3 Penny Stocks That Dipped Could Be Ready To Rip
There’s always a time when a stock stops going up. This has been especially prevalent with penny stocks. Let’s face it, a rising tide can’t rise forever. There needs to be profit-taking to make money from your investment. But some stocks continue to drop for extended periods of time; we call this the falling knife. So what comes next?
Well, if you are looking for penny stocks to watch that could be bottomed out, tracking 52-week levels might help you out. There was an article published today talking about penny stocks to reached new highs. But what is the relevance when they reach new 52-week lows? You basically will see 1 of two things happen: either they continue lower or reverse. But the factors involved are vital.
Sometimes there may be a fakeout. You might think there’s a reversal but you might have missed the fact that the company filed a statement to raise funds at a discount. In such a case, you might end up holding the bag. So, before we dive in, be aware that if you’re looking for a list of penny stocks at historic lows, understand why they are there and if they have the make-up of a stock that can reverse.
Penny Stocks To Watch #1: Briggs & Stratton
First, Briggs & Stratton (BGG – Free Report) hit fresh 52-week lows on Tuesday. Shares dipped to $3.32 as the company came off of a big hit from a downgrade from Moody’s. But this wasn’t a one-time thing either. The downgrade followed the company’s weak guidance, bad earnings results, and a suspension of its dividend.
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But things started to turn around (for now) on February 5th. There was a filing made on the 4th showing that BlackRock, Inc. has a 16.2% stake in the company. So it makes sense that some of the bullish sentiment returned to the market in the short term. But what does that mean for the long-term? The company just reported another bad quarter. Furthermore, now that there is lowered guidance and the hit to its dividend, is it really a matter of, “there’s nowhere to go but up?”
That would be an answer only you can come up with. But from a purely technical perspective, short term indicators have started to turn slightly bullish after Wednesday’s performance. Both MACD and RSI are starting to slightly turn back up from the depths of the lowest levels seen in recent times. In addition, the penny stock saw its first day of higher lows in over 2 weeks.
Penny Stocks To Watch #2: Sprint
This has been a storied stock but now Sprint (S – Free Report) is officially a penny stock according to the formal, SEC definition. I remember when we first broke the story asking the question if Sprint was about to become a penny stock. Not only did it become one but it also continued to slide since that article was published. But that may be changing at least from a market perspective.
The problems that the company has created for itself haven’t changed but sentiment may have begun to. The main focus as always been the merger with T-Mobile (TMUS – Free Report). Though there’s been a fair amount of pushback, the fact remains that the U.S. is rampantly trying to grab footing in 5G. With foreign competitors like Huawei quickly capturing share, the argument to push the TMUS/Sprint deal forward has gained ground.
Also, keep in mind that Sprint may be doing a mea culpa of sorts after its latest move alongside T-Mobile and Comcast to stop robocalls. Aside from that, there’ve been strategic insider buys conducted this week, which may bode as a show of confidence for the investing community. Still, keep in mind that at any point the merger deal could be stopped. Whether or not that is realistic is another story. But for now, Sprint stock has enjoyed a multi-day rally after inking new 52-week lows this week.
Penny Stocks To Watch #3: Tailored Brands
Finally, Tailored Brands (TLRD – Free Report) saw shares bounce back from 52-week lows this week. The company owns brands like Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank, Moore’s, and K&G. Just like many brick & mortar centered models, Tailored has had to compete with slower foot traffic in light of more online retail shopping. Earlier this year the company sold its Joseph Abboud trademarks to WHP Global for $115 million. This deal now allows WHP to sell and rent Joseph Abboud branded apparel and related merchandise in the U.S. and Canada.
That gave the penny stock a brief pause on its bear trend. But ever since then, the apparel stock continued to slide. That was true up until February 5. There were no announcements made by the company but just like Briggs & Stratton, an SC 13G/A filing shows a large shareholder on the books. BlackRock, Inc. holds a 15.8% stake in Tailored Brands. Again, this is another case of determining whether or not this is a sustainable move.
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Of course, it’s great to see a fund like Black Rock jump into the stock but what about the company? In its Q3 earnings, the company topped expectations. However, it reported that its Q4 loss could be wider. This was wider than the street expected. With earnings coming, what will the books show for 2019’s overall performance and was this the first day of a new uptrend or just another break in a longer downtrend?