Unless you’ve been living under a rock lately, you know how volatile the markets are right now. That has been a prime atmosphere for a “small class” of cheap equities we like to call penny stocks. Now, if you’re new to these because maybe your favorite company has become one of the stocks under $5, it’s important to know some basics. First, what are penny stocks?
Depending on who you talk to, different people define penny stocks by different price levels. But I like to write about as many of these low-priced stocks as possible, so we’ll go by the SEC’s definition of penny stocks. They say a penny stock is one that trades below $5 a share. So, considering how many stocks over $10 are now under $5, there’s likely a lot of people getting familiar with penny stocks this year.
How To Find The Best Penny Stocks To Buy
But, with that being said, we’ve also seen some massive breakouts. I’m talking thousands of percentage points. Just look back at some of the articles in late January and February. There are coronavirus penny stocks that traded for literal pennies and now trade above $30 a share; that’s very real. Will every penny stock bring gigantic wins like this? No, and many could be giant losers too.
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But if you can lose 9 times out of 10 taking losses of 10-15% but then hit on a trade that goes hundreds of percentage points, I’m sure you won’t be writing penny stocks off anytime soon. That’s the excitement behind these low priced equities: there are always chances that they produce serious gains. The bottom line is to do your research, understand there’s high risk involved, and get used to the fact that volatile swings can produce large gains just as quickly as they can large losses.
So it’s important to have a proper trading strategy put in place beforehand. You can secure profit while also managing risk and opportunities for those giant moves. With that, here’s a list of penny stocks to watch. Each trades below $3 a share as of the closing bell on May 18. Will they be the best penny stocks to buy? That’s up to you to decide.
Penny Stocks To Watch Under $3: Oncolytics Biotech
Oncolytics Biotech Inc. (ONCY Stock Report) was one of the top penny stocks to watch during the fourth quarter of 2019. In fact, we covered until we couldn’t cover it anymore. Why couldn’t we cover ONCY stock anymore? Well, we first discussed the company, this biotech penny stock traded around $0.95.
Through the duration of the 4th quarter, we watched first-hand, ONCY stock rally to highs of over $6. But remember what I said above. It’s about managing risk and it wouldn’t be prudent to think something could go up so high, so quickly, and not encounter profit takers. Over the next few months, ONCY stock eventually came to settle around $1.25.
Since the start of May, ONCY has been steadily climbing higher. Over the last few weeks, it jumped by nearly 60%. This came after the company announced that it would present the publication of an abstract as part of the ESMO Breast Cancer Virtual Meeting on May 23 & 24, 2020, which is coming up soon. The presentation will go over specifics of interim biomarker data from the AWARE-1 early-stage breast cancer study.
Oncolytics is evaluating its pelareorep along with Roche Holdings AG’s (RHHBY Stock Report) Tecentriq. The company also recently announced the publication of two abstracts in connection with the upcoming ASCO Virtual Annual Meeting on May 29-31. With 2 big blockbuster presentations coming up, sentiment seems to have grown more bullish.
Penny Stocks To Watch Under $3: Kirkland’s Inc.
Have you heard of Kirkland’s Inc. (KIRK Stock Report)? If you’re into home decor, you’ve likely been past a Kirkland’s store or seen its ads online. With the “real world” essentially shutting down, brick and mortar businesses have been hit the hardest. Some may never recover especially if they can’t gain eCommerce footing. We recently saw J.C. Penney (JCP Stock Report) going through this exact scenario. Failure to evolve can be a problem and for Kirkland’s, of course, store closures haven’t helped things.
However, it may be working to stay ahead of things right now. After closing down over 400 stores, the company began focusing on new opportunities created by COVID-19’s shutdowns. That focus was on offers and promotions on its eCommerce business through the main website. It also tightened its belt on all costs running as close to “lean” as possible. The company’s Board of Directors even elected to forego their cash compensation for the first quarter. As they say, the proof is in the pudding, and shortly after the close on May 18, Kirkland’s reported an update.
“The tremendous effort shown by our employees over the past several weeks has enabled us to successfully execute our contingency plans through phased store openings and contactless curbside pickup. We are pleased with the initial demand and the continued strength of our e-commerce sales. Combined with the substantial cost-cutting measures we took to ensure we have the right infrastructure in place, we believe these early results provide us with sufficient liquidity…” said Woody Woodward, CEO of Kirkland’s.
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In the period since the stores closed on March 19, the company said its e-commerce demand increased 96% to $23.7 million. Will this translate into a continue bullish trend for KIRK stock? Shares closed the Monday session at $0.84.
Penny Stocks To Watch Under $3: Arbutus Biopharma Corporation
You might remember Arbutus Biopharma Corporation (ABUS Stock Report) from last December. At the time, ABUS stock traded around $2. The company recently 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.” But after rallying to highs of $3.66, the party started to get a little shaky. ABUS stock traded sideways, holding gains above $3.20 right up until the start of March.
This was when Arbutus reported earnings and revealed a big miss. Shares ended up tumbling to eventual lows of $0.88 in April. Over the last 3 weeks, however, ABUS stock has started to creep back up again. This came in the wake of its latest Q1 earnings, beating estimates this time and offering a pipeline update.
Among several initiatives was initiating an internal research program to identify new small-molecule antiviral medicines to treat COVID-19 and future coronavirus outbreaks. It also gave an update on a Phase 1a/1b clinical trial to determine safety, tolerability and other key factors of its AB-729 to treat people with the hepatitis B virus.
On May 18, shortly after the close, Arbutus gave an update. Week 12 data showed a “significant and continuous reduction in HBsAG,” which is a key indicator of the hepatitis B virus. Dr. Gaston Picchio, Chief Development Officer of Arbutus, stated, “Importantly, throughout the 12 week period, not only does AB-729 demonstrate robust HBsAg reduction, it does so while remaining generally safe and well-tolerated with no abnormal transaminase values in any of the six subjects.” On Monday, May 18th, ABUS stock closed at $1.87 but has managed to climb 125% from May 1 to May 18’s high of $2.32. Will the move continue after this news?
