Two Beaten Down Penny Stocks To Watch
Penny stock investing can be one of the most exhilarating experiences for any individual. The main reason behind the popularity of these cheap stocks is that they have the potential of generating enormous returns in a short period of time.
The fact that one day you can buy a penny stock for $0.50 and see it rally just ten cents by the next day is incredible. Why? Well, that small 10-cent move to $0.60 means your position is worth 20% more within a single day. What blue-chip stocks can consistently do that?
That being said, it can all go wrong if the investor buys penny stocks based on hype alone. Diligent research is key if you want to consistently succeed in penny stock investing. Here is a look at two penny stocks that have been beaten down this year but may be showing some signs of life.
Penny Stocks to Watch #1 Nio Inc (NIO)
Over the course of 2019, Chinese electric vehicle manufacturer Nio Inc (NIO Stock Report) has had an incredibly tough time. That has obviously been reflected in the stock price, which plunged to record lows. The company is losing money hand over fist. As a matter of fact, some analysts have stated that NIO could face liquidity issues at some point this year.
The stock has been extremely volatile over the past few weeks as well and if an investor is able to time his investment, then he could make a neat profit. On Monday, the stock rose by 11% despite there being no news regarding the company. That being said, NIO is extremely volatile and traders should be cautious when it comes to this company.
Penny Stocks to Watch #2 Groupon (GRPN)
The other penny stock that has become highly interesting this year is Groupon Inc (GRPN Stock Report). It has been on the most popular penny stocks on Robinhood for several months including this month. The company that made “flash sale” highly popular some years ago has caught attention in 2019. But not necessarily for the best reasons, initially.
Shares have dropped as much as 90% in value from the heights of 2011 when it had its IPO. But the company’s revenues are only 18% lower than its peak in 2014. Groupon is a cash-rich company as well and there is absolutely no chance of the company not being in business for the foreseeable future.
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Moreover, it has made a strategic shift and is now focusing on other avenues. The company has also projected earnings per share to be 22 cents, up from 18 cents and that is definitely a positive for the immediate future of the company. It is definitely a company that should be watched closely.
Can You Make Money With Penny Stocks?
Obviously, in the case of these two penny stocks, there can be opportunities to make quick money if traded correctly. However, in the long-run, these penny stocks haven’t been the best “buy and hold” if you jumped on the IPO train. Given this, it’s important to understand that most penny stocks will be volatile like these. So, it’s important to pay close attention to different market trends and company news.
In the cases of Groupon and Nio, they’ve both had their fair share of bad press. Nio most likely took the trophy there. That’s especially true considering the company expects further hurdles.
In any case, no matter how “popular” a penny stock may appear, it comes down to the numbers and market sentiment. As we’ve reported in the monthly article about popular penny stocks on Robinhood, just because the stocks make the list, it doesn’t mean they’re the best penny stocks to buy.
With this in mind, yes you can make money with penny stocks. But it’s also key to have a plan going into it. Understand the market dynamics at play and it may not be a bad idea to keep close stops when dealing with volatile trading patterns. If you’re new to penny stocks check out this Penny Stocks FAQ for more info.