Are These On Your List Of Penny Stocks To Watch This Week?
It can be tough at times to trade penny stocks. Some days there are only a few names to choose from. But there are other days where there seems to be plenty of penny stocks to buy. In either case, having your plan in place can definitely help. Now, you might be asking, “How does a plan help if there are too many penny stocks to watch?”
That’s a great question if you’re new to trading. The name of the game is to find the best set-ups possible. Even though there may be countless stocks flying about, you can’t catch every breakout and effectively trade the full “rip”. Could you scalp? It’s possible but then you’re doing 10 times the work for possibly the same payout or less.
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So a good rule of thumb is to look for top set-ups or “grade A” set-ups. These are ones that have consistency in trading, aren’t ripping up and down within the blink of an eye, and give you a chance to enter and exit comfortably. The beauty of having too many choices is that when you trade out of one profitable position, you can take your time to find the next “grade A” set-up.
How Do You Find The Best Penny Stocks To Buy?
I talked about having a strategy in place. That strategy doesn’t just involve proper diligence but also a proper way to actually trade through your position. Some people will buy all shares at one price and sell all shares at another. This is inefficient. One of the best ways to stay in winning trades longer while also being able to cut out of losing trades quickly and with minimal loss is through tiered trading.
This is an advanced strategy that involves buying and selling different chunks of your “full position” as a stock is going up. By doing this, you essentially build your stock position by taking in different sizes until you reach 100%. This is much easier shown than reading about and there’s a quick way to learn from an actual, former hedge fund trader.
Needless to say, identifying a trade set-up is important but understanding how to navigate through a trade is just as important. With this in mind, here’s a look at a few penny stocks under $3 right now. Will they be the best penny stocks to buy this week? You be the judge.
Penny Stocks To Watch Under $3: CymaBay Therapeutics Inc.
If you read our articles frequently and you’ve done so since late last year, you’re likely familiar with CymaBay Therapeutics (CBAY Stock Report). This was one of the penny stocks to watch before Black Friday 2019. At the time, CBAY stock traded around $1.35 and had just halted the clinical development of its Seladelpar treatment. Unfortunately the initial hype or hope for a “dead cat bounce” didn’t cut the mustard and CBAY stock has been locked in a trading channel between $1.21 and $1.90 ever since the start of the year. But that all changed this week.
CymaBay not only reported its Q1 earnings, it also revealed some “easter eggs” in its corporate update. First, an independent expert panel unanimously concludes there is no clinical, biochemical or histological evidence of seladelpar-induced liver injury in the Phase 2b NASH study.
Second, the panel resoundingly supported re-initiating clinical development. Finally, CymaBay explicitly stated that it plans to re-engage with the FDA as quickly as possible. Keep in mind that before it halted clinical developments, CBAY stock was trading above $5.50 a share.
Adding fuel to the fire, CymaBay beat EPS estimates and narrowed its Q1 loss. “While we have not yet discussed full results from our investigation nor any of the panel’s conclusions with the FDA, we are planning to re-engage with the agency as quickly as possible. At this point, we cannot guarantee what the next steps or timelines will be, but we are confident that we have conducted a truly rigorous, independent review to help us definitively support the conclusion that seladelpar did not cause drug-induced liver injury in our NASH phase 2b study,” said Sujal Shah, President, and CEO of CymaBay.
Penny Stocks To Watch Under $3: MicroVision
An oldie but a goodie, MicroVision (MVIS Stock Report) was one of the penny stocks we’ve kept a close eye on since April. At the time, MVIS stock was trading around $0.30 as it brought on strategic advisors to help explore alternatives for the company. Since then, rumors began to filter across trading groups and on social media about a possible deal with Microsoft (MSFT Stock Report). While there haven’t been any full details given regarding a formal announcement by either company, speculation has been a big driver recently.
MVIS stock was one of the big movers from earlier in the month and eventually reached highs of $1.82 before plummeting back to the mid $0.50 range. No doubt this was a great move from the first discussion back on April 14th. But like all things, profit-taking is generally expected as nothing goes up forever without at least a little consolidation. As we saw, however, that wasn’t just a “little” consolidation from MVIS; it was a big drop. Shares continued to dip after the company released its earnings. But the latest buzz on Monday breathed new life back into MVIS stock.
Late in the afternoon, the rumor mill began buzzing again. This time the discussion was one about the “Microsoft deal” again. Craig-Hallum Capital Group (one of the MVIS strategic advisors)’s analyst Mic Malouf said he “believes the primary drivers of this dramatic increase are speculation that the company’s technology is in Microsoft’s Hololens 2 and that Microsoft would be interested in buying MicroVision.” – according to statements on TheFly.
No Confirmation To The Speculation So Far
But he feels that this speculation is “significantly overblown in the stock price”. Then again there was a blog article that was published alluding to a Microsoft/MicroVision deal “likely happening.” And who doesn’t take blogs as the only place you need to go for DD? Again, there has been no confirmation of this deal by either company as of 7 PM EST on May 11, 2020.
As of its most recent PR from May 8, MVIS is also still “exploring all options including the sale of one or more of our module product verticals and related technology or a potential sale of the Company,” according to Sumit Sharma, MicroVision’s CEO.
So If this is on your list of penny stocks right now, have a really strong understanding that speculation and a lot of it could be dictating the pace of the market and its volatile swings. Just remember, with such high speculation, no one ever went broke taking profits and “hopium” can put on the blinders especially if there’s misinformation floating around. What are your thoughts on the hype surrounding MicroVision? Is it believable or are you just pulling up a chair and getting your popcorn ready for whatever comes (or doesn’t) next?
Penny Stocks To Watch Under $3: Genius Brands
Another one of the penny stocks we’ve watched break out in real-time has been Genius Brands (GNUS Stock Report). We wrote about the company following its latest update. Genius announced the launch of a new network brand, Kartoon Channel, going live on June 15, 2020. According to Genius, the newly rebranded channel will “significantly expand the distribution”. This already reaches over 100M U.S. television households and over 200M users via OTT and mobile devices as it stands.
Similar to MVIS, GNUS stock saw a pullback. But instead of staying down, shares bounced back to start the week this week. There weren’t any new headlines to mention. But there was a recently filed 13G disclosure statement. It showed that Empery Funds holds a larger stake in the company. In addition to this, you’ll also see that Genius Brands had entered into securities purchase agreements with “long-standing investors”.
These were for $2.8 million (at $0.35/share) on May 7th and $5.448 million (at $0.454/share) on May 8th. The latter is expected to close by May 12 with the forming closing May 8. The company said it intends to fund the production of additional episodes of its series, Rainbow Rangers. It also wants to grow its newly-announced digital network for children and families, Kartoon Channel! from the proceeds of the offerings among other items listed.
Considering that both of these discounted offerings were made before this week and GNUS stock has continued to see momentum, has the market already digested the information? If GNUS stock is on your list of penny stocks to watch, financing deals are always something to keep tabs on especially concerning the price at which money was raised.
Penny Stocks To Watch Under $3: Akorn Inc.
One of the lower-priced names on this list of penny stocks is Akorn Inc. (AKRX Stock Report). Shares have been flip-flopping between $0.19 and $0.29 for the most part. There were a few days where AKRX stock broke above and below this range. However, the channel has been relatively consistent over the last few weeks. If AKRX stock seems familiar, it’s likely because you’ve been reading our April and May updates.
The last time we mentioned Akorn, shares were trading around $0.25. But there was an issue: no headlines or filings. We explained, “since the company is engaged in the development, manufacturing, and marketing of generic and prescription pharmaceuticals, could there still be “something” in its pipeline to justify this type of interest?” This week might have shed a bit more light on things after the company reported its latest round of earnings.
Akorn’s reported net revenue was $204.7 million for the three month period ended March 31, 2020. This was an increase of $38.8 million, or 23.4%, as compared to net revenue of $165.9 million in Q1, 2019. The company also said that discussions with lenders regarding the sale process and Chapter 11 filing are on-going. So far it looks like the market has taken these results as a sign of strength. AKRX stock started jumping after the initial results were released on May 11.
