American Tankers Ltd. NYSE: NAT
Nordic American Tankers is another penny stock noted by analysts for its strong performance over an extended period. In the year to date, the share price has soared from 1.75$ to $3.01. The shipping company, which can boast of a 33-ship fleet, had an 83.8% 12-month trailing total return as of December 2022. Though the company is posting losses, they are reducing year on year, as net voyage revenue increases in line with a rise in shipping costs.
Over the course of 2022, Nordic insiders purchased 10% more NAT stock than they sold. As Yahoo Finance points out, “logic dictates you should pay some attention to whether insiders are buying or selling shares”. The biggest insider purchase was actioned by Director Alexander Hansson, who bought $414,000 worth of NAT shares. Many prospective investors will take that as a sign to be confident in NAT’s long-term prosperity.
Energy stocks to watch
The price of global energy soared over the past year. Supply-side shortages owing to sanctions on Russian oil and natural gas, as well as an immovable OPEC, has seen the cost of energy balloon. The energy sector has reaped the rewards of the global shortage, with major energy companies embarking on share buyback programmes as they post record profits.
But it’s not just companies who deal with fossil fuels – solar energy and wind energy firms have also enjoyed a windfall. Energy companies are expected to continue to post strong performances in the medium to long term. Here’s what the analysts are saying about the right energy stocks to buy.
Exxon Mobil Corp (XOM)
Selected by Forbes in January of this year as among the best-performing stocks of the month, Exxon is the largest private-sector oil company in the world. The oil giant spent massive sums to finance long-term energy production. Though this led to stilted cash flows around 2020, those long-term decisions are now paying dividends – literally. The company has a market cap of $456 billion, and an impressive 5-year average annualised return of 9.1%.
Exxon isn’t sitting on their laurels; they are continuing to shell out massive investments to increase its production levels. To give just one example, Exxon is leading a consortium to build a major offshore oil field off the coast of the Caribbean country of Guyana. The multi-billion-dollar project is one amongst a litany aimed at expanding production and profit.
Chevron Corp (CVX)
Also recommended by Forbes, Chevron Corp is riding high. The energy company Headquartered out of San Ramon, California has a market cap of $353 billion and a 5-year average annualised return of 11.9%. Forbes cites “The recent rebound in travel and the global economy” for putting boosters under Chevron’s already soaring wings.
Chevron has demonstrated a commitment to longevity and is making investments in a diverse array of energy sources, with a particular focus on renewable energy. As has been reported Chevron recently pledged $25 million to a green waste-to-hydrogen project in California which will supply hydrogen fuels to the transportation market across the Golden State.
As per Virginia-based private financial and investing advice company Motley Fool:
“Chevron expects oil prices to remain robust in 2023. The company’s CEO, Michael Wirth, has said he believes that supplies will remain constrained due to policy issues, Russia’s invasion of Ukraine, underinvestment by the industry, and OPEC…Many others in the industry agree that there are more upside catalysts for oil prices than downside pressures. That view is leading Chevron to increase its capital investments by 25% this year.”
Devon Energy Corp NYSE: DVN
A pick by Joe Baglole of InvestorPlace, Devon Energy has performed robustly on the stock market. As of January 12, the companies’ share price stands at a formidable $64.03 – this constituting a year-to-date increase of $14.39 against its 2022 price of $49.64.
Emerging market stocks
When looking at the best new stocks to buy in 2023 it would be remiss not to examine emerging markets. Though there is no universally accepted definition of an emerging market, they are identified, according to the IMF “based on such attributes as sustained market access, progress in reaching middle-income levels, and greater global economic relevance”. Emerging markets can have tremendous potential for strong ROI due to their capacity for growth which is both substantial and sustained.
As the Financial Times reported on January 9 of this year: “The MSCI Emerging Markets index has risen more than 21 per cent from its intraday low on October 25”. After a trough induced by Federal rate rises EM equities and local-currency bonds are making a strong recovery. David Hauner, strategist at Bank of America Securities told the FT that “There is increasing enthusiasm to pile into what could be a secular outperformance of EM over US assets”.
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Ranked foremost among Insidermonkey’s five best emerging market stocks to buy now is the Taiwanese semiconductor giant TSMC. The firm, which established the world’s first dedicated semiconductor foundry, has been flying high. In December of 2022, the manufacturing company announced that in addition to their new Arizona fab, scheduled to begin production in 2024, they have undertaken construction of a second fab slated for completion in 2026. Construction is also underway for a fab in Kumamoto, Japan, “with production targeted for 2024.”
TSMC’s expansion is buoyed by the prevailing market conditions which have made a commodity of semiconductors. Moves by the Biden administration to control the global supply, enabled by the close relationship between the US and Taiwan, as well as multilateral sanctions on imports of semiconductors to Russia have introduced scarcity into the market.
This strong position is reflected in TSMC shares which have risen 453 TWD to 500 TWD in the YTD. Five years ago, TSMC shares were trading for just 255.5 TWD. This Friday Bloomberg reported on a 4.6% rise in the share price on the day “as Investors Bet on Chip Giant’s Scale in Downturn”. Market Beat awards TSMC s Healthy rating for short interest and a Moderate rating for dividend return. If nothing else TSMC is one to watch.
AXIS Capital Holdings Limited (NYSE: AXS)
Featured by Yahoo Finance among their 12 Best Emerging Market Stocks to Buy Now and awarded a 5/6 rating by SimplyWallSt, AXIS is in the spotlight for the right reasons. The firm is an international specialty insurer and reinsurer. It is part of AXIS Capital Holdings Limited, the umbrella company for the AXIS group of companies.
Yahoo finance report that “At the end of the second quarter of 2022, 16 hedge funds in the database of Insider Monkey held stakes worth $570.7 million in AXIS Capital Holdings Limited (NYSE: AXS), compared to 23 in the preceding quarter worth $689 million.”. They go on to say that along with TSMC, Axis is one of the best emerging market stocks to purchase now.
It’s easy to see why. According to Marketdata.com in data issued on January 12, the firm has a market cap of $4.80 billion. In their October quarterly earnings report AXIS Capital “had a return on equity of 12.52% and a net margin of 7.47%. The firm had revenue of $1.04 billion during the quarter, compared to analysts’ expectations of $1.08 billion. During the same period last year, the company earned $0.01 earnings per share. As a group, research analysts expect that AXIS Capital will post 5.5 EPS for the current fiscal year”. Though some analysts have issued Hold valuations in recent times, others are more optimistic and are still advising to Buy.
Those looking to inject dynamism and freshness into their portfolio will be keeping an eye out for new stocks to watch. But the potential of high reward is rarely unaccompanied by the spectre of high risk. While penny stocks and emerging markets contain the potential for massive ROI, the safest bet is often with the big boys.