Are These Epicenter Stocks On Your Watch List This Week?
Penny stocks have become a household name this year. That’s thanks, in part, to the coronavirus pandemic. A shockwave was sent across the global markets as stay at home orders slashed valuations and saw blue chip stocks crumble. With that, however, came a broader focus on stocks under $5.
Aside from traders looking for risk, the simple fact was many of the “market leaders” were trading at these levels. Fast-forward to this week and we’ve seen a surge in bullish sentiment. Aside from the election outcome, big news out of Pfizer (PFE Stock Report) has sent a jolt of momentum into the stock market today.
Pfizer and BioNTech (BNTX Stock Report) announced Monday their coronavirus vaccine was more than 90% effective in preventing Covid-19 among those without evidence of prior infection.
With hopes of reopening pegged against the backdrop of a potentially effective vaccine, epicenter stocks are back in focus. This grouping of stocks has been a frequent discussion among traders. Initially coined by Fundstrat’s Tom Lee, these “epicenter” or “reopening stocks” are ones hit hardest by the pandemic but that could recover the quickest if we get a vaccine. In light of this, there are plenty of ways to look at epicenter stocks. With this in mind, let’s take a look at a few “cheap stocks” in this group.
Epicenter Stocks To Watch
- AMC Entertainment Holdings Inc. (AMC Stock Report)
- Muscle Maker Inc (GRIL Stock Report)
- Party City Holdco Inc. (PRTY Stock Report)
- Coty Inc. (COTY Stock Report)
- Marathon Oil Corporation (MRO Stock Report)
Epicenter Penny Stocks To Buy [or avoid] #1: AMC Entertainment Holdings Inc.
Shares of AMC Entertainment Holdings Inc. took flight on Monday morning. Sparked by positive vaccine news, the beaten-down movie theatre stock found bullish sentiment early. Just last week, AMC stock reached lows not seen since the beginning of the pandemic. Call it a double bottom technical move or simply a broader sector catalyst, AMC stock has rallied over 100% since last Monday.
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What’s more is that even with the pandemic putting a stranglehold on certain companies, AMC has focused on reopening for months. In fact, at the end of October, 539 of 600 domestic locations were already operating again. Also, more than half of AMC’s international locations were open.
Epicenter Penny Stocks To Buy [or avoid] #2: Muscle Maker Inc.
When you talk about reopening, you can’t ignore the restaurant stocks. For the most part, we have seen some of the hardest hit names in restaurants as social distancing measures all but shut down these businesses. Along the way, however, innovation has created a few new opportunities that could continue even after we get back to some normalcy. Muscle Maker Inc., for instance, has seen its shares surge not only on the Pfizer news but also prior to this.
The company is working its way around the issues hurting in-restaurant dining. Its Muscle Maker Grill fast casual experience has shifted models. Not only has the company been acquiring new locations, it’s also expanding its “ghost kitchen” model.
In an October PR Michael Roper, CEO of Muscle Maker Grill, commented, “As stated in recent press announcements, the company is following its non-traditional growth plans, and now we’ve got a dedicated franchise partner opening their first two delivery only ghost kitchen locations on the West Coast. The ghost kitchen model makes sense for the brand given the high delivery demand due to Covid, low cost of entry and ability to expand rapidly.”
Epicenter Penny Stocks To Buy [or avoid]: Party City Holdco Inc.
Party City has been one of the more heavily discussed penny stocks over the last few months. Leading up to its “Catalina Wine Mixer” or as they call it, Halloween season, some speculated that it could have been a make or break moment for the company. Managing to take advantage of a brick and click model during the pandemic, Party City managed to weather a few storms.
This week everything came to a head as the company reported earnings. Revenue came in at $533.8 million with earnings per share of $2.24 for the third quarter. The company also said that it expects better October results than initially thought. Third quarter adjusted EPS came in at $0.10 which crushed the 34 cent loss per share that analysts had expected. Furthermore, Wall Street expected sales of $489.3 million which didn’t compare to that $500+million figure.
“Against a pandemic-impacted environment, we delivered $534 million in sales, including an 8.3% brand comparable sales increase, a stabilization in our Wholesale revenues and an almost threefold increase in Adjusted EBITDA over the prior year period.”Brad Weston , Chief Executive Officer
Epicenter Penny Stocks To Buy [or avoid] #4: Coty Inc.
Coty Inc. is another one of the retail epicenter penny stocks to watch. While it may or may not have been hurt directly by the pandemic, potentially new stimulus measures against the backdrop of vaccine news could spark more interest in retail stocks. Coty focuses on building beauty brands.
Last week the company reported fiscal Q1 2021 results. Similar to Party City, Coty crushed EPS estimates. The company reported earnings of 11 cents, which beat the 5 cent loss per share analysts expected. Sales also came in stronger than Wall Street thought. Coty reached $1.69 billion, which beat the $1.08 billion estimate. This week, DA Davidson analysts maintained a neutral rating on the stock but boosted price targets to $4 from $3.50. With a renewed optimism in the stock market today, retail could be a focus.
Epicenter Penny Stocks To Buy [or avoid] #5: Marathon Oil Corporation
Oil and gas stocks, believe it or not, are also wrapped up in the grouping of epicenter stocks. The idea of things reopening obviously suggests that travel and commerce will become more frequent. In light of this, it’s no wonder why we’re seeing a surge in energy stocks today. Marathon Oil Corporation is among these names. For the most part, MRO stock has treaded water over the last few months. Even recent earnings came in relatively as expected just slightly missing Wall Street estimates.
“While we continue to manage through commodity price volatility and the ongoing COVID-19 pandemic, third quarter represented an inflection point in what has been a transitional year, highlighted by $180 million of free cash flow generation on strong execution across all elements of our business…We are well-positioned to continue doing both in the current environment,” said Chairman, President, and CEO Lee Tillman.
Marathon Oil lowered its full year unit production operating expense guidance for both U.S. and International segments by over 5% and 8% respectively. The company also raised its full year U.S. oil-equivalent production guidance by 5,000 net boed at the midpoint.