The past year has not been kind to stock investors. The historic collapse during October and November affected every industry and influenced all sectors of the market. Several penny stocks, however, have still managed to turn in some impressive gains over the past 12 months.

Below is a chart of the top three penny stock performers during the past year. Two of the companies are in the business of gas and oil exploration, and the other is in the wireless telecom industry. Two of the stocks have a market cap of under $20 million, and all three have amassed some great returns this year:

While TSYS has held its value very well amidst the economic crisis, New Concept and Mexco both hit their 52-week high back in May, and have since given back much of their returns. If you’d bought Mexco last December, however, and sold when the stock hit $50 five months later, you could’ve claimed a 1,135% return!

Shares of New Concept could’ve been had for $1.50 last December. When the stock spiked to $12.75 earlier this year, investors had an opportunity to cash in on a 750% gain. Despite the hit these stocks have taken in the past six months, they are still giving last year’s buyers a nice return on investment at their current levels.

Now, for comparison sake, lets take a look at the top performing stocks from the Dow Jones over the past year:

As you can see, only two of the 30 stocks in the Dow have had a positive return over the past 12 months. Wal-Mart has been the Dow’s best performer by far. The third best, Johnson & Johnson, is currently sporting a -9.73% return over the past 12 months.

Now, you may be wondering what penny stocks, if any, have performed well since during the recent market turmoil. Well, you maybe surprised to learn that a few small caps have done quite well despite the market meltdown. The top penny performer over the past three months is in the outsourcing business, the runner-up is a provider of competition management services, and the third is a pharmaceutical company that focuses on prescription drugs for central nervous system (CNS) disorders:

All three of these stocks have posted some remarkable gains over a short amount of time, especially when placed in the context of the recent market collapse.

The Dow, by comparison, has two positive performers over the past three months, although their gains are much more modest:

Exxon and McDonald’s have done very well to post any gain over the past three months, particularly considering the Dow Jones Industrial Average is down 23% during that same time period. Despite outperforming their peers, Exxon and McDonalds can’t hold a candle to the returns of this quarter’s top penny stocks.

These comparisons very clearly illustrate the profit potential that these un-diluted penny stocks bring to the table. The blue chips rarely see such explosive growth over such a short period of time. And even in one of the biggest collapses the market has ever seen, you can still find some great penny stock buys. You’ve just got to know where to look.

Best Regards,
John Schuler

December 08, 2008

P.S.: To get a jump-start on the top penny performers of 2009, check out Penny Stock Fortunes. In their December issue, Greg and Jim have found four cheap stocks that would be considered bargains in any market.

John Schuler

After studying history in college, John worked for several years in finance and supply-chain management. He now draws on that experience when scouring the small-cap sector for penny stock plays. John has a particular interest in well-run companies that are both under-valued and poised for significant growth. John also contributed to Penny Stock Fortunes.

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