When you hear about penny stocks, oftentimes people will refer to technical indicators and momentum first. There are, of course, a catalyst that can be cited as a trigger for a short term move. But, in general, your average day trader looks at things like share volume and technical levels. We know from reading and writing about countless penny stocks, there’s more than meets the eye by looking at more than 1 specific thing like technical indicators.
You need to consider fundamentals as well. Let’s say there’s a penny stock that’s moving up big without any news whatsoever. Are the changes greater or less than the stock can handle in order to maintain that move?
In many cases, penny stocks moving solely on trading momentum rarely sustain bullish moves for a longer period of time without some kind of fundamental catalyst. Today we’re taking a look at a handful of penny stock charts and will also be taking into consideration what these companies are actually doing.
The main reason being is that these aren’t your typical penny stock charts. These trends have sustained for weeks and at times, months.
Best Penny Stocks To Trade (or ignore) #4: Allena Pharmaceuticals
This is one of the popular biotech penny stocks to watch this month. Allena Pharmaceuticals (ALNA Stock Report) had a rough 4th quarter right up until mid-November. Shares plummeted from over $6 to less than $1.60 after the company actually announced positive results from two studies evaluating its reloxaliase.
The studies evaluated high-risk patients with enteric hyperoxaluria and advanced chronic kidney disease. It eventually rolled to 52-week lows of $1.55, after reporting its Q3 earnings. But there could be a silver lining here as shares of ALNA stock continued higher during the second half of November.
What to watch now? The company presented at the Evercore ISI HEALTHCONx Conference this week. By the look of things, reactions appear favorable. What’s more. however, is that the company plans to re-engage with the FDA to evaluate opportunities to streamline its URIROX-2 therapy.
Specifically, the company wishes to “discuss measures to potentially streamline its ongoing URIROX program through modifications to the adaptive URIROX-2 trial design.” They are also reducing the workforce to preserve capital in order to conduct these programs. In an 8K filing, the company estimates that it will incur aggregate charges of roughly $500k to $600k for severance packages, in Q4. But these, it states, are 1-time expenses. In any case, ALNA has moved steadily higher since falling in November and this latest development saw shares jump even higher in late trading on December 4.
Best Penny Stocks To Trade (or ignore) #3: Arbutus Biopharma
The next on this list of penny stocks is Arbutus Biopharma (ABUS Stock Report). Unlike Allena, ABUS stock had a banner 4th quarter despite falling during the first week. At the start of October, shares traded at $1.50 but after the company reported that it would discontinue development of one of its drugs (AB-506), shares dropped to lows of $0.82. Ever since then, the biotech stock has rallied strongly to highs of $2.45 on Wednesday. Even if this was on a “penny stocks to watch” list at the start of Q4, the stock is still up over 60%; up nearly 200% from Q4 lows.
So what happened with Arbutus to warrant this move besides market momentum? For starters, the company reported Q3 financials which showed a significant cash position on the books of over $90 million. This was significant because according to the company it can fund operations sufficiently into “early 2021.”
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What could have shares in a frenzy this week isn’t indicated by news or filings at this time. Nothing new has come out thus far. But On its earnings call, Bill Collier did state that the company wishes “to select one of [its] compounds for IND enabling studies by December of this year.” Could this be helping to drive speculation right now?
Best Penny Stocks To Trade (or ignore) #2: La Jolla Pharmaceutical
Another biotech penny stock to watch was La Jolla Pharmaceutical (LJPC Stock Report) this month. Toward the tail end of November, share prices for LJPC stock were rocked. The stock fell from over $6 to lows of $2.30 after falling victim to a similar situation as Arbutus. La Jolla reported a few additional items as well.
The company first released a statement regarding the departure of its CEO, which didn’t bode well for the stock. It also reported that it would discontinue its study of LJ401-BT01 after it saw lacking efficacy. Here’s where it gets interesting. If you only look at headlines, you would miss some big things going on with the company right now.
A series of Form 4s files earlier this week shows some insider buying going on with the stock. Albeit light buying by the CCO, CFO, and CMO, it’s still worth noting. Based on the chart pattern as well, LJPC stock has upheld its latest uptrend for the last 5 trading sessions. Will this insider buying and the company’s current management search be enough speculation to help push things along for the time being?
Best Penny Stocks To Trade (or ignore) #1: Waitr Holdings Inc.
We brought this penny stock to light earlier in November. Waitr Holdings Inc. (WTRH Stock Report) came on the radar after hitting fresh 52-week lows. Since that time, there was no news released by the company. However, there were several Form 4s filed that showed insider transactions during this latest period of the uptrend in the middle of the 4th quarter.
So what’s happened recently besides these insider actions? It’s difficult because there hasn’t been much of anything else besides a slew of class action lawsuit press releases. If you took a read through or listened to Waitr’s earnings call, there are a few things to understand. First, the company is going through a huge restructuring of management. This can help build upon “the unknown.” But according to Karl Meche, the company is moving toward efficiency and ways to reach profitability.
“Moving forward, you should expect to see steady improvements in cash flow compared to the past several quarters. You should also expect to see a refocus on existing markets where there is a strong user base, great brand awareness and still a lot of growth potential.”
Adam Price
Can this micro-rally continue and what might WTRH stock realize by way of directional momentum? In my opinion, there may still be a lot left to the imagination considering a lack of new information following earnings. However, in light of this WTRH has managed to climb back nearly 170% since hitting those 52-week lows of $0.21
