Penny Stocks To Watch Right Now As Energy & Tech Captivate Investor Interest
Once again, the morning session greets those trading penny stocks with a big bullish trend in electric vehicle stocks today. But how long can the momentum last in these names? It’s a big question I’m sure many are asking as valuations are becoming astronomical at this point. We’re seeing penny stocks explode from less than $1 to highs of over $10 within a day. Even with such a parabolic move, retail traders continue flocking to these stocks looking for ways to “invest” without breaking down fundamentals. For those who’re reading and relating to this, please take some things into consideration right now.
First, nothing goes up in a straight line forever. As amazing as these moves have been, responsible traders are protecting gains by taking profit as these stocks go up. Holding onto these penny stocks and hoping that they follow a similar trend to Nio (NIO Stock Report) or Xpeng Inc. (XPEV Stock Report) has a flaw. That flaw is “hoping” something trades a certain way. The market will ultimately dictate the pace and direction.
If a company that was trading at $1 “yesterday” is at $10 “today,” fundamentally what has changed to justify a valuation 10 times higher within a day? Unless we’re talking about a massive deal that’s immediately accretive 10x or more to a company’s bottom line, there’s not much to justify such a market cap. This is the beauty of penny stocks, low floats, short squeezes, FOMO, sympathy trading, and emotionally-fueled speculation. In many cases, even a mention of something related to a current hot sector can send penny stocks surging. It’s important to keep in mind that there are other factors at play than someone saying “this is the next Tesla”.
How To Trade Penny Stocks
So what’s to say about penny stocks? Should all penny stocks be day traded? Are all penny stocks bad to invest in? Everyone asks questions like these daily. There’s also a good chance that someone ends up buying at the top of a move, knowing the risk, and still says penny stocks should be avoided at all costs.
At the end of the day, the ones consistently making money with these stocks under $5 are those sticking to a proven strategy. Some even go a step further, taking up a tier trading strategy ensuring to stay in winning trades longer and cut out of losing trades quicker. While this is easier said than done, a strategy that allows for things like this can help when it comes to these massive sector moves.
Peeling profit along the way, scaling up, scaling out, etc. These are all different ways of taking advantage of such explosive momentum. With this in mind, some sectors have also benefited from the move that electric vehicle stocks have made. This includes energy, alternative fuels, and even certain technology stocks. Given the sympathy momentum, however, will these stocks establish a trend or is this going to be a short-lived breakout move? Those are things to keep in mind heading into the rest of the short week this week.
Penny Stocks Buy [or avoid]: American Resources Corporation
American Resources Corporation (AREC Stock Report) is catching some strong momentum early on Tuesday morning. The move came in conjunction with its latest update. American Resources’ subsidiary, American Rare Earth LLC entered into a joint venture to develop and commercialize critical element and graphene technologies.
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Why’s this relevant right now? The JV was established with Gerardine Botte, Ph.D., a Texas Tech University Professor, and the Whitacre Department Chair in Chemical Engineering. The venture focuses on developing and commercializing technologies for critical elements and graphene production from carbon-based deposits.
It will also be under the newly established and jointly controlled company, Advanced Carbon Materials LLC. Advanced Carbon will focus on developing new technologies for both critical elements (rare earth elements) and graphene production to bring domestic production to the electrification marketplace, including the needs of the Department of Energy, Department of Defense and electric vehicle production.
Considering the hype around names with exposure to electric vehicles right now, AREC could be a stock to watch.
Penny Stocks Buy [or avoid]: Transatlantic Petroleum Ltd.
Transatlantic Petroleum Ltd. (TAT Stock Report) is another one of the energy stocks to watch on Tuesday. The company recently caught a surge after reporting third quarter results last week. Transatlatic saw EPS and sales lower for the quarter on a year-over-year basis. However, quarter over quarter, the company saw revenues climb from $6.5 million in Q2 to over $8.5 million in Q3. Transatlantic also recorded a smaller net loss in Q3 compared to Q2.
One of the things investors are looking at right now with TAT stock is a pending merger. In August, the Company entered into an Agreement and Plan of Merger where an affiliate of a group of holders representing 100% of the company’s outstanding 12.0% Series A Convertible Redeemable Preferred Shares would acquire all of the outstanding common shares for $0.13 per share in cash.There will be a special shareholder meeting held next month, which will likely determine the outcome of this potential combination.
Penny Stocks Buy [or avoid]: Gevo Inc.
Shares of Gevo Inc. (GEVO Stock Report) have been on the rise for nearly a week now. Since the start of last week, GEVO stock has been flying high. It’s now moved from around $1 last week to highs this week of over $2.80 so far. The move has been fueled (no pun intended) by the attention the alternative energy stocks and alternative fuels have gotten. Possibly due, in part, to the electric vehicle stocks that’ve broken out, GEVO followed suit.
Similar to many of the other parabolic moved we’ve seen, it’s important to keep this catalyst in mind. While Gevo, itself may have reached certain milestones this year, we’ve got to look at what’s happened during the period that it broke out. The company hasn’t put out any news or filings. However, related names in fuel cell, hydrogen, and alternative fuels markets have. That sector strength may have been the main driver of this move. Is GEVO still one of the penny stocks to buy right now or has the move gotten too far extended?
Penny Stocks Buy [or avoid]: Tellurian Inc.
Tellurian Inc. (TELL Stock Report) is focused on building out its integrated global natural gas business. Similar to many of the other penny stocks in this space, TELL stock has benefited from sector strength this month. While the penny stock has been climbing, the last few days have seen considerably higher trading volumes.
Earlier this month Tellurian released a business update and earnings report. President and CEO Meg Gentle said, “Natural gas markets and prices have recovered worldwide. Investment in new drilling and infrastructure is acutely needed to balance the market in 2021 and beyond. Building liquefaction terminals as fully integrated partnerships is the only way partners will secure the lowest cost of gas and be protected from the market’s inherent volatility.”
In light of the recent momentum in natural gas and the upcoming winter months, will TELL be on your list of penny stocks to buy or avoid?
Penny Stocks To Buy [or avoid]: Camber Energy Inc.
Camber Energy Inc. (CEI Stock Report) also extended a week-long move on Tuesday. shares hit premarket highs of $1.11 with strong volume continuing into the open. The company has gained steam during the entire process of a potential combination with Viking Energy. Camber and Viking have each satisfied nearly all of their respective conditions to closing the merger and are waiting on approvals. The deal would further enhance the oil and natural gas assets of the two. This deal currently is looking to be closed before year-end.
Given the timing of this in relation to the latest surge in natural gas stocks right now, CEI shares have begun testing levels not seen since October. Will this trend continue into the rest of the holiday week or is this another exhausted move in energy stocks?