Penny Stocks Have Seen Some Of The Biggest Returns This Year
Penny stocks are known for their high-risk and high-reward. But is trading penny stocks the best way to make money? Depending on how you like to make money, penny stocks have traditionally offered quick ways to see returns of 50-100% on the regular. While actually capitalizing on that type of move might prove a little less simple, the truth of the matter remains. You can make money with penny stocks.
But these cheap stocks aren’t for the faint of heart. The moves come quickly and psychology can play a major role. However, compared to other types of equities like Facebook, Twitter, Apple, Google, etc. it isn’t unlikely to see penny stocks double or even triple in price within a week or even a single day. Understanding this is half the battle. You know you’ll be up against a very volatile market so, in light of that, it wouldn’t be unreasonable to take a shorter-term mindset in certain cases.
It can be very easy to get caught up in the hype and honestly, many times this year, the hype has fueled much larger runs than initially thought. That same “hype” can also create bubbles and that’s not something you want to get caught up in. We saw this exact scenario happen with Hertz (HTZ Stock Report).
Are Penny Stocks Worth It?
Chalk it up to inexperience or simple emotion, Hertz stock exploded more than 10-fold. Yes, this is the same “HTZ” that declared bankruptcy just prior to this boom. Why would anyone buy shares of a bankrupt company? That’s a great question but the facts remain, HTZ stock saw a huge (yet brief) rally, and obviously “hype” had a lot to do with that. For those trading HTZ, it was important to understand the risk of the trade and the psychology behind the move.
Of course, “investing” in a bankrupt company carries its own set of risks but trading to take advantage of short-term momentum was obviously a winning bet for some. So, what’s the point? Are all penny stocks bad? Should you invest in penny stocks? Should you only trade penny stocks? With these types of questions, you have to look at things situationally.
One of the standard rules of thumb is to take a profit when it’s there. The saying “no one goes broke taking a profit” couldn’t be truer. In that instance, the worst-case scenario is leaving money on the table. But the fact is that if a trend is truly a strong one, there will likely be more opportunities to take advantage of later on.
While stocks mentioned above – Apple, Facebook, Twitter, Google – have risen 50% or more over the last year, that same period of time has seen hundreds of penny stocks quickly jump hundred of percentage points during short breakout moves similar to what HTZ saw. Again, understanding the type of trade you’re getting into is a big factor to making money with penny stocks or losing money. With this in mind, let’s take a look at a few stocks under $5 turning heads at the beginning of the week.
Penny Stocks To Watch: Revive Therapeutics Inc.
At the end of the week last week, Revive Therapeutics Inc. (RVVTF Stock Report)(RVV) began to trend a bit higher than it had been previously. Shares saw lows last week of $0.136 but by the end of the week, RVVTF stock closed above $0.16. Revive has been working to build a diverse biotech pipeline addressing several indications.
Not only is it working on a treatment that could have an application for coronavirus, but it has also focused on emerging niches of health care as well. Specifically, its work with psychedelics has been a recent focus for the company. Noting the growing interest for companies in this niche, Revive, through the acquisition of Psilocin Pharma Corp., is building research partnerships to evaluate certain formulations.
Earlier this month the company announced that it expanded the sponsored research partnership agreement entered with the University of Wisconsin-Madison. Michael Frank, Revive’s Chief Executive Officer explained, “As part of our psychedelic-based pharmaceutical strategy, we are focused on balancing research and development of novel psilocybin-based formulations and clinical research of psilocybin to create a robust product pipeline backed by intellectual property and clinical data with the aim to pursue the FDA regulatory pathway for commercialization.”
Since the start of the 2nd quarter, Revive stock has climbed from $0.0725 to highs of $0.274. It’s still up by more than 100% heading into the final week of the quarter. With growing attention on psychedelic stocks right now, will Revive be on your list of penny stocks to watch?
Penny Stocks To Watch: Check-Cap Ltd.
Shares of Check-Cap Ltd. (CHEK Stock Report) were off and running at the start of the week. CHECK stock jumped from a previous close of $0.5348 to an initial morning high of $0.62 on Monday. If you remember back in April, we talked about Check-Cap being one of the momentum-driven penny stocks. The only recent event. was an analyst upgrade on the stock. Besides that, CHEK stock was running on pure momentum.
This week it might be a similar case. There weren’t any new updates over the weekend. As far as the company’s filings go, Check hasn’t filed anything since early this month. Needless to say, Check-Cap’s main focus is on colorectal cancer through the use of its screening test. The company’s C-Scan® is the first and only patient-friendly preparation-free screening test to detect polyps before they transform into colorectal cancer; according to Check-Cap. CHEK stock has turned a few heads on June 22. So it will be interesting to see what, if anything, transpires.
On June 5th the company announced it received a minimum bid price notification from NASDAQ. So unless the CHEK stock price can get back above $1, there’s a risk it could get delisted from the exchange. Days like today don’t hurt but again, we’ll have to see how everything unfolds during the final days of the quarter.
Penny Stocks To Watch: Inpixon
Inpixon (INPX Stock Report) is another one of the stocks under $5 that could be on watch lists this week. While the 2-month move for INPX stock hasn’t been as explosive as some of the other penny stocks, shares have managed to climb from lows of $1.01 to highs of $1.89 during premarket trading on Monday.
Earlier this month we talked about Inpixon following its CEO featured in an industry article. Titled “Tech cruise ships could implement to combat the spread of coronavirus: far-UVC sanitation, contact tracing,” USA Today did a featured spot on the cruise industry.
Inpixon was highlighted for its ability to collect and use data acquired using radio frequency scanners that pick up on Wi-Fi, Bluetooth signals and cellular signals. “Nadir Ali, the CEO of Inpixon, an indoor data intelligence company, is working with cruise lines and hotels on incorporating the technology to help safely monitor passengers and lessen fears around cruising.”
This week the company announced its plan to acquire the exclusive global license to develop & distribute Systat and SigmaPlot software. Systat and SigmaPlot are data analytics and statistical visualization solutions and are estimated to have more than 400,000 users across 37 countries. The transaction is expected to be accretive to earnings and will expand Inpixon’s subsidiary operations into the United Kingdom and Germany.
Penny Stocks To Watch: Biolase Inc.
Shares of Biolase Inc. (BIOL Stock Report) took off at the open on June 22. After testing its 50-Day Moving Average (line in yellow on the chart), BIOL stock jumped to initial highs of roughly $0.52. This comes in anticipation of an event coming later this week. In a corporate tweet last week, Biolase announced that it will conduct a presentation via webinar. “This program will cover the latest applications of technology in the Dental Clinic. We’ll dive into #Periodontal, #Restorative and #DentalHygiene specific applications of #dentallasers, and HOW to increase productivity and promote practice growth post-#COVID19.”
Considering that this webinar is set for Friday, it makes sense that BIOL has started to grab some attention early on. However, something else that should be noted if you’re lookin at BIOL stock right now is what came out at the end of the week last week.
Biolase filed a registration statement covering the potential sale of subscription rights to purchase up to 15,000 units at a subscription price of $1,000 per unit. That came out Friday. Why is this important to point out? These “Series F” convertible preferred shares are immediately convertible into shares of BIOL common stock at a conversion price of $0.40 per share. There are also 2,500 warrants to purchase the company’s common stock with an exercise price of $0.40 per share.
Could this pose potential dilution risk to the BIOL market or have traders already “baked this in”. Since the start of the second quarter, BIOL stock has climbed from $0.38 to highs of $0.96. Since pulling back from those highs, it appeared the 50DMA continues to act as a possible support level.