Certain penny stocks to buy can generate significant gains. But it’s also important to note that penny stocks are inherently volatile by nature.
Penny stocks don’t typically have much liquidity. Usually, there is very little trading that goes on in these stocks on a daily basis. Hence, even a small sell-off can trigger a large drop for a penny stock and wipeout whatever gains that might have been generated earlier.
However, there are other stocks that investors have been following, which have had liquidity. The only thing is that these specific penny stocks to watch haven’t performed well at all. It wasn’t because of lack of liquidity either. Something of a similar nature happened with one penny stock. I’m talking about J.C. Penney and on August 15 this was one small-cap stock that felt the wrath of penny stock investors, market-wide.
Volatile Penny Stocks To Watch: J.C. Penney Company (JCP) Impresses Investors (slightly)
On Thursday, J.C. Penney Company Inc (JCP Stock Report) rose significantly in early trading (but there’s more to this story so keep reading). This has been a beaten-down penny stock over the course of the past year or so. Mainly the beat down was due to the company’s massive debt burden. But after the company declared is Q2 2019 results, the company managed to spark a slight improvement in its numbers. JCP stock soared by as much as 14%.
In the second quarter, J.C. Penney generated total sales of $2.5 billion and its loss per share came in at $0.15. That’s an improvement from its prior-year quarter when the company generated $0.32 worth of losses per share. It also managed to improve its cash flow and reduced inventories. It seems that the surge in the stock was primarily due to the optimism among certain investors.
But the improved figures could only hold attention spans for a little while. The fact remains that the tens of billions in debt are still weighing J.C. Penney down. Despite the significant rise in JCP stock price, it ultimately gave up all of its gains by the end of the session. Keep in mind that J.C. Penney still has a long road ahead before it can manage to get a semblance of normalcy.
Will J.C. Penney Ever Be A Penny Stock To Buy?
This is a good question. The company has been riddled with debt and declining sales for countless quarters. Despite the upbeat figures from this last report, the company still reported a net loss of $48 million for the second quarter. It also saw a nearly 9.2% drop in sales from the year-earlier period. Aside from the day traders looking for a range-bound penny stock, it’s hard to say what could happen next.
Along with its quarterly figures, a penny stock news release also shows the company trying to expand. In an effort to “evolve,” JC Penney announced a partnership with ThredUp Inc. It will sell used clothing in 30 stores through the popular resale site that stocks brands from Gap to Gucci.
“With the rise of online resale markets, there’s no doubt that demand for great value on quality brands is at an all-time high. There’s an emotional thrill that comes with finding one-of-a-kind secondhand product for much less.”Michelle Wlazlo, executive vice president and chief merchant for J.C. Penney
The difficult part of this is that a deal such as this may only be another thing to manage. It doesn’t necessarily address the core business of the company. Knowing that J.C. Penney is a business over 100 years old, it’s likely not your typical penny stock to watch. Based on this reason, the volatility may not be 100% due to