Are These Cheap Stocks Worth The Risk ?
Believe it or not penny stocks and small cap stocks, in general are performing well during the early Tuesday session. Where the S&P is down slightly, the Russell 2000 (IWM ETF) is trading higher. What does this mean for traders right now? Well, let’s go over a few things that we’ve already seen this week and get a lay of the land, so to speak. First, the risk-on trade seems to have been alive and well to start the week. Pfizer’s (PFE Stock Report) COVID-19 vaccine news stoked a market recovery like we haven’t seen in months. While new record highs would emerge, by the end of the day, reality began setting in. Most of those gains ended up disappearing by the close.
Needless to say, things like consumer cyclicals, energy, and tech were some of the winners. Meanwhile, safe-havens like gold and mining stocks took a long-awaited breather. That doesn’t mean the leaders continue leading and the laggards go away for good. But, as we’ve come to understand this year, headlines have driven sentiment in a big way. So are we back to a risk-off trade on Tuesday?
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In my opinion, not quite. We’re still seeing a lot of volatility right now but momentum in small cap stocks suggests traders are still “ok” with risk right now. Not only did more vaccine news come out of Eli Lilly last night, but we’ve also still got Pfizer’s vaccine news and the outcome of the Presidential race to take into consideration. All things aside, Monday’s upbeat day (even with a pullback) might not be the last we see of bullish momentum in the stock market this week.
Trading Penny Stocks Doesn’t Mean Throwing Caution To The Wind
Remember, just because traders are looking for a bit more risk, that doesn’t mean to throw your strategy out the window. Unbridled stock market exuberance can easily and very quickly bring emotion into trading. Fear of missing out and no fear of taking a loss are equally as important to stay away from. So with all of the hype in the stock market today, keep your heads on your shoulders and remember your trading strategy as a whole.
As we saw in Monday’s session, big moves up are great but they can just as easily be given right back. Furthermore, even with this big vaccine news, COVID cases continue reaching new record figures. The U.S. has now surpassed 10 million cases this year with nearly 240,000 deaths being recorded. According to data from Johns Hopkins, global coronavirus deaths have surpassed 1.26 million with just under 51 million total cases.
The fact is that while headlines on a potential vaccine are positive, there is still work to be done. Meanwhile, penny stocks have remained some of the most active regardless of the broader market trends. With this in mind, here are a few trading below $4.50 right now. But just because they’re “cheap,” are they the best penny stocks to buy right now?
Top Penny Stocks To Buy [or avoid]: AgEagle Aerial Systems Inc.
Tuesday morning, AgEagle Aerial Systems Inc. (UAVS Stock Report) reported that it was selected to participate in the unmanned aircraft pilot program in Kansas. CEO Michael Drozd stated, “We believe that our experience and expertise in drone manufacturing, drone delivery systems integration and aerial imaging-based data collection and analytics will prove invaluable as we work in close collaboration with KDOT, universities and other public and private partners involved with the BEYOND program to realize the full and very promising potential of commercial drones.”
This move comes roughly 1 month after signing a partnership with Valqari to manufacture drone delivery stations. A lot of speculation has been revolving around the company’s future prospects as organizations like Amazon design drone package delivery platforms. AgEagle’s deal with Valqari puts it in a two-year exclusive contract manufacturing agreement to produce Valqari’s Drone Delivery Station. AgEagle also made an equity investment into Valqari associated with a current early-stage funding round.
As the stay-at-home economy and social distancing sculpt the future, drones could play a larger role. Evidence of this via the UAV program in Kanasas and the fact that there’s a need for drone delivery stations could suggest potential for the market. So, it will be interesting to see how big a role AgEagle might play in that case.
Top Penny Stocks To Buy [or avoid]: Greenland Technologies Holding Corp.
Greenland Technologies Holding Corp. (GTEC Stock Report) saw a strong surge early on Tuesday morning. The low float tech stock announced electric vehicle-related news. As many of you’ve already found lately, EV stocks are quite the talk among traders. While this isn’t your typical electric vehicle stock, Greenland has developed an electric drivetrane system for electric forklifts.
“Due to increasing environmental regulations and decreasing production costs, the material handling industry is at the cusp of a dramatic shift towards lithium powered solutions,” said Raymond Wang, CEO of Greenland Technologies Holding Corp. “It is a great opportunity for us and we will continue innovating in clean energy technology to meet this growing demand for our clients.”
For those looking for momentum, GTEC stock has clearly demonstrated this early on. However, it’s also important to understand that low float, high-volatility may be better suited for certain types of traders. The highest share volume day for this penny stock in 2020 was just under 4 million shares. On Tuesday, GTEC stock saw more than 21 million traded within the first 11 minutes of the market being open. Will this be on your list of penny stocks to buy or avoid right now?
Top Penny Stocks To Buy [or avoid]: Coty Inc.
Big news between Target and Ulta Beauty sparked interest in cosmetics companies on Tuesday. The deal has Ulta popping up inside Target locations as a “Shop-In-Shop”. This has brought some attention to companies like Coty Inc. (COTY Stock Report).
Earlier this year, the company completed the transaction to create a long-term strategic partnership with Kylie Jenner. This would see the two jointly build and further develop Kylie’s existing beauty business into a global powerhouse brand.
While this deal came amid questionable pricing (some say Coty overpaid), it does bring direct access to the Kylie Brand. What’s more is that Kylie Cosmetics is sold by Ulta. Will the latest news from Target and the cosmetics retailer give a sympathy boost to companies like Coty this week?