How can you make money trading in the stock market today? Ask some retail traders, and they’ll quickly respond with two words: penny stocks. According to the standard definition, these are stocks, usually of small companies, that can be bought and sold for less than $5.
We usually aren’t talking about billion-dollar market cap companies though there are some cheap stocks with such valuations. In general, penny stocks are associated with start-ups or, as we’ve seen throughout 2022 and 2023, larger companies that have fallen on hard times.
The so-called “household stocks” with well-known brand companies trading for a fraction of their IPO prices are increasingly popular. Companies like AMC Entertainment (NYSE: AMC), GameStop (NYSE: GME), Bed Bath & Beyond (NASDAQ: BBBY), and plenty of others have promoted the idea that retail traders can capitalize on low-priced stocks.
Building A List Of Penny Stocks
One of the first places to begin (assuming you understand how to trade penny stocks) is putting together a list. Now, this list of stocks under $5 doesn’t have to be final but more of a starting point for you to begin focusing on a set of potential targets. You might want to start with a theme like short-interest penny stocks or stocks with insider trading. Other areas of interest tend to deal more with momentum in the market, in general.
What are the most active penny stocks today? Which stocks are experiencing unusually high levels of volume or options activity? Are there penny stocks on Reddit or stocks being mentioned by the Fintwit community that could be gaining speculative-fueled momentum? There are plenty of topics you can base your research.
The initial starting point, as we said, is building that list of penny stocks to watch. This article closely examines a handful of cheap stocks gaining momentum this week. We look at recent updates, filings, any “unusual activity,” or upcoming events that could gain investors’ interest. Then you can decide if they deserve a place on your watch list heading into March.
Penny Stocks to Buy [or avoid]
Glatfelter Martin Corp. (NYSE: GLT)
Shares of engineered materials supplier Glatfelter pulled an about-face on Monday. The company has strongly focused on innovation and sustainability for personal hygiene, food and beverage filtration, cleaning, personal protection, home improvement, and industrial products. Last week GLT stock slipped down to test the 50-day moving average for the first time since January. A recent earnings miss helped to bring some selling pressure into the market this month.
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It missed earnings per share estimates by a wide margin reporting a 16-cent loss compared to the 5-cent gain expected. However, CEO Thomas Fahnemann explained, “Our focus on profitability and prudent inventory management, along with seasonal shifts in order patterns and pockets of slower demand, had an anticipated temporary impact on volumes in Airlaid Materials and Composite Fibers. All aspects of our business continued to be impacted by macroeconomic challenges related to energy and raw material inflation. However, more aggressive pricing actions to recover this inflation resulted in meaningful progress in closing the price-cost gap.”
Besides an upcoming presentation at JP Morgan’s Global High Yield and Leveraged Finance Conference next month, insiders are one of the catalysts this week. The company’s SVP, IGSC, and IT Wolfgang Laures reported the largest purchase with 277,000 shares at an average price of $3.722 in a trade valued at over $1 million.
American Lithium Corp. (NASDAQ: AMLI)
Lithium stocks have been in the news recently but not for the optimistic view they have received in the past. Lithium prices have fallen as certain lithium battery companies have adjusted their pricing strategy. Even with that as the case, some traders are seeing potential in this move lower, with companies like American Lithium rebounding at the start of the week.
American Lithium is developing large-scale lithium projects throughout the Americas. Initially, it has focused on the Tonopah Lithium Claims area in the Esmeralda lithium district of Nevada. American Lithium is also looking at production from southeastern Peru.
Earlier this month, the company announced positive preliminary economic assessment results for the TLC. According to American Lithium, it “demonstrates that the TLC project has the potential to become a substantial, long-life producer of low-cost lithium carbonate (“LCE” or “Li2CO3”) with the potential to produce either battery grade LCE or lithium hydroxide (“LiOH”). The PEA base case envisions an initial 4.4 Million tonnes per annum (“Mtpa”) processing throughput expanding to 8.8Mtpa. The PEA alternative case is identical but with added production of high-purity magnesium sulfate as a by-product over life of operations. Unless otherwise stated, all dollar figures are in US currency.”
Based on this, the company appears optimistic about the prospects of this claim. While it will be capital intensive, details of the PEA suggest the present value outpaces that cost by a noticeable margin if executed. The company cited a pre-tax Net Present Value8% $3.64 billion at $20,000/tonne. Simon Clarke, CEO of American Lithium, stated, “At 99.4% LCE purity, TLC offers the capability to produce either battery grade lithium carbonate or hydroxide with minimal additional refining.”
With lithium prices in focus, AMLI stock has gotten a recharge at the start of the week.
Asset Entities Inc. (NASDAQ: ASST)
Shares of newly public Asset Entities Inc. saw their first meaningful green day in the market since the IPO. The digital marketing and content company’s stock price popped when it opened for trading this month but has since bled out to fresh lows by last Friday.
Nevertheless, ASST stock has come back into focus as more than 2.7 million shares exchanged hands on Monday, marking the highest single-day volumes in its short history of being a public company. There weren’t any related headlines to immediately point toward.
But recent news has focused on Asset Entities’ recent online marketing campaign launch for its Discord community services product. The company packaged design, development, and management services into a single offering to provide businesses and celebrities with a digital marketing option via the popular chat platform.
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Thanks to the move that companies like ContraFect (NASDAQ: CFRX) made recently, low-float stocks are a hot topic. As of its IPO debut, Asset Entities came to market with 1.5 million shares of stock at $5 per share. Based on that information, ASST stock could be one that traders are watching that could fit the mold of this recent niche trend.
