The Next Million-Dollar Penny Stock

Penny stocks can make you rich. Need proof? Every one of these multibaggers was once a penny stock:


Recent Price

CAPS Stars (out of 5)

5-Year Return

Almost Family (Nasdaq: AFAM  )




Hansen Natural (Nasdaq: HANS  )




Arena Resources (NYSE: ARD  )




Smith & Wesson Holding




STEC (Nasdaq: STEC  )




Sources: Motley Fool CAPS, Yahoo! Finance.

The promise of outrageous returns has periodically made even the world's best stock pickers penny stock investors. Peter Lynch has enjoyed the stock market's super-cheap seats in the past, and still does on occasion. The Royce Low-Priced Stock fund has beaten the market for a decade by betting on stocks trading near or below $10 a share, including Sigma Designs (Nasdaq: SIGM  ) .

Even the All-Stars in our 140,000-plus Motley Fool CAPS community take to penny stocks. More than a few have been richly rewarded.

Pennies from heaven
So why not invest in penny stocks? Well, the warning the SEC issued about them provides one excellent reason to steer clear. But what if we take the agency's definition literally, and limit our choices to stocks trading between $1.50 and $5 a share? And what if we further seek only four- and five-star stocks with a market cap between $250 million and $2 billion? Surely our CAPS screener would return some winners, right?

This week when I ran that screen, 53 stocks made the cut -- including our last topper, Taseko Mines.

My favorite penny stock this week is gold miner Rubicon Minerals (AMEX: RBY  ) . The details:


Rubicon Minerals

CAPS stars
(out of 5)


Total ratings


Percent Bulls


Percent Bears


Bullish pitches

72 out of 72

Data current as of Aug. 28.

Once again, the compelling prose of my Foolish colleague Christopher Barker has me looking at a metals stock. Rubicon, he says, is a natural acquisition candidate for any number of miners, but one in particular has his attention more than others:

Because of their adjacent locations in the prolific Red Lake mining district of Ontario, Canada, I believe Goldcorp (NYSE: GG  ) and Rubicon Minerals make for a logical pairing. Rubicon has uncovered bonanza-grade ores at Red Lake. Since Goldcorp founder and former CEO Rob McEwen owns nearly a quarter of Rubicon shares, I presume I'm not the first to ponder such a pairing.

Certainly not, Chris. But I'm not sure that many people have duplicated the back-of-the-envelope valuation work published by CAPS investor sewells1951 a few days ago:

Basically, I think Rubicon's resource will wind up being a lot more than 3 million ounces. Deposits at Red Lake wind up growing consistently over time for the most part. My own back of the envelope calcs tell me Rubicon probably has 5 million ounces or more in their F2 property which would support a price in the $5 plus range in the next two years as the resource becomes more clearly delineated.

Do you agree? Would you buy Rubicon Minerals at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.

More millionaire-making Foolishness:

Each month, our Motley Fool Hidden Gems service spotlights promising micro-cap opportunities in a segment called Tiny Gems. Try this market-beating service risk-free for 30 days to find out what our penny stock sleuths are following now. Hansen Natural and Sigma Designs are Motley Fool Rule Breakers recommendations. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy was small and cuddly. Once.

Read/Post Comments (0) | Recommend This Article (12)

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 973804, ~/Articles/ArticleHandler.aspx, 10/23/2016 6:50:50 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
AFAM $41.40 Down -0.45 -1.08%
Almost Family CAPS Rating: *****
ARD.DL2 $0.00 Down +0.00 +0.00%
Arena Resources, I… CAPS Rating: ****
GG $15.51 Up +0.11 +0.71%
Goldcorp CAPS Rating: ***
MNST $147.26 Up +0.65 +0.44%
Monster Beverage CAPS Rating: ***
RBYCF $0.03 Down +0.00 +0.00%
Rubicon Minerals C… CAPS Rating: **
SIGM $7.56 Down -0.06 -0.79%
Sigma Designs CAPS Rating: **
STEC.DL $0.00 Down +0.00 +0.00%
STEC CAPS Rating: ***