Looking For Low Float Penny Stocks To Buy?
There are plenty of penny stocks to choose from right now. However, some of the more popular names are among a niche group of stocks known as “low float penny stocks”. While there’s no standard definition of “low float,” I’d put a limit of 20 million shares as the highest end of that range. What exactly is “the float” though?
I’m glad you asked. In this wonderful world of stocks, there’s something called share structure. For those of you who are newer to trading, you might want to pay a bit of attention. Understanding the share structure of a company can help you determine the type of trade you’re going to make (or avoid entirely). Three things to keep in mind: what is the float, how many shares are issued & outstanding, and how many shares are authorized.
Share Structure Highlights
Float: You should try to find the number of shares in the float to gain an understanding of how much supply is actually in the market. For example, if you see the float of a penny stock is 5 million shares and it’s currently trading over 10 million, chances are price volatility will be a big factor in your trading.
Issued & Outstanding Shares: The issued and outstanding (OS) is important when it comes to accounting for shares that could “hit the market”. Just because shares were issued, it doesn’t mean they are part of the public float (yet). While OS accounts for the float, it also accounts for things like restricted shares and control stock.
Authorized Shares: Knowing how many shares a company has authorized comes into focus when discussing financing. A company can only issue as many shares as it has authorized. Once it reaches that level, it either has to increase the authorized or, in some cases, effect a reverse stock split. They may also choose to buy back shares as well.
Are Low Float Penny Stocks Good To Buy?
This is a great question and one that you’ll have to answer for yourself. The lower the float of a penny stock the higher the chances of big price fluctuations. Think of it as a simple economics theory. A low supply environment paired with higher demand equates to prices moving up quickly. This is the attraction of low float penny stocks. However, just as quickly as they move up, they can fall back leaving bag-holders in the wake of the sell-off. So if you are looking for low float penny stocks to buy right now, keep that in mind.
Low Float Penny Stocks To Watch: Birks Group Inc.
I know I’m going to get messages about breaking down what these companies do. The only reason that’s the case is most traders who’re buying these stocks only care about the letters in the ticker. But I will be the first to say that it’s never a bad idea to investigate the company itself. It can help you gain an understanding of potential underlying trends that may or may not lead to more follow-through down the road.
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In the case of Birks Group Inc. (BGI Stock Report), the company designs jewelry, watches, and luxury gifts. The company operates 29 stores across Canada with 26 stores under the Maison Birks brand. One thing that has plagued the company is the COVID-19 lockdown restrictions. This month the company updated the market on the potential impact of a “second wave”.
In response, Jean-Christophe Bédos, President and CEO of Birks Group explained “MaisonBirks.com is the #1 e-commerce destination in Canada for luxury watches and jewellery. We remain committed to, and recently invested in technological equipment for the purpose of, offering the highest possible quality in individual video shopping to our clients.”
With under 18 million shares outstanding and some outlets showing a float below 5 million, BGI comes onto this list. The unusual volume has come as a sign for some traders to add this to their watch list this week. Quarter-to-date, BGI stock is up 73% so far.
Low Float Penny Stocks To Watch: Obalon Therapeutics
Obalon Therapeutics (OBLN Stock Report) is another low float penny stock gaining momentum on Tuesday. Shares of OBLN surged to highs of $2.06 bringing its Q4 move to 119%. Furthermore, you’ll see on the chart that OBLN is no stranger to big price spikes. Earlier this month, shares exploded to highs of $3.13 from just $1.57 earlier that day. We also saw something similar back in the first half of the year as well. The overall trend has been bullish but it has obviously come with considerably high levels of volatility.
What’s more, is that there haven’t been any new updates from the company in some time. Obalon focuses on developing and commercializing medical devices. Specifically, its devices target people with obesity and who are overweight. We’ve discussed the company plenty of times this year. So if it seems familiar, that’s because it probably is.
The company’s Balloon System helps combat obesity in patients. On November 6th, Obalon announced its Q3 2020 financial results for the period ending on September 30th. In the results, the company managed to bring its losses down to around $0.20 per share from $0.61 in Q3 2019. Despite the lack of information, it’s interesting to see which institutions are actually taking a stake in the company. Armistice Capital, LLC reported a 14.2% stake in the company earlier this quarter. Furthermore, Morgan Stanley reported a 5.9% at the end of the 3rd quarter.
Low Float Penny Stocks To Watch: Emerson Radio Corp.
Another familiar name on this list of low float penny stocks is Emerson Radio Corp. (MSN Stock Report). The company’s OS is hovering around 21 million shares. However, some sources show the float of around 6 million. We first started following the company in mid-October. That was when MSN stock saw its first parabolic price spike. Shares jumped from $0.70 to highs of $0.92 within a single session. It would then go on to see numerous days of volatile trading eventually taking it to highs of $1.35. Since settling down a bit during recent weeks, MSN stock chart has formed a good looking uptrend. Albeit filled with sporadic moves, quarter-to-date, the penny stock is up 84% so far.
As has been the case all year, Emerson isn’t one for releasing news. But the obvious boost in trading volume has traders watching. You’ve likely seen the logo on plenty of electronics and appliances if you recall going to department stores. Its customers include Kroger, Wal-Mart, Amazon.com, and Fred Meyer to name a few.
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As far as fundamentals go, taking a look at the last 10Q shows growth. For the 3 months ended September 30, 2020, Net product sales were $2.2 million. Compared to $1.4 million for the second quarter of fiscal 2020, it was an increase of 60.3%. Houseware products net sales alone, 112.4%. So given this growth and the latest COVID stimulus optimism, MSN could be one of the low float penny stocks to watch before 2021.