Are There Really Penny Stocks To Invest In Or Are You Better Off Trading?
The age-old question about penny stocks: should I trade or invest? When it comes to high-risk, stocks under $5 are pretty close to the top of that list when you’re talking about the market. These types of equities can fluctuate in price by wide spreads in a single day.
At the same time, that high-risk can also produce some higher rewards above traditional, “safe” investments. This is a good question to ask, though, especially if you’re new to these small and micro-cap stocks. Are there good penny stocks to invest in or are they all just day trades?
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Understanding that involves understanding the make-up of these types of stocks. They are generally shares of early-stage, development companies that maybe have a business plan, they could have some revenues, they likely have loads of debt, and a dream to make it big one day. I’m here to tell you, that not all penny stocks will see explosive gains and not all penny stocks will go on to become the next Amazon.
Can I Find Penny Stocks To Invest In?
But there have been penny stocks that hit it big by executing on the companies’ business models, communicated with the public, raised money responsibly, and worked to grow. Just look at some of the penny stocks that hit it big in 2020, already.
Some of them have now become the most talked-about companies in their sectors standing toe-to-toe with market leaders. We also had a list of penny stocks that did the same in 2019, which still trade far above the sub-$5 range by leaps and bounds.
At the end of the day, your trading strategy will dictate your actual ability to invest in penny stocks; whether you’re mentally wired to trade or invest. What’s more is that it is also up to the company to actually deliver, grow, and capitalize in the future. Regardless, most people look for penny stocks to trade, initially, then some will hold a small position well-after taking the bulk of their profit “just in case”. With that said, are these the best penny stocks to trade or fade this month?
Penny Stocks To Trade [or fade]: TrueCar Inc.
Earnings season can be nerve-racking to say the least. Sometimes it comes down to a coin-flip. We’ve seen companies report record revenues with increased guidance yet the stock price declines. On the other hand, we’ve seen companies report their worst earnings ever but the stock jumps. With the case of TrueCar Inc. (TRUE Stock Report), however, the outcome was in line with what you might think comes with positive earnings.
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Thursday afternoon saw TrueCar, yes the online auto dealer with “that rating system” report earnings. TRUE stock has suffered for months as the pandemic wreaked havoc on retail companies. Since its April low of $1.98, shares have seen sporadic pops and an overall bullish uptrend. These last two weeks, however were some of the most aggressive in terms of short-term price movement. Since July 27th alone, TRUE stock price jumped over 50%. Once the earnings report hit, TRUE started to uptick after-hours.
Mike Darrow, TrueCar’s President and Chief Executive Officer said, “In light of the situation around us, we are pleased by our results, highlighted by revenue and Adjusted EBITDA well above expectations. During the quarter, we successfully navigated the onset of COVID-19, executed a transformative strategic restructuring and formalized numerous cross-functional initiatives to support the USAA transition.”
The company beat on EPS and Sales. TrueCar also announced a $75 million buyback while agreeing to sell its ALG subsidiary for $135 million to J.D. Power. Will this be the last time we see TRUE on a list of penny stocks to watch right now?
Penny Stocks To Trade [or fade]: Conduent Inc.
Conduent Inc. (CNDT Stock Report) is another one of the penny stocks to watch at the end of the week. It saw its highest single-day of trading volume of the year on Thursday. Furthermore, this was ahead of its quarterly results. Leading up to August 6th, the trend was relatively sideways with most of the action being on a day-to-day basis. There was one prolonged rally back in May & June that lasted a few weeks but nothing that stood the test of time.
Prior to announcing earnings, Thursday morning Conduent reported that its Conduent Transportation unit implemented phase 1 of its fare collection system across the De Lijn public transportations network in Belgium. This enabled De Lijn to launch contactless payment on public transports. This was an initial catalyst for Thursday’s momentum…then earnings came out.
Not only did the company beat expectations on EPS and and sales but both came in well-above estimates. For the quarter, Conduent reported a positive EPS of $0.12, which beat expectations of a $0.05 EPS loss. Furthermore, its $1.02 billion in sales overshadowed Wall Street’s estimate of $923.25 million. Total contract value of signings came in at $623M, which was up 90% year-over-year and 92% quarter-over-quarter.
Brian Webb-Walsh, CFO, stated, “Our focus on delivering for clients while managing our costs is clearly showing in our results. We performed well in the second quarter and our business showed resiliency in the face of the COVID-19 pandemic. We also now expect to overachieve on our $100M cost program for 2020. Given current trends, we anticipate Q3 2020 revenue to be $960 million to $1.01 billion and an Adjusted EBITDA margin of between 10.0% and 11.5% in Q3 2020.”
Penny Stocks To Trade [or fade]: Ra Medical Systems Inc.
Earlier today one of our writers put out an article about penny stocks with unusual volume. Specifically, what was said was that “volume can act as an indication of interest” especially if it’s different from the daily average. Ra Medical Systems Inc. (RMED Stock Report) had a tough year this year and ended up just recently hitting new 52-week lows of $0.276.
During the course of the days to follow, RMED stock price remained stagnant. However, on August 6th, the market woke up and the penny stock saw its first green close in weeks. What’s more, it was the stock’s highest share volume of the quarter so far.
While there were no headlines to go along with the move, there was insider activity. In a string of Form-4 Filings on Wednesday, the company reported that management members, as well as council, purchased shares of RMED stock. In total, 40,000 shares were purchased at an average price of $0.35. Aside from that, the only other filing from August was regarding the recently closed public offering Ra Medical conducted.
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Something that the company has worked on this year is advancing its atherectomy indication trial and engineering efforts. Ra Medical commercializes excimer lasers as tools for the treatment of vascular and dermatological diseases. The company reports earnings early next week as well. So if RMED is on your list right now, make sure to mark down and keep August 11th in mind. The company will report second-quarter 2020 financial results and provide a business update after the market close on Tuesday.