After A Tough Year, Are These Top Penny Stocks To Watch Next Year?
In 2019, plenty of penny stocks recorded gains and generated a lot of wealth for investors. But as the year winds down it’s time to look at some penny stocks that could be worth watching next year.
One of the most important things to keep in mind is that analysts believe that the damaging U.S.-China trade war may come to end next year. That could bring in much-needed stability to the markets. Hence, there is a lot to look forward to.
There’s also the thought that there could be even more volatility in the markets. It could make a strong case in favor of small-cap and micro-cap stocks. Several of these companies had a rough year this year. But the latest surge in interest may change that.
Penny Stocks to Watch #1 Nio Inc. (NIO)
Chinese electric vehicle manufacturer Nio Inc (NIO Stock Report) is one of these penny stocks to watch. The company had a very tough year and its stock fell like a rock. But over the past two months, NIO stock has generated highly impressive sales figures. Following the difficult second quarter, NIO came back strongly in October. It improved further in November as it delivered as many as 2528 vehicles.
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The stock rebounded somewhat as well but the bigger worry for investors is the fact that NIO is very low on cash. Furthermore, many analysts have expressed worries about whether it can continue as a strong business. After having burned through $620 million in Q2, the company revealed that at the end of June it had $503.4 million in cash.
Fresh capital raise plans have not come to fruition either. That’s despite the announcements from the company. Investors need to be cautious about the stock and consider its financial condition. Needless to say, shares have continued to climb in the 4th quarter. The initial gap down created from negative headlines has closed within less than $1.
Penny Stocks to Watch #2 J.C. Penney (JCP)
The other penny stock that could be of some interest is J.C. Penney Company Inc (JCP Stock Report). The company has been in all sorts of trouble due to its massive debt burden. On December 9 J.C. Penney released its financial results for the third quarter and it revealed that the company is showing some resilience.
The stock has been trading around $1 a share for the past few months. It’s been a slow churn since JCP stock hit a 2019 bottom of $0.53 in August. In its last earnings report losses came in at $0.29 a share as opposed to analysts’ estimates of $0.56 a share. It would be interesting to see if the company can stage a turnaround of sorts.
Some market chatter has investors focusing on H/2 Capital Partners, a lender to the company. There were reports that H/2 wants to offload almost $800 million from its $1.7 billion loan it made the company. The plan is to auction it off at a potential price of $0.87 per dollar according to Bloomberg News last week. Whether these are just rumors or not, it’s important to keep this in mind considering the stock currently trades above $1.10 a share right now.
Penny Stocks to Watch #3 Chesapeake Energy (CHK)
It’s funny to think but just a few weeks ago, Chesapeake Energy (CHK Stock Report) hit new 52-week lows. Fast-forward to this week and shares have rallied by over 50%. The company announced the pricing of the much anticipated $1.5 billion term loan facility. Doug Lawler, President and Chief Executive Officer of Chesapeake Energy, stated, “We are very pleased to have the financing in place to eliminate Brazos Valley’s separate capital structure.”
“Combining into a single financing structure increases our flexibility, enhances our credit profile and improves our ability to continue to meet our financial obligations as we focus on reducing debt, improving our cost structure and positioning the company to deliver increased shareholder returns.”
Essentially, this 4.5-year term loan will be secured by Chesapeake’s revolving credit facility. It’s expected to close before Christmas. Whether or not the market will respond favorably to this is yet to be seen. However, it is important to note that financing deals can bring volatility while the market sifts through the legal jargon of the company’s deal. As for now, shares climbed to higher of nearly $0.85 on Tuesday but took a sharp turn after the open.