Cheap Penny Stocks To Buy For Under $3 But Are They Too High Risk?
There are plenty of penny stocks to choose from. But which ones are the right ones to buy right now? You could, of course, look for different sector trends to find opportunities. On the other hand, you could look for other catalysts like news, for instance. Whether it’s company-specific headlines or more broad, secular press, using the news that penny stocks report can become a great way to find underlying momentum.
However, it doesn’t necessarily have to be a formal announcement that a company “did something,” and let me expand on that. If you’ve been following the stock market recently, there’s a huge push for social-media-driven stocks. First, it was GameStop, then AMC Entertainment. That ended up triggering momentum in other names like Bed, Bath, & Beyond, BlackBerry, and even Express.
Popular Penny Stocks Follow Particular Trends
One thing that these companies all had in common was heavy short interest. Large funds were betting against these companies in a big way. Retail traders identified this trend and responded with bullish trading. As they’ve been dubbed, the Reddit traders sparked one of the biggest short squeezes many had seen in recent history. This is what became “the short squeeze” trend. Traders began searching for it by name: “highest short interest stocks,” for example.
So what’s my point? I said above that “news” doesn’t necessarily need to be a major headline from a company. It can simply be a story that sparks sympathy trading. In this light, we didn’t see any single sector gain momentum; we saw specific stocks that met the criteria of the broader market “storyline,” which was “short squeeze stocks.” We’ve also seen things like this when 1 low float penny stock breaks out big.
The search isn’t for industry-specific stocks. It’s for any stock with a low float. Traders are fickle, but they do follow trends. In this article, we’ve got a few names to watch that can all be bought under a certain price threshold; $3. However, just because they’re cheap, does that mean they’re the best penny stocks to buy right now?
Penny Stocks To Buy [under $3]
- Globalstar Inc. (NYSE: GSAT)
- Cinedigm Corporation (NASDAQ: CIDM)
- Vislink Technologies Inc. (NASDAQ: VISL)
- Aeterna Zentaris Inc. (NASDAQ: AEZS)
Globalstar is one of the popular communications penny stocks we’ve discussed in the past. Shares have managed to jump by more than 200% since the start of 2021. One of the important things to note is that the company has exposure to the 5G arena. As more search for top 5G penny stocks, Globalstar has come up frequently in conversations. However, there’s a bigger story that has been developing over the last few months.
Recently the company announced the next steps to this latest initiative. Globalstar had some leadership changes that would be more in line with growth in the commercial Internet of Things industry (IoT). In particular, the company has been signing deals that utilize Globalstar’s satellite imaging, tracking, and spectrum solutions.
These deals include companies like Nokia, which licensed & deployed Globalstar’s Band 53 spectrum technology at the Port of Seattle last month. The company also signed a deal with a livestock tracking company, Ceres Tag. Globalstar is supplying satellite services through the world’s first and only smart ear tag for traceability provenance, biosecurity, health, animal welfare, production improvement, and theft reduction.
I know there’s a lot of attention on companies like AMC Entertainment right now. But outside of short squeeze stocks, entertainment technology has benefited greatly over the last 12 months. Thanks to stay-at-home orders and social distancing, people find new ways to satisfy their need to be entertained. In this light, you’ve got companies like Cinedigm gaining some attention.
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The company offers premium content & streaming solutions for its customers. Similar to Globalstar, recent deals have brought more interest to Cinedigm. For instance, last month, the company launched its All3Media ‘s SO… REAL on the Roku® platform. This now extends its reach on the Roku platform offering users access to All3Media’s catalog of reality content. The company has also partnered with the likes of TLC to include all of its channels in TLC’s launch of a service in certain TVs in North America.
These and other developments have lead to bullishness in the market. This is from both retail traders and analysts. Alliance Global recently adjusted its price target from $2 to $3. It also maintains a Buy on the stock.
Another one of the tech penny stocks to watch on this list is Vislink. There’s been plenty of attention on communications companies, drone companies, surveillance companies & the like. In the case of Vislink, the company falls more on the side of communications components for things like live video. The company said it began shipping its DVE6100 encoder for quick & secure communications transmission via satellite in its most recent update.
Right now is also when the market is turning toward earnings results for last year and Q4. While Vislink hasn’t reported yet, we see that the company is coming off a shaky Q3. Last quarter the company saw declines in most major areas. However, since it was COVID-related, management made a point to say it expected a recovery into Q4 and focused on cost-saving strategies to balance things out.
Something else to note that was revealed in its Q3 update was explained by Carleton Miller, CEO of Vislink Technologies. “We were pleased to introduce two significant product lines: the DVE/IRD satcom encoder/decoder, and the IP Link 3.0 digital microwave system. These will be followed by the introduction of the new Quantum Receiver in the first half of 2021.”
Aeterna Zentaris Inc.
Finally, Aeterna Zentaris is the one biotech penny stock on this list that has been turning heads for weeks. The company develops growth hormone deficiency treatments. Its AEZS-130-P02 has been a focus recently. The company’s evaluating macimorelin in diagnosing childhood-onset growth hormone deficiency. A Phase 3 Study is expected to be initiated this quarter. So speculative optimism could also play a role right now. However, this week, it isn’t growth hormone headlines grabbing attention; it’s COVID.
Tuesday, the company announced that it entered into an exclusive option agreement to evaluate a preclinical potential COVID-19 vaccine developed at the Julius-Maximilians-University Wuerzburg in Germany. The vaccine technology developed at the University uses a typhoid fever vaccine as a carrier strain. According to the company, it can be an orally active COVID-19 (SARS-CoV-2) live-attenuated bacterial vaccine.
“We are optimistic that results from further studies of this new vaccination approach may offer a much needed, safe and effective immunization alternative against COVID-19. Aeterna will contribute its expertise and experience in preclinical development and GMP-compliant manufacturing to the project.”Dr. Klaus Paulini, Chief Executive Officer of Aeterna Zentaris
Something to keep in mind with AEZS, in particular, is that this news sparked a big, pre-market move. The main focus will likely be on whether shares can sustain these higher levels or if a pull-back is due.
Penny Stocks & Risk
When it comes to penny stocks, weighing risk and reward is important. It isn’t hard to see cheap stocks and assume they’ll produce a big return in “just a few ticks.” Doing your research and understanding what’s moving certain stocks is key. Also, monitoring and understanding certain technical trends help avoid getting caught holding the bag as well. At the end of the day, when it comes to lower-priced penny stocks, remember one thing. Just as quickly as they climb, they can free-fall just as fast. Your goal is to be on the winning side of that trade.