Are Cheap Penny Stocks Worth The Risk?
In this article, we’ll answer the question, “What are penny stocks” and we’ll go over a few notable names to know right now. So let’s get started.
What Are Penny Stocks?
These typically represent shares of companies that can be bought for less than $5 a share. Some traders take it a step further and make their own definition. This might entail something like stocks under $2 or penny stocks under 50 cents. However, according to the Securities & Exchange Commission’s definition of penny stocks, the $5 mark is the upper threshold.
Regardless of the definition, the goal is always to make money with these stocks. So where should you start? Assuming you’ve got a bit of the basic of day trading down, the next step is putting together your watch list. Some will focus on certain industries while others will seek out stocks by price. Recently it would seem that the latter is more relevant than anything else.
Those who fall into this category need to keep a few things in mind. Specifically, cheaper penny stocks tend to carry higher levels of inherent risk. This is simply due to the fact that small changes in price can mean big changes in percentage gains or losses. For example, if you’re looking at penny stocks under 50 cents, even a 10 cent move is a 20% change or more in the value of that position. In this article, we’re going to look at a few stocks that are trading below $1.50. While they aren’t the cheapest stocks, they are some of the most active right now. It will be up to you to decide if they’re the best penny stocks to buy before the end of the month.
- Guardion Health Sciences (NASDAQ: GHSI)
- Inpixon (NASDAQ: INPX)
- Motus GI Holdings (NASDAQ: MOTS)
- Conformis Inc. (NASDAQ: CFMS)
- Novan Inc. (NASDAQ: NOVN)
Penny Stocks To Buy Under $1: Guardion Health Sciences
If you’re looking for cheap stocks right now, those that trade under $1 are among the cheapest. Keep in mind that the lower the price, the higher the volatility in most cases. Guardion Health Sciences is one of the cheaper stocks on this list. Over the last few months, GHSI has continued climbing after hitting 52-week lows in November. It hasn’t been a small rebound either. Since then, GHSI shares have climbed from just $0;.165 to highs of $1.04.
The company produces various products for use in the medical food and medical devices industry. Its products include Lumega-Z, GlaucoCetin, and others. These medical foods provide vision aiding benefits to patients. Additionally, the company has several medical devices in its pipeline such as its VectorVision, CSV-1000, and MapcatSF. The majority of what Guardion is working on is involved in ocular health.
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Right now, the company’s Lumega-Z is a near-term focus. It’s being developed for an adult market as a vision health and support product. It’s also being formulated as a visual attention and energy drink for the youth market. The angle for the energy drink is to target consumers in video gaming and other close-up device viewing markets. The initial round of testing has been completed according to Guardion. Why this could be a near-term point of focus is that the final round is expected to finish by the end of this quarter.
Penny Stocks To Buy Under $1.50: Inpixon
It isn’t one of the cheapest stocks on the list but Inpixon is one of the penny stocks under $1.50 right now gaining momentum this year. The penny stock has mounted a strong and consistent move in 2021. Opening the year, INPX shares were trading around $1.02. Fast-forward to this week and the penny stock has jumped to highs of $1.25.
There could be a few things to keep in mind, both technical and fundamental. On the fundamental side of things, Inpixon has released recent updates that have acted as catalysts early on. First, the company announced the latest release of its indoor security solution, Inpixon Aware. The platform is built for organizations to implement for helping with decision making. It’s designed to help corporate enterprises and governmental agencies combat theft of confidential information and to enhance safety and operational efficiency. This includes providing visibility into the location of wireless devices, people and critical assets within indoor spaces.
Earlier this week, the company was actually awarded for its portfolio of IoT solutions. This has helped act as a trigger for momentum to continue. However, for those looking at technicals, you’ll see that INPX has tested a key level of historic resistance at its 200 Day Moving Average. It’s been well-over a year since INPX shares managed to break and hold above this level. In light of this, will it remain a stock to watch or is another consolidation coming?
Motus GI Holdings
Another one of the penny stocks under $1.50 to watch is Motus GI. Similar to Inpixon, Motus has been on the move recently. In fact, since the beginning of November, shares of MOTS stock have jumped as much as 71% after hitting highs of $1.25 this week.
The company provides endoscopy solutions to diagnose and manage gastrointestinal conditions. After a few quarters of bearishness, Q3 looks like it revealed some renewed momentum. In fact, Tim Moran, Chief Executive Officer of Motus GI pointed out that, “During Q3, we saw these hospitals have ramped up inpatient colonoscopy volumes to approximately 80-90% of pre-pandemic levels…Moving forward, we believe we can start to achieve sustainable procedure volumes at target accounts, and we expect to see a continuation of our progress and momentum into the fourth quarter.”
In light of this, the market has rallied behind the penny stock. This week that rally has continued as Motus announced approval from DEKRA (EU Notified Body) for enhancements to its Pure-Vu GEN2 System. They said that these enhancements were introduced to commercial customers in the U.S. during the fourth quarter of 2020. It comes shortly after Motus announced that the U.S. Patent and Trademark Office & the European Patent Office issued 2 new patents to further protect Pure-Vu in these markets.
The past thirty days have seen shares of CFMS shoot up over 60% which is quite substantial. Conformis Inc. operates as a specialty biotech business. It designs and manufactures a large range of products that help those who have had joint replacements. This includes iTotal PS, a replacement ligament system, as well as iUni, a full knee replacement product. While this is a specialty market, the demand for these products seems to be enough to support a healthy balance sheet. Last week, Conformis Inc. announced that it would be reporting its fourth-quarter results as well as its full 2020 financial results in the beginning of March.
Ahead of this, let’s take a look at its Q3 2020 financial results. In the third quarter, which ended on September 30th, CFMS announced revenue of $16 million. While this is a decrease of around 7% YoY, this makes sense given the effects of the pandemic. Mark Augusti, CEO of Conformis, stated that “we were pleased to see a continued resumption of elective primary joint replacement surgery during the third quarter. Given the challenges of managing through the pandemic, I am particularly pleased to see gross margin improvement over last year.”
The hopes are that this type of surgery will begin to resume as the pandemic lessens in severity with vaccine distribution. With Q4 earnings coming in March will CFMS be on your list of penny stocks to watch?
This has been one of the company that we started discussing months ago. Novan was also one of the first penny stocks on our list at the start of 2021. What’s been helping push momentum? In short, COVID. The company has been focused on advancing its platform known as Nitricil. This nitric oxide-based tech platform allows for the treatment of a wide variety of illnesses.
In fact, toward the end of last year, Novan announced a Master Services Agreement with Catalent to develop its intranasal drug, berdazimer sodium for COVID-19. Catalent works as a provider of drug delivery technologies including those used in biologics and gene therapies. The agreement supports certain development activities for the formulation.
“Following the initial positive in vitro results that we announced earlier, we believe berdazimer sodium has the potential to offer benefit in inhibiting the replication of SARS-CoV-2, the virus that causes COVID-19, and we look forward to further exploring its potential.”Dr. Carri Geer, Chief Technology Officer of Novan
Given the interest in COVID-related stocks, NOVN could be one to watch as investors shift focus from vaccines to preventative treatments.
Are Penny Stocks Worth It?
Penny stocks are well-known for their ability to turn quick profits. But they’re also known for their swift drops in price. This year and in 2020, new traders got a first-hand look at exactly this. One of the main things to take account of is emotions. The minute that excitement or despair plays a role, you’ve become emotional about your trade. Separating these emotions from your trading is important when it comes to taking profit especially. At the end of the day, if you sold too early, a strong trend will give you more opportunities to re-enter. Furthermore, taking a small gain is better than holding onto a losing trade. At least if you’re goal is making money in the market.
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