These Penny Stocks Just Hit New 52-Week Highs. Are They Still A Buy?
There’s no getting around the fact that penny stocks are high-risk equities. Just as quickly as they move up, they can come crashing down. In line with this, there’ve been plenty of higher-priced stocks that recently became penny stocks. Take a look at Minerva Neurosciences Inc. (NERV Stock Report) for example.
While this could have briefly been considered a penny stock earlier this year, it has traded more consistently above $5 than it has below. But that might have changed in May. On Tuesday, shares of NERV stock reached highs of $15.22. Remember that number because I’m about to show you just how quickly things can turn down quickly for thinly traded stocks.
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Something you need to keep in mind especially with biotech stocks – no matter the price – is that trial results are vital. Despite Phase 1 being relatively far from commercialization, a positive trial result can trigger huge breakouts for biotech penny stocks. We saw it earlier this year and COVID-19 helped propel several names far beyond due to the fast track stance on potential vaccines.
Penny Stocks & Risk/Reward
However, trial results can have a very different impact in the event they come up short or if there was slight adversity in a study. For Minerva, that’s exactly what it ran into this week. The company reported that its Phase 3 trial of the drug, roluperidone to treat negative symptoms in schizophrenia did not meet its primary and key secondary endpoints. Cue the Wile E. Coyote cliff.
NERV stock plummeted to lows of $1.81 from a premarket high of $14.37. Despite that case, the stock did essentially recover by more than 100% intra-day. Is there hope? We’ll have to see but it would appear the market could see potential based on the reaction in the market by the close on Friday. But again, nothing’s set in stone and missing endpoints is kind of a big deal.
I mention this because of the fact that you should know that there are definitely risks involved. At this point, the question is how much lower can it go? On the flip side, some penny stocks skyrocket and continue moving higher. The biggest question at that point is how much higher can they go? This leads me to this list of penny stocks. They’ve all just reached new 52-week highs so are they set to continue higher in June or have they “topped out”?
Penny Stocks To Buy [or avoid]: Northern Dynasty
Shares of Northern Dynasty (NAK Stock Report) reached new 52-week highs on May 29. NAK stock has been on this uptrend since it hit 52-week lows on March 18th. At that time it was trading around $0.35. After raising several rounds of financing, Norther Dynasty returned its focus to advancing its Pebble Project. If you’re seeing NAK stock for the first time, let’s get you up to speed.
Northern Dynasty’s principal asset, owned through its wholly-owned Alaska -based U.S. subsidiary, Pebble Limited Partnership, is a 100% interest in a contiguous block of 2,402 mineral claims in southwest Alaska. This includes the Pebble deposit and an initiative to develop one of the world’s most important mineral resources.
What’s Going On With NAK Stock?
Earlier this month the US Army Corps of Engineers announced a preferred development alternative for the proposed copper-gold-molybdenum-silver mine in southwest Alaska. The Corps is the lead federal regulator for the Environmental Impact Statement permitting process for the Pebble Project.
During a media availability session on May 22, Alaska District Regulatory Division Chief David Hobbie confirmed the USACE has selected the ‘least environmentally damaging practicable alternative’. That was for the proposed Pebble mine and includes an all land-based transportation route to connect the proposed mine site to a port site.
NAK stock momentum escalated after its latest update. A letter issued today by the U.S. EPA confirmed the Environmental Impact Statement process for the proposed Pebble mine is proceeding well. Furthermore, it stated that the process is effectively addressing all issues and concerns raised by EPA, the US Fish, and Wildlife Service and other cooperating agencies. Though NAK stock pulled back by the end of the day, do you think it can recover to make new highs again in June or is the pull-back set to continue?
Penny Stocks To Buy [or avoid]: MEI Pharma Inc.
MEI Pharma Inc. (MEIP Stock Report) is in a similar scenario from a chart trend perspective as NAK. MEIP stock reached new 52-week lows of $0.72 on March 19th. Ever since then, the trend has been up for the most part. On April 14th the penny stock gapped up big and actually reached a new 52-week high of $3.64 at the time. This came as the company announced that along with Kyowa Kirin they would co-develop and co-promote ME-401 in the U.S. MEI would receive $100 million in an upfront cash payment and could receive up to an additional $582.5 million based on milestones.
The moved turned parabolic and MEIP stock dipped to lows of $2.10 during the following sessions. At the end of April, however, the penny stock started climbing again. This time it was leading up to its May 7th earnings results. These showed an improved EPS as well as $1.24 million in revenue for its 3rd quarter. This was followed with an update on clinical data from a Phase 1b study of ME-401.
What’s Going On With MEIP Stock?
This data evaluated patients on an intermittent dosing schedule of ME-401 and showed that treatment was generally well tolerated with an 83% overall response rate in patients with relapsed or refractory follicular lymphoma. These results were featured in a poster discussion at the American Society of Clinical Oncology Virtual Scientific Program this week. The response appears to have been positive considering the market activity.
Next week MEI presents at the Jefferies Conference on Tuesday morning. Considering a slew of new analysts ratings and price targets announced, is MEIP stock set for another round of new highs or is this a penny stock to avoid after this week’s 52-week high?
Penny Stocks to Buy [or avoid]: Aileron Therapeutics
Finally, Aileron Therapeutics (ALRN Stock Report) snagged a spot on a list of active penny stocks hitting 52-week highs. This was actually one of the active biotech penny stocks to watch that caught our attention in June of last year. At the time, shares were sitting around $0.80.
Overall, it’s been a strong run for ALRN stock from there to here as the price has climbed over 100%. But a look back at the last 11 months will show a much more volatile story. ALRN stock jumped all around hitting highs of $1.05 and lows of $0.25. But it was after reaching that 52-week low of $0.25 that ALRN stock began to firm its biggest move yet.
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Since mid-March, this penny stock has managed to rally more than 550% after reaching new, 52-week highs of $1.63 on May 29th. In an update earlier this week, Aileron announced the expansion of one of the dose levels in the dose optimization part of its Phase 1b/2 clinical trial. This trial is evaluating the company’s ALRN-6924 as an agent to protect patients with small cell lung cancer against chemotherapy-induced toxicity.
What’s Going On With ALRN Stock?
Aileron said the first patient was enrolled in the expansion cohort, which was triggered by results from the ongoing trial that met protocol-specified criteria for expansion. What’s important here is that Aileron plans to report interim results for the dose optimization part of the trial in June. So as we approach the new month and ALRN stock etched new 52-week highs, do you expect the highs to continue? If ALRN is on your list of penny stocks leave a comment on your thoughts below.