3 Penny Stocks To Buy Under $3 But Are They Worth The Risk?
What are penny stocks? If you’re new to trading, you need to start somewhere, right? The definition of a penny stock is a share of a company that trades for less than $5 a share. It seems like something so shrouded in mystery would have a more complex definition. But there you have it. Why would anyone want to trade these cheap stocks, they’re just worthless companies aren’t they?
Believe it or not, that’s a question we get a lot. The fact of the matter is that while certain names are a bit weak in the business department, there are plenty of other companies building from the ground up. Penny stocks are far more than just stocks under $5. You’ve got real businesses generating significant interest in the stock market. This isn’t just for being volatile stocks, it’s for the future potential that investors see in them.
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Take, for instance, the countless biotech penny stocks that have gone on to see explosive gains this year. Novavax (NVAX Stock Report) is one that comes to mind. Continuing its execution on key milestones helped this company grow from a $4 penny stock to one reaching highs of nearly $190 this year.
Do All Penny Stocks Become Big Winning Trades?
While moves like NVAX and plenty other top penny stocks experienced this year are great, not all penny stocks are able to follow such a trend. Many even fail completely. Look at Hertz Global Holdings Inc. (HTZGQ Stock Report) for instance. This company once lead the car rental sector. But several major hurdles resulted in Hertz stock getting pummeled in the market. It even saw its biggest shareholders cut losses in the wake of the 2020 pandemic. Now, in bankruptcy, it was delisted completely from the New York Stock exchange.
That’s right, Hertz stock is now an OTC penny stock due to the struggles it ran into this year. Now, can it recover? Sure, but that’s obviously yet to be seen. There’ve been plenty of penny stocks that ran into hard times but were able to right the ship eventually. Nio Inc. (NIO Stock Report) is one example of penny stocks that turn things around. As you can see, NIO reached new all-time highs this week. What’s crazy is that a little over 12 months ago, it was one of the penny stocks under $2 that we began to follow closely. So you’ve got a lot to consider when approaching these cheap stocks. The long and short of it is that not all penny stocks are meant to trade and not all penny stocks are meant to invest in.
Make sure you know which strategy you’d like to utilize (Day Trading vs Investing) when looking for penny stocks to buy. Also, be aware that the price is only one factor to consider when putting your list together.
Penny Stocks To Buy Under $3: Digital Ally Inc.
Digital Ally Inc. (DGLY Stock Report) is on this list of penny stocks right now thanks to speculative momentum that’s built up heading into the election. The company’s main focus is body-worn A/V equipment. Obviously, the heightened level of civil unrest this year has boosted interest in companies that have exposure to anything related to this niche.
Last week the Department of Justice announced that body-worn cameras would be used on the Federal Task Force. With cities like Washington D.C. and Philadelphia actually preparing for disaster-like scenarios following the election, stocks like DGLY and even arms makers like Smith & Wesson are actually experience speculative trading momentum.
What’s more, is that Digital Ally put out a tweet on Monday that helped boost even more optimism had followed. The company highlighted a quote from the Pickens County Sheriff’s Office.
“With the ability to automatically activate our FirstVu HD body-worn cameras and in-car video systems with Digital Ally’s patented VuLink technology, our officers no longer have to think about pressing a button to record interactions. This functionality allows us to meet our goals of increasing the safety for our officers while ensuring that we capture a comprehensive perspective of the event.”
The biggest thing to keep in mind right now is whether or not this momentum continues after the election.
Penny Stocks To Buy Under $3: Vislink Technologies Inc.
Vislink Technologies Inc. (VISL Stock Report) is another one of the tech penny stocks to watch right now. VISL caught a nice surge in bullish momentum on Monday but it wasn’t paired with anything like a Tweet or news headline. But, much like Digital Ally, Vislink has some exposure to the security side of the recent sympathy momentum leading into the election.
The company offers a suite of communications products. Everything from audio/visual to satellite and drone products, Vislink has built its brand around numerous markets. One of the things to note as potentially attributable to the current situation surrounding this election is the company’s focus on first responders and government personnel. The idea is to provide technology via wireless cameras, airborne systems, and portable systems to deploy in various scenarios.
One thing to note about Vislink is that the majority of its communication has come from Twitter. There haven’t been many press releases from the company in recent months. Given the idea that penny stocks like VISL are getting a boost from sympathy momentum, it will be important to monitor things like volume and follow-through. More times than not, once the sympathy hype dies down, the risk is that so too will a stock’s momentum.
Penny Stocks To Buy Under $3: Cemtrex Inc.
Cemtrex Inc. (CETX Stock Report) is the 3 tech penny stock on this list. Similar to the others mentioned, Cemtrex has exposure to the security systems and communications sector. The company provides tech that utilizes augmented & virtual reality, artificial intelligence, digital intelligence, as well as security & surveillance.
Early last month, Cemtrex received a $500k upgrade order to build upon its security business. The order was for an upgrade of a security technology system through its Advanced Technology Segment. The upgrade was for a large Tennessee based corrections facility. This order followed a previous deal in September that saw Cemtrex awarded a contract for thermal body temperature cams for a major school district. All of these solutions offered via these latest deals are obviously involved with some of the hot topic items in the regular news cycle.
While Monday’s momentum was strong, it wasn’t an anomaly compared to its previous week of trading. Over the last 6 sessions, CETX stock continues extending its uptrend. This has now resulted in a move of more than 15% so far. What you may also notice on the CETX stock chart is that its 200 day moving average has remained a key level of resistance for the last few months. Can it manage to break and hold above it in light of this recent momentum?