Are These Cheap Stocks Worth The Risk?
As we move further into February, many penny stocks are grabbing attention. It’s not enough for a stock to make big daily gains. Rather, traders should be searching for companies that may hold intrinsic value. If you’ve been trading this year, you know that the market is different than ever before. When we combine massive speculation brought in by retail traders with volatility from the pandemic, we begin to see the stock market’s current state. And while volatility may seem scary at first, there are ways to use it to your advantage.
The best way to avoid being a victim of volatility is to have an entrance and exit strategy. Often, investors will see a penny stock making big daily gains. At this point, they buy, hoping to not miss out on the bullish price action. Shortly after, prices can go down. Novice traders panic sell, and then the losses are realized. To avoid this, there are a few strategies to use. As mentioned before, traders should have a price to enter and exit a position at. It’s also advantageous to take profit at different stages as the trade works out in your favor.
This means if a stock begins increasing to an initial profit target, traders could sell a portion of their position to protect gains. As it continues to rise, traders may sell a larger portion of the remaining position. And as they reach their final target price, sell the rest. This is a great way to maximize profit and is referred to as tier trading. Whatever your strategy, the best place to begin your search is with a list of penny stocks. Let’s take a look at 3 penny stocks that traders are watching in February.
Penny Stocks to Watch In February
- Weidai Ltd. (NYSE: WEI)
- Invivo Therapeutics Holdings Corp. (NASDAQ: NVIV)
- Molecular Data Inc. (NASDAQ: MKD)
Up 12% by midday on February 4th is Weidai Ltd. We’ve discussed WEI stock several times in the past few months for various reasons. While you may not have heard of Weidai, the company offers a financing and lending firm platform based in China. It utilizes auto-backed financing services to connect consumers with investors.
This market opportunity has become very popular in the past few years, as more and more people wish to start businesses and receive proper funding. Its platform works by offering small and micro-enterprise investors the opportunity to connect with proper funding partners. It can generate revenue through service fees and other fees for facilitating the investments on its platform.
While not much news comes out of WEI stock, the company has recently regained compliance with the NYSE trading requirements. This was a positive sign for investors and something that could remain positive moving forward. One thing to keep in mind is that WEI stock is quite volatile. We’ve seen shares of WEI jump from $0.85 to over $5 in a single day (back in October 2020).
In its most recent operating results report, the company posted over $123 million in net revenue. While it did post an EPS loss of roughly $0.97 per share, its revenue should be enough to continue growth in the long term. Whether this information makes WEI a penny stock to watch is up to you.
Invivo Therapeutics Holdings Corp.
NVIV stock is one of the larger gainers of the day so far, climbing roughly 14% by midday on February 3rd. For some context, Invivo is a clinical-stage biotech company with a focus on biomaterials. The company has several instances of proprietary technology in its pipeline and is affiliated with some select medical institutions in the U.S. While not much information has come out of NVIV stock in the past month or so, the company looks like it has been working on new fundraising methods. A few months back, Invivo announced the closing of a $15 million public offering. With this, the company stated that it plans to use these funds for both corporate purposes and further its research.
Since November, shares of NVIV stock have shot up by as much as 142%, including the gain on February 3rd. While part of this is due to the company, the other part seems to be based on the popularity of biotech companies. The company is currently working on a biomaterial project, where it aims to commercialize a biopolymer. This can be used as a type of scaffolding in the body to treat neuro-spinal disorders.
There haven’t been too many formal headlines from the company. However, Twitter has been a place to get recent info. In its last tweet, Invivo said it is “actively enrolling patients into our INSPIRE 2.0 clinical study. INSPIRE 2.0 is a 20-patient clinical study designed to assess the potential benefit of the investigational Neuro-Spinal Scaffold in comparison to current standard of care.”
Molecular Data Inc.
Another decent gainer of the day on February 4th is Molecular Data Inc. By midday, shares of MKD stock were up by around 9%. Molecular Data Inc. operates an e-commerce platform specializing in chemical sales. It offers a large range of products for use online, including warehouse solutions, logistics, software, and others. These products are used across the spectrum of chemical companies in China. Molecular Data is another penny stock that doesn’t put out too much information regularly.
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As a tech company primarily, Molecular Data depends on returning and new customers to grow its business. During the pandemic, software and e-commerce companies have seen a great deal of bullish interest from investors. Molecular Data holds a wide variety of these online platforms, helping customers build their businesses easily and effectively.
Also, China is one of the largest producers and exporters of chemicals in the world. This puts Molecular Data right in the middle of a growing market. Now, MKD stock is quite volatile, and this is something that investors should keep in mind.