While Most of Wall Street focuses on large and mega-cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Some of the most significant public companies, especially the technology giants, trade in the low to mid-hundreds to close to $1000. It’s hard to get decent share count leverage at those steep prices.
Many investors, especially more aggressive traders, look at lower-priced stocks to make good money and get a higher share count. That can help the decision-making process, especially when you are on to a winner, as you can always sell half of the position and keep half.
We screened our 24/7 Wall St. equity research database, looking for companies that could offer patient investors enormous returns for the rest of 2024 and beyond, and found five under $25 that look like big winners. While these are hardly penny stocks, for lower-price stock skeptics, many of the biggest companies in the world, including Apple, Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), and NetFlix, Inc. (NASDAQ: NFLX), all traded in single digits at once.
Ares Capital
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The company specializes in financing solutions for the middle market.
This company is a high-yielding Business Development Company (BDC) paying a massive 9.49% dividend. Ares Capital Corporation (NASDAQ: ARCC) specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle-market companies.
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.
The fund will also consider investments in industries such as:
- restaurants,
- retail,
- oil and gas, and
- technology sectors.
It focuses on investments in the Northeast, Mid-Atlantic, Southeast, and Southwest regions from its New York office, the Midwest region from the Chicago office, and the Western region from the Los Angeles office.
The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million
The fund invests through:
- Revolvers,
- First-lien loans
- Warrants
- Unitranche structures
- Second-lien loans
- Mezzanine debt
- Private high yield
- Junior Capital
- Subordinated debt
- Non-control preferred and common equity.
The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically finds the purchase of stressed and discounted debt positions.
Ares Capital Corporation prefers to be an agent and lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.
Frontline
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Frontline is the world’s fourth-largest oil tanker shipping company.
While off the radar of most investors, this shipping company could explode higher and pay a massive 12.62% dividend. Frontline plc (NYSE: FRO) engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers.
In a press release earlier this year, the company announced that it would sell its five oldest VLCCs (Very large crude carriers) built in 2009 and 2010 for an aggregate net sale price of $290 million.
The vessels are expected to be delivered to the new owner during the first quarter of 2024. After repaying existing debt on the vessels, the transaction is expected to generate approximately $207 million in net cash proceeds.
The Company expects to record a gain in the first quarter of 2024 in the range of roughly $68 million to $76 million, depending on the delivery date of each vessel to the new owner. The sale is subject to certain closing conditions, according to industry standards.
Following the transaction and the completion of the delivery of all 24 VLCCs acquired from Euronav NV, Frontline’s fleet will consist of:
- 84 vessels comprised of 41 VLCCs
- 25 Suezmax tankers
- 18 LR2/Aframax tankers
FS KKR
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This well-known name on Wall Street offers a solid entry point at current levels and pays a massive 14.68 dividend. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.
The company also seeks to invest in first-lien senior secured loans, second-lien secured loans, and, to a lesser extent, subordinated loans or mezzanine loans.
In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seeks to purchase minority interests in common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.
The fund may invest in corporate bonds and similar debt securities opportunistically.
The fund does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans. It aims to invest in small and middle-market companies in the United States.
FS KKR seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It aims to exit from securities by selling them in a privately negotiated over-the-counter market.
Kimbell Royalty Partners
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While an on-off-the-radar energy play, this is a safe way to play the sector while getting a massive 10.73% dividend. Kimbell Royalty Partners, LP. (NYSE: KRP) Together with its subsidiaries, it acquires and owns mineral and royalty interests in oil and natural gas properties in the United States. The company serves as its general partner. Kimbell Royalty Partners, LP.
The company is one of the largest owners of minerals and royalties nationwide. The portfolio includes approximately 17 million gross acres in 28 states and every central onshore basin in the continental United States, including ownership in more than 129,000 gross wells with over 50,000 wells in the Permian Basin.
Another huge positive for investors is that Kimball Royalty Partners, as opposed to most energy Master Limited Partnerships, converted to a C-Corp for federal income tax purposes in September 2018. Thus, investors in the standard units will receive a 1099-DIV rather than a K-1, a massive plus for shareholders at tax time.
Petróleo Brasileiro S.A.
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This top energy company in Brazil pays a gigantic 17.60% dividend. Petróleo Brasileiro S.A. (NYSE: PBR) explores, produces, and sells oil and gas in Brazil and internationally.
The company operates through:
- Exploration and Production
- Refining
- Transportation and Marketing
- Gas and Power
It also engages in prospecting, drilling, refining, processing, trading, and transporting crude oil from producing onshore and offshore oil fields, shale or other rocks, oil products, natural gas, and other liquid hydrocarbons.
The Exploration and Production segment explores, develops, and produces crude oil, natural gas liquids, and natural gas primarily for supplies to domestic refineries.
The Refining, Transportation, and Marketing segment engages in the refining, logistics, transport, marketing, and trading crude oil and oil products; exportation of ethanol; and extraction and processing of shale and holding interests in petrochemical companies.
The Gas and Power segment is involved in:
- Logistics and trading natural gas and electricity
- Transportation and trading of LNG
- Generating electricity through thermoelectric power plants
- Holding interests in natural gas transportation and distribution
- Fertilizer production and natural gas processing business
In addition, the company produces biodiesel and its co-products and ethanol and distributes oil products.
Trinity Capital
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Based in Phoenix, this business development company pays a massive 14.36% dividend. Trinity Capital, Inc. (NASDAQ: TRIN) is a venture capital firm specializing in venture debt to growth-stage companies looking for loans and equipment financing.
The company is an internally managed business development company leading provider of diversified financial solutions to growth-stage companies with institutional equity investors.
Trinity Capital’s investment objective is to generate current income and, to a lesser extent, capital appreciation through investments, including:
- Term loans
- Equipment financings
- Equity-related investments.
The firm believes it is one of only a select group of specialty lenders with a depth of knowledge, experience, and track record in lending to growth-stage companies.
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