Buying stocks is a great way to invest leftover money and have it grow over time. Over the past year especially, investing in the stock market has become increasingly popular among amateur investors because. It has great financial potential and is more accessible than ever. Modern apps are making it easier than ever before for anyone to invest. The trickiest part is deciding where to start.
For investing novices and experienced investors alike, penny stocks are an interesting type of stock to watch.
Apple Inc. (AAPL) is an example of a well–known, moderately priced stock. Palantir Technologies Inc. is an example of a less-known, more expensive penny stock. Other like Shopify Inc. (SHOP), are also examples of penny stocks that have seen their prices rise significantly in recent years.
But what are they, and which ones are the best penny stocks to invest in currently?
Read on to learn more about penny stocks and which ones to consider investing in now.
What are Penny Stocks?
Traditionally, penny stocks are any stocks with a share price below a dollar, 99 cents, or below. Recently, this definition has been expanded to include stocks that are below five dollars, as determined by the
U.S. Securities and Exchange Commission (SEC). To be designated a penny stock, there is a market cap on how much a company is worth and its market capitalization.
Penny stocks can be very risky stock picks. They are stock shares from small companies that usually do not have a long-established track record. It is important to be wary of which penny stocks to buy for this reason.
Phunware Inc. (PHUN), for example, is a mobile software development company. It has a market capitalization of $191 million. This makes it a relatively small company. It is also unprofitable, with a net loss of $5.7 million in 2017. This makes it a risky investment.
Apple Inc. (AAPL) is a large, well-established company. It has a market capitalization of $935 billion. It is profitable, with a net income of $48.7 billion in 2017. This makes it a safer investment. Apple Inc. is a good example of penny stock you should buy, while Phunware Inc. is an example of penny stock you should avoid.
Sometimes, it can be hard to sell penny stocks after purchasing them because of little demand. Other times, penny stocks are an inconsequential and easy way to invest in the stock market. Because they are so cheap, you do not have to drain your savings just to get into investing. Many of these stocks show incredible growth potential as well.
How To Trade Penny Stocks Successfully
Like any other stock trade, to trade penny stocks means that you have to keep up on your shares often.
Earnings per share (EPS) and other financial data can change on a penny stock company very quickly, so you need to be able to act fast if you want to buy or sell.
Another thing to keep in mind is that penny stocks are much more volatile than other stocks. This means that the prices can change rapidly, sometimes going up or down by large percentages in just a few minutes.
Be prepared for this volatility if you decide to trade penny stocks, and make sure that you have a solid strategy in place in case the stock price moves against you.
EMargin Corporation is a good resource for determining a stock’s volatility. A company earnings report can also be a source of volatility information. When you file quarterly reports with the Securities and Exchange Commission (SEC), you can also find out more about volatility.
You can strategize a couple of different ways to be successful with penny stocks: the short-term or long-term game. Short-term investing involves buying a high dollar amount of penny stocks and selling them once they have quickly jumped and hit your price target. Long-term investing, on the other hand, means researching penny stock options more thoroughly in hopes that they will gradually rise in stock prices and grow out of the penny stock categorization in the future.
Here is our list of top penny stock companies that should be on your watch list:
Biolase, Inc. (NASDAQ: BIOL)
Biolase is a penny stock to watch, a medical supply company that primarily serves the dental industry. It is a great penny stock to watch out for because it has huge market and growth potential. Because the dental industry was impacted by the pandemic, stock prices for BIOL dropped into penny stock territory.
Currently, the stock sits at around 0.65 per share, a true penny stock by any definition. It sits at almost half of the 1.20 it was in February 2020 before the global pandemic hit. Despite being a low price stock option, the company still holds hundreds of patents and has a large stake in the dental industry.
Electrameccanica Vehicles (NASDAQ: SOLO)
Unlike Biolase, Electrameccanica Vehicles Corporation is a penny stock by the SEC definition. It currently sits at about 3.30, but experts think the stock is undervalued and will be on the incline soon. After hitting a high of over ten dollars in February of this year, SOLO is waiting to take off again.
Hedge fund managers seem to think so too, as SOLO has been growing in popularity with the big players. In the past six months, SOLO has seen a large influx of investment from some of the biggest names in the industry.
Have you heard about hedge fund sentiment? In the world of finance, “hedge fund sentiment” is a term used to describe the general feeling among hedge fund managers about particular security or asset class.
Generally speaking, if hedge fund managers are bullish on a security or asset class, the security or asset class is likely to perform well. Conversely, if hedge fund managers are bearish on a security or asset class, the security or asset class is likely to perform poorly.
Hedge fund sentiment is an important indicator to watch because it can provide insights into where the market is heading.
Electrameccanica is an intriguing company that is researching and designing electric vehicles. Its most famous innovation is their new vehicle design called the solo, which is a one-person, three-wheeled electric car. The company has plans to expand its retail presence to the United States soon, increase its production capacity, and expand to other global markets.
Inuvo (NYSEAMERICAN: INUV)
This is perhaps the top penny stock to watch. Inuvo, Inc. provides display methods for e-Commerce companies. Several different investment forecasts have noted INUV to be a top stock to watch for the past couple of months.
This year, the stock price peaked at almost two dollars. Since then, the stock has been semi-regularly rising and falling, now sitting at around 0.65 per share. The penny stock does pose its risks in terms of security and volatility, but it could be a great penny stock to watch out for.
Corporate earnings are scheduled for release on Feb. 13th after the market closes and could provide a catalyst for the stock.
Glory Star New Media (NASDAQ: GSMG)
Glory Star New Media is a Chinese digital media LLC. Currently, the share price hovers around two dollars, down from its peak in March at 4.72 for this year to date. The stock is speculated to be a good penny stock to invest in because it just recently announced a deal with an institutional investor.
Since being founded in 2016, the company has gained notoriety for integrated premium subscription video services with e-commerce, advertising, and content production services. In August, investors traded the stock at an extremely high volume. Look into this stock if you are interested in diversifying your investments in the Chinese market.
The company has not released any quarterly reports yet. But, in March, they announced that they had signed a deal with an institutional investor. The investor is unnamed, but the deal is said to be worth millions of dollars. This could be why the stock price is on the rise.
Keep in mind that penny stocks are high–risk investments, and it is important to do your research before investing. Glory Star New Media may be a good investment, but there is always risk involved.
RLX Technology Inc. (NYSE: RLX)
RLX Technology, Inc. is another China-based company that is a leader in the e-vapor industry, or alternatives to cigarettes. The company, much like many other e-vapor companies, has seen price plummets due to stricter regulations and changes in Chinese IPOs in U.S. stock exchanges.
However, the company shows promise for the way that it has slowly steadied out over the past month or so. The stock currently sits around 4.50. Because it has shown net revenue growth in past quarters, the company will be a stock to look out for at an affordable share price.
Earnings releases for the company will also be something to look out for in order to determine whether or not the company is making a profit.
Investment advisory firm Roth Capital Partners LLC initiated coverage of the stock with a “buy” rating and a price target of $8 on Tuesday.
Based on the news, it seems that the market is bullish on the company’s prospects and that the stock price could potentially go up in the future.
Seanergy Maritime (NASDAQ: SHIP)
Seanergy Maritime Holdings Corporation was founded in the Marshall Islands and is currently headquartered in Greece. The company’s share price is down over the last year from the near two dollar range to about 1.30 currently. The company has been steadily growing globally and has seen little to no interruption of usual business activity because of the persistent need for dry goods shipping.
Investment advisory services are provided through Shore Capital Group LLC, a registered investment advisor.
The company owns and operates a fleet of dry bulk carriers that transport various dry bulk cargoes, such as coal, iron ore, and grains, among others. These cargoes are transported to and from major ports around the world.
The company has a current fleet of 68 vessels, with an average age of 10.5 years. The fleet includes Capesize, Panamax, and supramax vessels. The company‘s vessels are employed on medium to long–term charters with high–quality counterparties.
Investment firm Jefferies LLC initiated coverage of the company in September 2017 with a “buy” rating and a price target of $2.50 per share.
In October 2017, the company announced the completion of a $50 million senior unsecured notes offering. The net proceeds from the offering will be used to refinance existing indebtedness and for other general corporate purposes.
The company’s vessels are chartered to various counterparties, including J.P. Morgan Asset Management, Glencore, and Cargill.
The company has a strong track record of profitability, with a net income of $36.7 million in 2016 and a market capitalization of $153.8 million. The company is listed on the Nasdaq Global Select Market under the symbol SHIP with its primary competitors including DryShips Inc. (DRYS) and Navios Maritime Holdings Inc. (NM).
Trivago (NASDAQ: TRVG)
Lastly, and the most household name of all of these penny stock options, Trivago is a popular travel and tourism company. TRVG has been steadily falling from almost five dollars since March and sits around 2.40 now. The pandemic negatively affected many companies’ stock prices, naturally. Now, experts forecast a change in tides for Trivago and many similar companies.
Note that you can trade all of these stocks in real-time because they belong on the NYSE, NASDAQ, or NYSEAMERICAN. Other stock exchanges in the world have delays for how instantaneously one can buy and sell shares. The time frame is generally 15 minutes.
Quarterly report releases, earnings releases, and other company news will drive stock prices for these penny stocks. Be sure to check out Seeking Alpha, Benzinga, and other financial news websites for updates on these companies!
Get Help From Shiirs
As mentioned above, penny stocks are a great opportunity to dabble in risky investments. Consider all risks before investing your entire life savings into a precarious penny stock. Even for seasoned investors, penny stocks can be difficult to predict. Proceed with caution, and if you can, consult with your financial advisor to make the best decision for your financial situation.
Quarterly report filings with the SEC are a great way to research penny stocks. This is where you can find information on a company‘s financial performance, management, and other key details. The filings are also a good way to see if the company is complying with SEC regulations.
Investment advisory firms can also be a great resource when researching penny stocks. Many of these firms have experts who can help you make informed investment decisions.
Finally, always remember that investing in penny stocks is a risky proposition. Do your homework, consult with professionals, and remember to diversify your portfolio to minimize your risk.
If you need more help, consider using our service. Financial advice is not a one size fits all and we would be more than happy to provide you with a worthy consultation.
Shiirs is here to help improve your financial health in any way you need. If you’re interested in penny stocks, first we can teach you
how to invest in stocks. Whether you are looking to improve your credit, invest your money, or secure a loan, Shiirs has plenty of expert advice and consulting to offer. Learn more about how we can help today!
