Through this 3-part series, we have seen the performance of select penny stocks have been exceptional. Many of them performing above 100% in returns and most outperforming the overall stock market. Will the same hold true in 2011? The answer is certain and almost always yes. You just need to be able to figure out which ones will be the outperformers.

Oil is heading above $100

To begin the year oil is trading above $90 barrel and it seems almost inevitable that it is heading above $100 a barrel, perhaps even within the month. Once speculators are attracted to the herd mentality and news reports of oil, they will soon pile in and the price will comfortably exceed $100. Currently reporters are saying that the prices won’t sky rocket as they had in the past however in the same breath are saying that they economy can support $90 oil. This means we’re in a range trade for oil. That is a good thing for penny stocks in the oil and gas sector.

Many of the speculative penny stock plays are companies searching for oil in various parts of the world. With oil prices staying high, these companies need to find less of it to still make a reasonable profit. Some companies are in the business of returning to areas where larger companies stopped drilling because it was no longer profitable. In some cases, there is once again a business case for these sites to drill deeper to extract more oil.

High oil prices also factor into two more important areas that have penny stock potential; rare earth elements and alternative energy. Rare earths has been a theme on the blog for some time now, however I strongly believe that trend will continue in 2011 as China continues to assert its power and control over the market. GWG should continue to perform; Stans Energy (SUU.V) will be another company that had explosive growth in stock price in 2010 and will be one to watch in 2011 in the rare earth space.

Alternative Energy is the wind and solar companies that are working towards a greener energy future. Triple digit oil, should be a psychological boost for investors to pay closer attention to what is happening in the green world. ARISE Technologies may be a bit of a risk, but has some potential a solar play (APV.TO). In the wind sector (WND.V) Western Wind Energy still seems like a good play. They have a great business model and seem to be executing on it.

There you have it! A few new, a few old, and a new year in which to profit. All the best in investing in 2011. It will be an exciting year to watch the markets and penny stocks especially. There’s always something new and changing and the blog will be here to follow along. Happy Trading!

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