Why Are Analysts Bullish On These Penny Stocks?
We can all agree that when it comes to finding penny stocks to buy, there’s a lot more than just reading headlines. There’s also a lot more than sifting through corporate disclosures as well. These low-priced stocks generally have much more speculation driving momentum than fundamentals.
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However, that doesn’t mean they don’t attract institutional interest. Whether you think it’s right or not, Wall Street analysts cover many penny stocks. For most, the justification behind rating penny stocks has much more to do with the “potential” of the companies or their business models than actual revenues.
However, I will also be the first to say that analyst ratings on penny stocks shouldn’t be the only thing you use to make a final decision. It’s important when looking for penny stocks to buy, you use as much info as possible to compile a strong thesis. I know this is easier said than done. But even with stocks breaking out in real time, you should understand why that breakout is happening. Failing to do so could leave you holding the bag.
Penny Stocks To Buy According To Analysts
Then again, it’s also good to see how analysts view certain companies in short and long-term time-frame. If you’re actually investing in penny stocks, this is much more important the day-to-day volatility. Do people actually invest in penny stocks? The short answer is yes, but obviously trading penny stocks is much more popular for most.
Keeping this in mind, let’s take a closer look at a few names that have analysts rating them a Buy or better. Leave us a comment at the end and let us know which analyst ratings, if any, you agree with or why you disagree.
Reed’s Inc.
Reed’s Inc. (REED Analyst Ratings) is a unique company to say the least. While COVID-19 headlines tend to dominate small-cap newsfeeds, REED stock has taken off for other reasons. If you’re unfamiliar with the company, let me explain why it’s “unique”. Where companies like Pepsi (PEP Stock Report) and Coca-Cola (KO Stock Report) sell a myriad of branded beverages, Reed’s focuses on 1 ingredient for its beverage line: ginger. Sticking to the Jamaican tradition of making ginger beer, Reed’s has expanded into variants like zero sugar as well as differing levels of ginger spiciness in its traditional ginger beers.
But apparently analysts have a thirst for REED stock at this point. Among those covering the penny stock, the general consensus shows that REED is a “Strong Buy”. It has even attracted interest from the likes of John Bello who sits on the company’s Board. He’s the same guy who founded the SoBe beverage company and introduced budding athletes to drinks with “high-performance” ingredients. Over the last 2 sessions, REED stock has been on the move.
You might be saying, “there’s no news or filings,” what’s happening? Consider this a possible beneficiary of more speculation stemming from COVID-19. In this case, there’s high expectations of the economy reopening and with it, restaurants. We can clearly see that aside from REED, other beverage companies like Molson (TAP Stock Report), New Age Beverages (NBEV Stock Report) and even Diageo (DEO) are all making stronger moves this week. Will analysts continue to be right about REED stock?
Cinedigm Corp.
Shares of Cinedigm Corp (CIDM Analyst Ratings) have been no stranger to big moves this quarter. After hitting 52-week lows of $0.25 in March, CIDM stock began Q2 in April trading at $0.38. The penny stock managed to reach highs of over $2.60 but some aggressive consolidation resulted in a pull-back to below $0.90.
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If chart technicals are of interest to you, the CIDM stock chart is something to note. Since about May of last year, its 50-day moving average was a clear point of resistance on the chart. Recently, however, the 200-day moving average acted as resistance. But with the May 20th breakout, it appears that the same 200-day moving average may be acting as support right now. CIDM stock has tested this level multiple times and has yet to break below it.
This week, the stock is back on the run following some recent developments. First, Cinedigm acquired all North American distribution rights to Cotton Films’ EVERYDAY MIRACLES in late-May. Following this, the company announced a strategic partnership with SpringServe, the leading ad serving platform for over-the-top and connected TV. It also expanded its distribution of “The Bob Ross Channel” on Roku (ROKU Stock Report) this week.
It all culminated into a strong rally in June. Will CIDM stock manage to get back above $2.60 again? That’s a good question. However, analysts appear bullish on it. Among those listed, the average rating right now shows a “Strong Buy”.
Nokia Corporation
You can’t talk about popular penny stocks without mentioning Nokia Corporation (NOK Analyst Report). It’s practically a household name that has evolved into one of the main points of focus when it comes to 5G stocks. It’s no secret that there’s a mad dash going on right now.
Everyone from Verizon to Huawei and companies in between are vying for position in the 5G marketplace. Nokia has long been thought of as a secondary telecom company in the U.S. for some. But outside of the country, the company is rapidly expanding its footprint.
Among analysts rating the stock, the majority have it at “Strong Buy” right now. There are a few “Hold” ratings but nothing below that level. Its latest developments could reinforce the stance of those analysts a bit, too. This week, in fact, Telus Corp. said it selected Ericsson and Nokia Corp. as equipment partners to help support the building of its 5G network. Prior to this, Nokia announced it achieved the world’s fastest 5G speeds in its Over-the-Air network in Dallas, Texas. What’s more, Nokia was selected by Taiwan Star Telecom to launch 5G for the company.
The most recent round of analyst activity has come from JP Morgan (JPM Stock Report) who now sees $5.50 as the target. It also holds an “Overweight” rating on NOK stock. Analyst Sandeep Deshpande wrote, “With – EUR6 million [free cash flow in the first quarter,] Nokia is in a very good place to report a positive [free cash flow] for the year, which is an essential element of the company’s turnaround.”
Remark Holdings Inc.
Finally, Remark Holdings Inc. (MARK Analyst Rating) has been a top penny stock to watch this quarter. Ever since April 28 when the company gained media attention for its thermal imaging, MARK stock has been on the move. Something to understand after watching this company for so long is that much of the attention isn’t stemming from press releases. It’s actually been Twitter that has become a source of market catalysts for MARK stock.
Most recently, the company retweeted something from Univision showing Remark’s technology being used in real-life settings. There’ve been plenty of examples of this over the last few months as well. I believe its helped drive a lot of the market’s momentum. However, there are still no official filings showing deals closed (yet). Regardless, it’s been enough to excite the market.
This week Remark did however announce its partnership with Hanvon Technology. It’s a publicly listed Chinese systems integrator, won the Phase 2 implementation of China Mobile’s contract for the transformation of its 17,800 corporate stores into smart retail stores. China Mobile’s Smart Telecom Operator Store Project will be done over the next two years. The first phase is valued at $50 million to Remark.
“KanKan AI is excited to continue our deep cooperation with Hanvon Technology. By combining their hardware expertise and sales channel with our advanced AI technology research and development, we expect the partnership will not only allow to us to win more contacts together with China Mobile, but also to expand our business in the smart telecom retail store market,” added Kai-Shing Tao, Remark’s Chairman and Chief Executive Officer.
