Today we look at some of the most active penny stocks to watch. If you’re new to trading, in general, we’ll first go into some of the ins and outs of trading, including a background on low-priced stocks. Then we’ll dive into this list of penny stocks and discuss some of the latest catalysts that might be important to account for. Once complete, you can decide if they deserve a place on your watch list or not.
What Are Penny Stocks and Why Consider Investing in Them?
Penny stocks are shares of small, emerging companies that trade for under $5 per share. Typically, these affordable stocks come from lesser-known businesses in new industries. Penny stocks often trade over-the-counter instead of major exchanges like the NYSE and Nasdaq.
The low per-share price allows investors to buy more shares for less upfront capital compared to investing in well-known blue chip stocks. For example, if you invest $500 in a $20 blue chip stock, you may only acquire 25 shares. But that same $500 could buy thousands of shares of a $.50 penny stock.
However, the lower share price also comes with increased risks. Penny stocks tend to have lower liquidity, making them harder to buy and sell. Additionally, smaller companies don’t have the same financial reporting requirements as large public companies. This makes reliable financial data more difficult to obtain.
Common Risks and Pitfalls to Avoid with Penny Stocks
While penny stocks can offer exciting potential, they also carry higher risks that investors should know before buying shares. Some key dangers to be aware of include pump and dump schemes, limited history to evaluate, and share dilution.
In a pump-and-dump scheme, scammers pump a penny stock heavily using false or misleading information in an attempt to “pump up” the share price. Once the stock price rises, the scammers then “dump” their shares for a profit, while other investors are often left holding the bag when the stock crashes. These schemes are illegal but still occur in penny stock investing.
Since most penny stock companies are young or struggling businesses, they also lack years of financial history and track record that help evaluate more established companies. This makes judging future performance much harder.
Penny stock companies may also engage in share dilution by frequently issuing new shares. This increases the total shares outstanding, which can reduce the value of each existing individual share.
Finding Promising Penny Stocks in 2023
In the recent stock market turbulence, some interesting penny stocks have emerged across sectors. The key is distinguishing companies with solid fundamentals from riskier speculations.
For instance, tech penny stocks are an interesting area to research, as falling share prices have pushed many emerging tech firms into penny territory. Look for innovators with new products/services gaining traction.
Healthcare and biotech are other sectors where penny stocks can rise. Identify biotech firms with novel treatments targeting underserved health needs. The aging population supports long-term growth.
Performing thorough due diligence is critical before investing in any penny stock. Understand the company’s financials, leadership team, and addressable market potential. Expert analysis provides valuable insight for identifying hidden gems.
Penny Stocks To Watch
- SNDL Inc. (NASDAQ: SNDL)
- T2 Biosystems (NASDAQ: TTOO)
- Aurora Cannabis (NASDAQ: ACB)
SNDL Inc. (SNDL)
Cannabis company SNDL Inc. has seen its share price trend higher amid recent positive developments in the marijuana industry. SNDL, which produces and distributes recreational cannabis, is approaching an important company milestone.
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Several catalysts appear to be driving investor enthusiasm for the penny stock. Proposed legislation for federal rescheduling of marijuana has raised hopes for loosening regulations on cannabis companies.
The company and Nova Cannabis also announced that they anticipate closing their strategic partnership transaction by the end of September. “SNDL and Nova recently participated in constructive discussions with the regulatory body responsible for final approval,” stated Nova’s CEO Marcie Kiziak.
“The conversation was productive, and we are confident in the transaction’s timely progression. SNDL and Nova remain committed to navigating through these processes with transparency and diligence, ensuring the best outcome for all parties involved.”
This week, more news has helped fuel momentum. SNDL announced the launch of its eCommerce platform for its destination liquor retail brand Wine and Beyond. Company CIO, Robbie Madan said that “This move will offer SNDL a scalable and flexible platform to broaden our market presence and customer reach while creating margin accretive tactics to drive revenue growth.”
T2 Biosystems (TTOO)
We’ve discussed the recent popularity of penny stocks under $1 over the last few weeks. T2 Biosystems has maintained a place on those lists. The company has gained attention thanks to its portfolio of detection platforms for pathogens and specific genes. Its products include the T2Dx® Instrument, the T2Bacteria® Panel, the T2Candida® Panel, the T2Resistance® Panel, and the T2SARS-CoV-2™ Panel and are powered by the proprietary T2 Magnetic Resonance (T2MR®) technology.
Earlier this quarter, T2 received FDA breakthrough device designation for its candida auris diagnostic test. It’s the third T2 product to receive the title. The device is a direct-from-blood molecular diagnostic test to detect C. auris in 3-5 hours.
last month, not only did T2’s latest Q2 earnings per share results beat estimates, the company also announced that it is back in compliance with NASDAQ listing standards regarding its market value. The news helped spark interest in the company and even generated some meme-stock-like buzz on platforms like Twitter and Reddit. Penny stocks can build momentum thanks to speculation and hype, which coincide with social sentiment.
Heading into next week, all eyes will likely be on the Gilmartin Group’s Emerging Growth Company Showcase. T2 is participating in fireside chats on September 21.
Aurora Cannabis (ACB)
Aurora is another one of the marijuana penny stocks to watch. It has been making its own news in recent weeks. Some of the latest were regarding its sale of the Aurora Sun Facility being completed via Bevo Farms’ acquisition. Bevo is one of North America’s largest suppliers of propagated vegetables and ornamental plants.
In an update, Aurora’s CEO, Miguel Martin, also mentioned, “Bevo has successfully repurposed the Aurora Sky facility in Edmonton, and we’re excited to further support their continued growth. Bevo’s acquisition of the Aurora Sun facility further demonstrates the close synergies between our companies and the value that our partnership creates for shareholders.”
The company also reported Q1 fiscal 2024 results. Aurora beat sales estimates by a wide margin, $55.91M versus $46.80M. Aurora also pointed out that there was meaningful Adjusted EBITDA growth realized. Miguel Martin noted the strong performance and explained, “We are pleased to have generated strong net revenue and record adjusted EBITDA during Q1, which positions us well for what we believe will be a successful fiscal year 2024.”
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Furthermore, Aurora recently reported that it has bought back an aggregate of roughly $12.3 million (US$9.0 million ) principal amount of its senior notes. After completing these buybacks, Aurora said it will have approximately $53 million (US$39 million) of Notes outstanding.
