Should You Buy Cheap Stocks Under $1 Right Now?
When it comes to making money in the stock market, there are plenty of ways to go about it. However, one of the most popular ways recently is by trading penny stocks. Whether you love them, hate them, or have no idea what they are, these cheap stocks have moved to the top of the list for traders in January. But what’s so great about these anyway? To answer this question, we first need to define what a penny stock actually is.
What Are Penny Stocks?
Penny stocks are shares of companies that trade for less than $5. While popular opinion suggests they should be trading for pennies, the Securities & Exchange Commission has done the leg work in setting a formal definition. With this in mind, we can move on to more important things like what are the top penny stocks to buy right now?
This is where you begin your research. Sifting through things like news, corporate filings, and even looking at analyst ratings can help you find some good names to add to your list. On the flip side, taking time to research can also help you find names to avoid. This is sometimes even more valuable than finding stocks to buy. This brings me to my next point: are penny stocks worth it?
Are Penny Stocks Worth It?
For new traders, understanding risk is a big deal. Becoming consistently profitable involves weighing risk and reward. Since these companies tend to be more speculative in nature, traders can be more reactive at times. This creates higher levels of volatility. What’s more, is that the lower the price, the higher the volatility as well. Case in point, we’re going to discuss some penny stocks that can be bought for under $1.
Even a small move of just 10 cents can equate to a change of 10% or more. So in determining if penny stocks are worth it or not, that is something you’ll have to answer based on your own trading style. Can you handle big price swings? Are you able to trade based on speculation? Will you be able to place trades quickly? These are just some of the things to ask yourself in determining if these types of stocks are right for you.
Now, if you’ve already concluded that they are, the next step is making your watch list. Keeping this in mind, here are stocks that can be bought for under $1 right now. Are they worth the risk?
Penny Stocks To Buy Under $1
- Onconova Therapeutics Inc. (NASDAQ: ONTX)
- Oragenics Inc. (NYSE: OGEN)
- Exela Technologies Inc. (NASDAQ: XELA)
- Synthetic Biologics Inc. (NYSE: SYN)
Onconova Therapeutics Inc.
Onconova had a very active day on Friday. Shares of the company saw the third highest trading volume day of 2021, with over 69 million traded. The penny stock also extended its recent multi-week uptrend that began late last year, reaching highs of $0.8684 before the closing bell. While ONTX stock did pull back during aftermarket trading, the momentum surge has remained a focus.
This week Steven Fruchtman, MD, President & CEO of Onconova, presents a company overview at NobleCon17. One of the recent wins that have been circulated by traders coincidentally wasn’t reported on by the company. So this may actually be one of the sources of speculation driving this latest uptrend. Earlier this month, registration with the European Patent Office Registration showed a patent was granted for ‘TREATMENT OF HEMATOLOGICAL CANCER REFRACTORY TO AN ANTI-CANCER AGENT.’
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Aside from this, Onconova is setting up to begin a Phase 1 study under the company’s Investigational New Drug application for ON 123300, the company’s cancer drug. In a December press release, Onconova had received permission from the FDA and set to dose the first patient during the first half of this year.
Oragenics Inc.
One of the penny stocks that we have discussed for a few weeks now is Oragenics Inc. Since climbing over 50% since the start of 2021, OGEN may be worth taking a look at. The company is working on a wide range of treatments with a focus on infectious diseases.
This includes OG716 and AG013, which work as an antibiotic and treatment of oral mucositis, respectively. The company has a large range of products in its pipeline, currently in various stages of the approval process. Recently, Oragenics was working on a vaccine to fight against Covid-19. Its TQL1055 or Terra CoV-2 is a vaccine that could have lasting effects on preventing the coronavirus.
Last week, the company announced that it had entered into a material transfer agreement with Adjuvance Technologies to produce the Covid-19 vaccine. As a follow-up, last week, the company issued a letter to shareholders. One of the highlights was explaining that the company’s drug could provide benefit against other coronaviruses.
Creation of the Master Cell Bank, required for later stage manufacturing will begin in the coming weeks. This work supports our expectation to file the IND mid-year with commencement of patient enrollment in Phase 1 clinical study immediately thereafter.
President and Chief Executive Officer, Alan Joslyn, Ph.D.
Exela Technologies Inc.
Another one of the penny stocks frequently on our list this year is Exela. Shares have skyrocketed during the first few weeks of 2021, thanks to big developments from the company. The most recent focus has been on what the future holds for Exela. The company retained UBS Investment Bank to explore strategic alternatives to build shareholder value. Last month, the company secured a loan for $145 million and retired its existing debt under a prior facility. This ultimately brought in more liquidity for its strategic initiatives.
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The broader move in tech stocks may have also helped XELA this year. The company offers business process automation to a customer base of 4,000 businesses across 50 countries. This has added to Exela’s progress over the last year. In its last quarterly update, the company reported significant revenue growth, year-over-year. Operating income for the third quarter was $4.8 million. This didn’t even compare to the operating loss of $93.9 million in the third quarter of 2019. The year-over-year increase in operating income was attributable to several operational changes.
“While some uncertainty related to the pandemic still remains, we continue to execute well against our plan for value creation in this current environment. Our sequential margin expansion, improving cash flow, and rising liquidity in the third quarter is further evidence of our progress,” said Ronald Cogburn, Chief Executive Officer of Exela, in response to these results.
Synthetic Biologics Inc.
Finally, Synthetic Biologics woke up in a big way this year. Most of 2020 was quiet for the stock. While it traded consistently, there weren’t many “big days” or time periods for the stock. Shares were able to reach highs of $0.75 but, for the most part, called $0.40 home last year. January has been much different. In fact, SYN stock managed to break above $1 for the first time since 2018 and with some of the biggest volume seen in years.
What has been a driving force for the penny stock in 2021? As we discussed last week, one of the things traders are looking at is the pending enrollment in its Phase 1b/2a trial for SYN-004. The trial focuses on allogeneic hematopoietic cell transplant (HCT) recipients. Synthetic said it expected the enrollment process to begin this quarter. Whether or not that means “this month” is up in the air. However, as I said above, penny stocks can be driven by speculation alone in many cases.
“In previously completed clinical trials, SYN-004 demonstrated a significant reduction in the incidence of CDI and VRE in treated patients versus placebo and has the potential to significantly improve outcomes for allogenic HCT recipients.”
Steven A. Shallcross, Chief Executive and Financial Officer of Synthetic
Furthermore, attention from institutional investors has raised eyebrows in January. Custodian Ventures reported a 9.9% stake in the biotech company.
Some Final Thoughts On Penny Stocks
There’s no denying the fact that penny stocks are red hot right now. One of the benchmark ETFs suggesting this is the case has been the Russell Small-Cap ETF (IWM). While broader markets have slid, small-cap stocks have remained near all-time highs. The one thing to remember is that there is a lot more risk involved in trading these cheap stocks. So before diving in, head-first, make sure you take time to research any of the companies you’re looking to put on your watch list to understand why they might be moving.
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