3 Penny Stocks (Some Former) With Very Different Stories
What defines a penny stock? Is it the exchange that it’s traded on? Could it be the market cap of the stock? While some may try to complicate this, what defines a penny stock is simply its price. According to the standard definition of penny stocks, these are shares of companies trading below $5 per share.
Certain traders have made up their own definitions over the years. However, your run-of-the-mill penny stocks will be ones trading below $5. Having said this, 2020 is a crazy year. Not only have we seen crazy economic conditions, but we’ve also seen a huge shakeup across myriad industries.
It didn’t matter if we were talking about tech, real estate, retail, transportation, energy; you name it. Every sector and every industry felt some serious strain. In the wake of this, many of your typical “blue chip stocks” ended up becoming penny stocks. Some of these companies even went bankrupt or completely out of business. On the flip side, some of the least known companies ended up flourishing amid the “new normal” that was created.
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Who would have thought that a company like Hertz would be one of the stocks under $0.50 this year? Also, could you ever imagine Marathon Oil ever trading below $5? Meanwhile, countless biotech penny stocks with limited histories experienced explosive moves. Novavax comes to mind in this case.
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It was trading below $5 earlier this year and ended up reaching a high of $189.40 just a few months later. Needless to say, when someone asks, “Are penny stocks worth it,” 2020 brings a whole new thought process in crafting the best answer. There are plenty more examples on both sides of the breakout and breakdown coin. Let’s take a look at how 3 penny stocks and former stocks under $5 faired so far this year.
J.C. Penney Co. (JCPNQ)
It’s never been a tale of tremendous wins for J.C. Penney Co. (JCPNQ Stock Report)(JCP). We’ve covered the company off and on over the last few years. While the company has made strides to turn a corner, its “new initiatives” couldn’t quite meet the mark. Prior to any whispers of coronavirus, J.C. Penney, one of the oldest retailers in the market, was dealing with issues. The company has consistently missed earnings while also coming up short versus comps. You also can’t forget the massive debt burden the company has fought against for quite some time.
Furthermore, the retail store chain has continued closing locations as brick and mortar took a back seat to eCommerce. As I’ve discussed in the past, the retail penny stocks best known for physical storefronts have been the ones enhancing their brick and click strategy. This involves having both physical locations but also a just as prominent online presence. That is not describing J.C. Penney and the JCPNQ stock price clearly reflects that.
Most recently, JCPNQ stock experienced some unusually strong bullish momentum. Shares jumped from around $0.19 to highs of $0.40 on Wednesday. The trend continued very briefly on Thursday with JCPNQ stock reaching a high of $0.80. But then it was back to business as usual. At the closing bell, JCPNQ stock had dropped nearly 65% from its high and just 11 cents shy of where it opened a day previously. The initial bout of excitement came as the company was reported to have lined up a suitor to acquire the retailer for $800 million. Will this actually become a turning point for J.C. Penney or the bump on the slide lower?
Eastman Kodak Company (KODK)
If one thing’s certain, it’s that the Eastman Kodak Company (KODK Stock Price) has experienced its share of financial troubles. The company best-known for “The Kodak Moment” had its [brief] moment in the sun this year. In July, the penny stock (at the time) was trading around $2.13 when suddenly it exploded to highs of $60 within a matter of 3 days. What was behind the massive surge in volume?
It was reported that it was in the running for a $765 million government loan under the Defense Production Act. While it was true that there was a potential deal on the table, the ink was barely dry on a letter of interest as the U.S. President touted the deal. Obviously, traders took these words as confirmation though the department charged with vetting the full scope of this deal hadn’t done so at the time.
Fast-forward a bit and the US International Development Finance Corp. put the loan on hold. Allegations of wrongdoing and concerns regarding executive and board-member stock options were the root cause. Such a scandal has brought KODK stock down significantly from its July highs, though not far enough to become a penny stock again (so far).
Over the last few days, KODK stock has gotten a bit of reprieve stemming from the excitement surrounding institutional buying in its shares. Earlier this month, hedge fund D.E. Shaw took on a new 5.2% stake in the company. Furthermore, this week, Southeastern Asset Management reported in a 13G filing, a 15.8% stake in KODK stock. Will this be enough to right the ship?
Penn National Gaming Inc. (PENN)
Remember how I was talking about stocks that had never been considered penny stocks? Penn National Gaming Inc. (PENN Stock Report) was one of those this year. While brief, PENN stock price dropped as low as $3.75 in March amid the massive market sell-off.
The normal home for Penn National Gaming stock usually sat around $20. It also saw a surge in February to highs of $39.18; a new 52-week high at the time. However, the coronavirus lockdowns across the globe rolled craps for PENN stock as well as countless other gaming stocks like EVRI, MGM, CZR and others. Needless to say, the months that followed have been nothing short of impressive for casino stock in particular.
Penn gaming stock price has now managed to make fresh 52-week highs of $65.79 this week. It’s also worth mentioning that this is also a new all-time high for PENN stock. This week, the company announced that the Pennsylvania Gaming Control Board has approved a live, real money test period for its new Barstool Sportsbook mobile app in Pennsylvania.
“The Barstool Sportsbook app is the centerpiece of our Company’s omni-channel strategy,” said Jay Snowden, President, and CEO of Penn National. With the NFL getting ready to “kick-off”, there’s been another surge of trading activity in sports-betting-related stocks.
Furthermore, Rosenblatt analyst Bernie McTernan initiated coverage on PENN stock with a Buy rating and $80 price target. He said, “PENN has the opportunity to gain significant share in the online sports betting market at above peer margins driven by their Barstool partnership and physical footprint.”