Looking For Volatile Penny Stocks? 4 To Take A Look At Before Friday
Here you are, looking for penny stocks to buy. What do you look at first? Some choose news, others choose technical indicators or chart patterns. Whichever side you fall on, the one thing traders look for in all penny stocks is volatility. This essentially is the lifeblood of a memorable breakout.
Volatile penny stocks can create quick fortunes. They can also generate significant losses. A good rule of thumb is the higher the volatility, the faster the big swings in price happen. So if you’re looking for volatile penny stocks to buy right now, keep thins in mind. Not everyone can stomach being down 20-40% on a position while waiting for the potential of a 500% rebound.
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I’m not an advisor but I will say that most traders will likely get stopped out before their position is down that much. However, it isn’t uncommon for those trading penny stocks to take a slightly larger paper loss when it comes to high-volatility because they’ve seen the other side of that coin.
Last week we saw a clear example of this phenomenon. If you were watching last week, you would have seen a particular stock skyrocket from $2.13 on July 27 to highs of nearly $12 on the 28th.
Trading Volatile Penny Stocks
When the closing bell rang on the 28th, that penny stock had pulled back 32% from its high. There’s a good chance that a prudent trader would have already exited that position considering the drop. However, if that trader were to sell out and not look back at the stock, they would have missed the fact that on July 29th, it ran to a high of $60.
There’s two schools of thought to this. First, the trader who sold to avoid further losses likely stuck to a proven strategy. A weak string of volume mixed with a downward trend 9 times out of 10 sees a stock go lower. However, the high-risk trader who studies low float penny stocks understood that “max pain” might have not been at 30% and was willing to take a little more stress with the hope that volatility would see a swing in the opposite direction.
Sure enough, that’s what happened by Wednesday. Are penny stocks safe when trading volatility swings? In my opinion, no and it’s important to have a strategy. Even if you’re like that prudent investor and miss the initial move, if the trend proves strong enough, there’s likely going to be more opportunities to capitalize. It all comes down to managing risk. So don’t feel bad if you stuck to a plan and you missed a move. There are thousands of volatile penny stocks to trade. With that in mind, are any of these on your list right now?
Volatile Penny Stocks To Watch: Xeris Pharmaceuticals
Shares of Xeris Pharmaceuticals (XERS Stock Report) have experienced a string of green days. Since dropping back in June, XERS stock has seen its market activity pick up a lot. Where it used to trade around 500,000 shares a day, prior, it now trades an average of roughly 3.7 million shares per day. The initial drop came after the company reported a $20 million financing in addition to a $60 million sale of convertible notes.
Unlike most of the biotech penny stocks right now, Xeris hasn’t gone into “full COVID”. Instead, the company has focused on its main pipeline treatments. In July, Xeris reported additional data from a Phase 1b Comparative study of its concentrated diazepam formulation: XP-0863. The therapy is intended to treat seizure emergencies. The complete results of the study were shared with the US FDA. The FDA provided feedback that Xeris’ drug development program for XP-0863 could advance directly into a Phase 3 registration study in both pediatric and adult patients with epilepsy.
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Where could volatility play a role with XERS stock? Heading into August, we’ve obviously entered the thick of earnings season. On August 10th, Xeris is set to report Q2 earnings. There’s also a conference call set for before the market open. The big thing about earnings, especially with biotech companies is what the progress has been and what the outlook will be. Based on recent updates, will XERS stock continue higher through its earnings date?
Volatile Penny Stocks To Watch: Houghton Mifflin Harcourt Co.
Houghton Mifflin Harcourt Co. (HMHC Stock Report) has been on the radar for weeks now. It initially began with completely baseless hype…so of course, it caught my attention. However, without anything solidified, there was nothing to report on. Once the company refuted rumors and came out with a real update, we took a closer look. This quarter there’s been a push for eLearning stocks. Houghton Mifflin introduced Teacher’s Corner last month. It focuses on remote education and includes features such as curated content, virtual events, and coaching.
At the end of July, the company announced HMH Anywhere™. This is a digital platform and content solution that will adapt to wherever districts and schools are or will need to be this fall. This includes dfully online, fully in-person, or a hybrid model. Jack Lynch, CEO of HMH explained that, “The entire teaching and learning community needs to be connected—not as an aspiration but as a necessity. HMH Anywhere provides that connection.”
Where does this become one of the volatile penny stocks to watch? Well, earnings, of course. This Thursday, HMHC reports Q2 results. Noting that most of the attention on the stock has occurred during the 3rd quarter so far, it will be interesting to see how the market reacts to Q2’s numbers. If HMHC stock is on your list right now, it’s important to note. Is this latest uptrend a “buy the rumor, sell the news” scenario or is this a lead up for HMHC’s next leg? Leave a comment below on what you’re thoughts are on Houghton Mifflin’s next move.
Volatile Penny Stocks To Watch: Castlight Health Inc.
Castlight Health Inc. (CSLT Stock Report) has been very volatile over the last few months. Also, if you look at the last few weeks, the penny stock has traded in a wide range. After jumping nearly 30% on July 21st, alone, CSLT stock’s range has been between lows of $1.02 and highs of $1.45. The most recent surge came on August 5th when shares jumped more than 16% on above-average trading volume.
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There aren’t any earnings results to determine with this company right now. Castlight reported back at the end of July. The company reported $35.5 million in revenue and a Q2 loss per share of $0.03. The adjusted EPS loss came in at ($0.01), which beat analyst estimates of ($0.04). Sales also beat estimates of $31 million.
“We made meaningful headway against our strategic plan in the second quarter, delivering strong financial results, demonstrating progress toward our goal of adding an additional health plan partner, and supporting our customers with rapid innovation during COVID-19. Over the past year, we made two major strategic decisions: our focus on health plan as a key go-to-market strategy, and investment in high-tech, high-touch solutions. Our momentum in the first half of 2020 validates these decisions, and I’m confident that Castlight is strategically well positioned in the marketplace,” commented Maeve O’Meara, chief executive officer of Castlight Health.
Where does volatility come into play? Obviously CSLT is already volatile on its own. However, in a recently filed 8-K on August 4th, the company revealed something new: Castlight anticipates conducting meetings with members of the investment community during August and September 2020. During these meetings management said it intends to discuss that Castlight entered into an agreement with Cigna Corporation to support a portion of Cigna’s Taft-Hartley and Federal Business segment, commencing on January 1, 2021, adding approximately two million dollars of annualized recurring revenue in the third quarter of 2020.
