In what’s likely to be another wild week, penny stocks remain a focus. Over the past 8 trading days, oil and gas stocks that once traded above $5 saw many fall far below that threshold. They’ve actually become penny stocks. This was the latest sector to feel the burn of the coronavirus pandemic. We’ve now seen negative impacts on real estate, travel, small-businesses, and now oil & gas. But one of the positives is that more investors are becoming familiar with the wild world of cheap stocks. They’re even starting to learn how to trade penny stocks right now.
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It may be cliche, but for too long, the average investor has scoffed at the idea of “penny stocks“. Maybe they think the companies are worthless or not worth the time to research. But that thought process is now becoming dated. When was the last time an investor in an oil and gas company like Marathon (MRO Stock Report) would even consider stocks under $10, let alone stocks under 5? But here we are. The energy stock that earlier this year traded above $10 now is one of the stocks below 5. It has even sunk as low as $3.02 this year.
Not only has it gained exposure to the “low-priced stock trader” but the die-hard Marathon Oil investor is likely monitoring closely. There’s a possibility that they’re even investing more to average a position. This has translated into compounded daily share volumes increasing from around 10 million shares per day to more than 100 million at times.
Can You Make Money With Penny Stocks?
Has there been an opportunity to make money with penny stocks like this? Well if you look at the chart, the simple answer is Yes. Not only from the last few weeks ($3.02 to $5.15 on April 24) but also on a daily level.
Here’s the point: just because something may be considered a penny stock, doesn’t mean it isn’t worth looking at. Do you like to make money? Can you handle higher levels of risk? Are you able to manage emotions when it comes to that risk? If your answer was yes in all cases, then why ignore an entire asset class that is known for high-risk and high-reward. Now it also includes some well-known names across a number of industries.
There’s a common misconception and mainstream entertainment has done a great job of making all penny stocks look like bad companies. But when you consider the fact that some of the top coronavirus stocks out there, trading millions of dollars per day were actually stocks under $2 at one point in 2020, it may make you think a bit harder about not “judging a book by its cover”. With this in mind, here’s a list of penny stocks to watch heading into the final week of April 2020.
Algernon Pharmaceuticals
One of the top coronavirus penny stocks to watch in April has been Algernon Pharmaceuticals (AGNPF Stock Report) (AGN). The company’s claim to fame is its approach to drug treatment. Algernon focuses on re-purposing compounds instead of creating them from the ground-up. What this allows the company to achieve is the means to get treatments to the “finish line” potentially sooner than a novel type of treatment. The repurposed compounds typically have a lower risk of failing in human trials as a result of safety issues. It’s also a more capital efficient model as the science behind new therapies can cost hundreds of millions of dollars in many cases.
Where the coronavirus comes into play is with regard to the company’s NPP-120 (Ifenprodil). Algernon has filed new intellectual property rights globally for NP-120 (Ifenprodil) for the treatment of respiratory diseases. It is also working to develop a proprietary injectable and slow release formulation. The Company is in the early stages of clinical research and development but has begun making progess with some of the world’s leading drug administrations.
Last week, the company received approval from the Ministry of Food and Drug Safety in South Korea, as well as ethics approval, for an investigator-led, Phase 2 COVID-19 clinical study of its re-purposed drug NP-120 (Ifenprodil). Enrollment in the trials begins on May 8th. This development shortly follow-up two other big updates from Algernon. These included the submission of a Clinical Trial Application to Health Canada for an NP-120 (Ifenprodil) COVID-19 Phase 2b/3 multinational clinical trial.
In addition, Algernon received positive feedback from the U.S. FDA regarding its plans to reformulate its repurposed drug NP-120 (Ifenprodil) into a new intravenous product. Thanks to this progress, Algernon stock has become one of the top penny stocks to watch in April.
Aytu Bioscience
Another one of the coronavirus penny stocks to watch in April has been Aytu Bioscience (AYTU Stock Report). While shares haven’t had the same overall trend as Algernon’s have, AYTU stock has had its positive performance on an intra-day level. A look at the 1-month chart in April doesn’t tell the full story of Aytu Bioscience, however.
Earlier this year we saw the biotech penny stock struggling to figure itself out. AYTU stock even dipped as low as $0.36. The biggest thing going for it was the acquisition of Innovus Pharmaceuticals, Inc., a specialty pharmaceutical company commercializing, licensing, and developing safe and effective consumer health products.
But then in mid-March, the company jumped into the “COVID-19 pool,” head-first. Aytu inked a distribution agreement for the right to commercialize a clinically validated and commercially used coronavirus 2019 (COVID-19) IgG/IgM Rapid Test. The rest has been history since then; until this week. What seems to have struck a chord is a recent deal the company struck and what the U.S. President has recently praised. The company signed an exclusive worldwide license from Cedars-Sinai to develop and commercialize the Healight Platform Technology.
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The Healight technology employs proprietary methods of administering intermittent ultraviolet A light via a novel endotracheal medical device. Thanks to Donald Trump’s favor of UV rays to combat coronavirus, this could be another speculative, momentum-fueled focus on AYTU stock.
Cyclacel Pharmaceuticals
Finally, Cyclacel Pharmaceuticals (CYCC Stock Report) has been a fierce penny stock to watch in April. While CYCC stock effected a 1 for 20 reverse split and saw the price trading above $6 thereafter, the volatility in the market was nothing short of “stressful” to say the least. Following the reverse, Cyclacel stock managed to run up from $6 to highs of $19.25. But almost like a vacuum was turned on, CYCC stock plummeted quickly from those highs to as low as $3.85. While it wasn’t a penny stock after its reverse split, it certainly is one, once again heading into the week. But why did the penny stock drop so fast, so quickly?
First, let’s see why the stock ran to begin with. On April 20th, CYCC ran up after the company announced a collaboration with the University of Edinburgh. It was to study fadraciclib (CYC065) and seliciclib (CYC202 or R-roscovitine), its clinical stage CDK2/9 inhibitors, as potential early treatments for the inflammatory response observed in patients with COVID-19 disease. After profit taking on the 20th saw the stock pull back from $19.25 to around $8.60 at the close, this is when Sh*t hit the fan. Following a reverse split, small-cap investors’ biggest fears include dilution.
Whether it’s from current debt holders or new funders, the fear is that a company simply reversed in order to make its price look attractive to institutions. While this isn’t always the case, apparently it was for CYCC and they dropped a bombshell on the market. The company announced a $20 million public offering at a price of $5 per share. After crumbling back into penny stock territory, something interesting happened after the close on April 24th.
Cyclacel announced the formal closing of the financing, which was now a financing at a premium to the retail share price. After closing at $4.02, the penny stock started climbing back higher and trading volume was also a big factor after the closing bell. Will that momentum continue into the week ahead?
