Are You A Buyer Of Any Of These Penny Stocks?
When it comes to the definition of penny stocks, let’s keep it simple. The standard SEC statement explains that these are stocks under $5 a share. This year, these cheap stocks have been the center of attention and for good reason. Starting with coronavirus vaccine stocks, some of the well-known names today were actually penny stocks earlier this year. Look at companies like Novavax, Inovio Pharmaceuticals, and even The Kodak Company. At one point in time this year, NVAX, INO, and KODK traded as stocks under $5.
Does this mean we’ve seen the best of 2020? In my opinion, far from it. Our writers look at the stock market every day to find top trending penny stocks. While not all penny stocks are “buys,” we do aim to break down why certain names might be trending. There are plenty of risks involved with these types of stocks.
One of the biggest is the dilution. When companies go public, the goal is to raise money through the market exchanging shares for cash. Since many companies trading as penny stocks aren’t well-established, raising money can be “expensive” meaning giving up more stock for cash.
Are Penny Stocks Risky?
Look at a company like Kodak. This week reports cited that convertible bond holders started converting their bonds into stock. As we’ve seen, KODK stock has fallen aggressively lower from its $60 highs of last week. This additional selling pressure has trigger more downside momentum in the stock. There were people who made money with KODK but those who invested into the huge spike and hype surrounding it are likely down big right now.
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Considering the high risks of penny stocks, dilution risk is a big factor. So, before you decide to buy, research is key not only for timing a buy but also understanding risks, or when to sell. Are certain debt notes coming due? What price did the company issue shares at from its most recent financing? These are just a few questions to ask when it comes to dilution risk. Now, if a company raises money, can you still profit from certain stocks?
The short answer is yes, but having a keen understanding and lay of the land so to speak will help you in the long run. At the end of the day, nobody ever went broke taking profit. In the case of KODK, a lot of hype and greed clouded judgment for some traders. So when you look at your list of penny stocks, keep in mind that the reason you’re buying in the first place is to profit; not to hold a bag. With this in mind, let’s take a look at a few penny stocks that can be bought for under $4 right now. Will they stay at these levels in August or are bigger moves in store?
Penny Stocks To Buy Under $4: CHF Solutions
CHF Solutions (CHFS Stock Report) is another one of the penny stocks we’ve followed for a while. We talked about the company earlier this weekend as trading momentum has remained above average recently. Considering that it has been on our watch lists since the end of February, you could say that readers are familiar with the company itself.
CHF’s Aquadex SmartFlow™ system is used for managing fluid overload in patients with renal and other diseases. When it comes to coronavirus, CHFS stock has become part of that “sector” in 2020. The company has explained that fluid overload has appeared to become an issue with critically ill children and adults including those with COVID-19.
Last week the company signed a distribution agreement with SysteMedic Ltd. It covers Israel and Palestine and represents the second distribution partnership in the Middle East region. Ultrafiltration therapy is now available in 16 countries outside the U.S. according to CHF. So that and a company tweet about its fluid system expanding in Florida seem to have acted as a catalyst.
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Something to keep in mind, however, is that its second-quarter 2020 financial results will be released on August 4 before the open. Could that pose some risks? Potentially, yes it could, in the event that results miss and the company reports a questionable outlook. It could also experience the opposite if results and outlook are favorable. Where do you stand on CHFS stock: is it on your list of penny stocks to buy or avoid right now?
Penny Stocks To Buy Under $4: Pitney Bowes Inc.
Pitney Bowes (PBI Stock Report) is just sliding in under that $4 mark today (so far). The company has been on the move for the last month, steadily rising from around $2.67 to just under $4 today. The company is focused on commerce solutions that power transactions. This includes offering solutions for analytics, and APIs. The company does billions in revenue with $3.2 reported in 2019. Meanwhile, it’s one of the few penny stocks that also offer a dividend. It also boasts service to 90% of the Fortune 500.
This week PBI stock continues its month-long rally after some big news. The company signed contracts worth $5 million with a large government agency. The contracts are to transform its shipping and mailing operations across several thousand U.S. locations. The client will drive business continuity, generate significant cost savings and increase efficiencies with the SendPro® C and SendPro® Online sending solutions. The competed contracts were awarded to Pitney Bowes as part of the agency’s strategy to consolidate and centralize its shipping and mailing procurement into a single, streamlined process.
This comes hot on the heels of its earnings beat last week. The company reported second-quarter results that included an EPS $0.04 beating analysts’ ($0.01) estimates. It also beat on sales. Pitney Bowes reported $837 million which was more than $130 million higher than analysts’ $705.82 million estimates. Will this be the last time PBI stock is considered a penny stock?
Penny Stocks To Buy Under $4: Genius Brands
We’ve followed Genius Brands (GNUS Stock Report) for months now. It wasn’t on the list since the start of 2020 but since April, GNUS stock has been one to watch. There’s been a lot that has gone on with the company over the last few months. Most recently, this included a series of news regarding the launch of the Kartoon Channel!. The company also created Stan Lee Universe – anchored by a global deal with Archie Comics – and appointed Michael Uslan as Head of Development for Stan Lee Universe. Genius Brands International, Inc. had also announced the signing of broadcast and digital platform deals for its Rainbow Rangers series with 9 networks.
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The company said that Shanghai Senyu licensed the right for mainland China. It also signed international content deals with outlets in Poland, Isreal, and Croatia for its Llama Llama series starring Jennifer Garner. This week, the company is back in the spotlight. It actually came in line with something Genius has been anticipating for a few months.
Genius announced the debut of the first toys from Fisher-Price for its Rainbow Rangers show. The toys are now available at Walmart (WMT Stock Report) stores across the U.S., Walmart.com, and Amazon. According to the company, in addition to Mattel, other manufacturing partners are producing DVDs, apparel, books, bicycles, sleepwear, underwear, and costumes & accessories. Since the start of the year, GNUS stock is up over 516%. Will this news spark a continuation in August?