Can These Penny Stocks Keep Pushing Higher In July?
How do you find the best penny stocks to buy? Some might search for news, others might seek out filings, while some look for high volume. There are also traders that look for technical levels to give them a “heads up” to start paying attention. This may include things like “overbought penny stocks,” “oversold penny stocks,” “penny stocks at support/resistance,” or “penny stocks at 52-week levels.”
While some of these may cross-over one another, each has its place in technical analysis. When it comes to 52-week levels, this takes into consideration new price levels not seen in at least 52 consecutive weeks.
Definition Of 52-Week Highs/Lows
Unlike some indicators, this isn’t a very complicated idea to unpack. When we refer to 52-week levels, we’re specifically talking about 52-week highs and 52-week lows. So let’s break it down and define these two so everyone has a general understanding. A 52-week high is the highest share price that a stock has traded at during the previous 52-week period in the stock market. Typically, it’s based on the closing price but plenty of people will discuss it as an intra-day level too. The 52-week high is a key factor to determine valuation and figure out the next potential move for the stock’s price.
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A 52-week low is an opposite. This is the lowest share price that a stock has traded at during the previous 52-week period in the stock market. Again, it is used to determine valuation and figure out the next potential move for a stock. Almost think of these levels as a potential pivot. They may act as the new “bottom” or “top” of a trend or they may signal that the market has started to revalue the company and adjust expectations higher or lower.
A perfect example of this was Tesla over the last few months. Shares continued to reach new 52-week highs and as traders digested more fundamental and speculative information, they reassessed the valuation of Tesla and determined that the value should be higher. Thus shares surged even more. That all came to a bigger head on July 22 after the company reported its 4th consecutive profitable quarter.
Penny Stocks To Watch At 52-Week Highs
When it comes to penny stocks, the same idea can be in place. When it comes to 52-week highs (as it did in our Tesla example), investors & traders have a job to do. They need to assess the valuation of the companies and determine if it’s time to sell/avoid a stock or if there’s enough to justify a higher valuation, making it a penny stock to buy.
One of the key things I would take into consideration is the debt structure of penny stocks. It’s not unlikely for these companies to take on dilutive or “expensive” financing early on. So in looking at these types of stocks, it wouldn’t hurt to dig into some of the recent filings and find out if there’s any debt, low-priced stock/warrants, and the like.
There are obviously many other things to look at when researching penny stocks to buy. But I think with prices at 52-week highs, dilution risk can start playing a bigger role. With this in mind, are any of these penny stocks on your list after reaching these historic levels
Waitr Holdings Inc.
Waitr Holdings Inc. (WTRH Stock Report) is no stranger to a list of penny stocks to watch. We first came across this company in November when it hit 52-week lows then more consistently in March when we speculated on companies that could capitalize on a “stay at home” trend. Since then, it’s become one of the turnaround stories to track. What was more of a “skeptical” play on Uber Eats or Postmates has actually evolved over the last several months.
However, if you look at the previous 52-weeks, you’ll see that the first 3 quarters of the year were bleak. But again, this is why I’m saying WTRH stock has been somewhat of a turnaround story. One of the key developments early on was management had identified that it was time to take things more seriously. Fast-forward to this week and WTRH stock has reached a fresh 52-week high of $5.43.
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Furthermore, the momentum has attracted some well-known analysts to report on the company. B. Riley FBD was the most recent to initiate coverage on the company. The firm holds a Buy rating on the stock with a price target of $8. Earlier this month, Deutsche Bank lifted its price target on WTRH from $2 to $3.80. However the bank downgraded Waitr to Hold from Buy. Considering WTRH stock pulled back from its 52-week high by the end of the July 22 session, is this the end of Waitr’s epic run or just consolidation before a continuation?
Endeavour Silver Corp.
There’s been a huge surge in prices for silver and gold over the last several months. Obviously silver and gold stocks are becoming a focus. While the biggest names in the sectors are gaining exposure, the small-cap mining penny stocks aren’t wavering either. Endeavour Silver Corp (EXK Stock Report) saw its highest share volume day in the past year. EXK stock also reached a new 52-week high of $4.18. There wasn’t much news to go along with this week’s move. However, the company has gained the attention of analysts.
B. Riley FBR recently initiated coverage on Endeavor. The firm gave a Buy rating and price target of $4.75. Other analysts like TD Securities, BMO Capital, and H.C. Wainwright previously set a similar tone. Respectively, the analysts gave Hold, Market Perform, and Buy ratings on the stock. The analysts also issued respective price targets of C$3.50, C$3.50, and $3.25.
The company also recently announced production figures in its abbreviated second quarter 2020 report. The company reported production of 596,545 silver ounces (oz) and 5,817 gold oz in Q2, 2020, for silver equivalent production of 1.06 million oz at an 80:1 silver:gold ratio (1.18 million oz at 100:1 ratio). “We will now look for opportunities to enhance our production in H2, 2020 to partly make up for lost ground in H1, 2020,” stated Bradford Cooke, Endeavour CEO in the update.
Northern Dynasty Minerals
One of the penny stocks that has built momentum around speculation recently has been Northern Dynasty Minerals (NAK Stock Chart). Why do I say this? If you’ve been reading our articles on NAK stock, then you know there may be an important date coming up for the company. Specifically, earlier this month, the company announced an update.
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CEO Tom Collier explained, “It is our understanding based on conversations with the U.S. Army Corps of Engineers that the final EIS will be published in the Federal Register on July 24th. This will mark one of the most significant milestones for the Pebble Project. Following the final EIS, the USACE will use this document as it prepares the Record of Decision for Pebble – a step expected to follow the publication of the final EIS.”
The biggest focus for the company has been on its principal asset, owned through its wholly-owned Alaska -based U.S. subsidiary, Pebble Limited Partnership. It 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. Given this, many are expecting and/or hoping for the July 24th date to be accurate and not just something “based on the understanding” of the company and no one else.
Being able to have watched this company since back in February has allowed traders to see progress in real time. On July 22nd, NAK stock hit yet another 52-week high of $2.49. Similar to WTRH stock, NAK pulled back from those highs. It’s important to understand that speculative hype has played a role recently. Is that the only thing driving this move or is there a fundamental event to look forward to? Furthermore, considering the consolidation, do you think NAK’s move has “topped out” or is this a consolidation before continuation?