Are These Penny Stocks Still A Buy Right Now?
When you think about penny stocks, what comes to mind first? Is it a stock that races higher and drops back down in a day’s time? On the other hand, is it a stock that climbs higher for months on end? Do you invest in penny stocks or do you trade them? What are certain things that tell you one stock is better than the other?
I know I’ve listed a bunch of questions but all of these come up when you talk about penny stocks. The fact of the matter is there aren’t any right or wrong answers, only the ones that result in profits. Right now we’re seeing a rebirth in the “retail trader” and thanks to outlets like Reddit, these traders have a louder voice.
Even some of the top contributors from the likes of CNBC are giving kudos to the once-assumed novice market participants. But thanks to massive rallies in some of the most beaten-down names in the stock market today, a bit more respect has been given to the mom and pop traders in 2021.
Of course, when you’ve got new traders, attention on things like penny stocks increases. I think it’s due, in part, to the fact that many novice traders are looking to risk smaller sums of money while learning the ropes. The thought is that you can buy a lot of shares in a penny stock and hopefully turn your smaller capital amount into a larger one, quickly.
[Read More] How To Trade Penny Stocks, A Beginner’s Guide For 2021
Penny Stocks To Buy For Under $2
Since these stocks come in many different forms, there are plenty to choose from. According to the Securities & Exchange Commission, penny stocks are shares of companies trading for less than $5. While we won’t go into the cheapest stocks in the market, I will discuss ones trading below $2 that’ve been trending recently. What may be even more interesting is that they’ve all experienced significant moves already in 2021. Will they continue to be penny stocks to buy right now or will they begin cooling off?
- Assertio Holdings Inc. (NASDAQ: ASRT)
- Guardion Health Sciences Inc. (NASDAQ: GHSI)
- Molecular Data Inc. (NASDAQ: MKD)
Assertio Holdings Inc.
Up around 200% for the year so far is Assertio Holdings Inc. As a pharmaceutical company, ASRT stock has received a lot of attention recently. While it isn’t working on any treatment for the coronavirus, the company has an extensive pipeline. This includes prescription drugs for neurology, pain management, and inflammation. While no news came out on Tuesday, February 9th, the company has made some exciting announcements in the past few weeks.
First, it announced the pricing of a $14 million registered direct offering only a week ago. This deal consists of roughly 22.6 million common shares for $0.62 per share. Assertio also announced another offering, this time for $34 million, which it closed last week. This larger round was done at $0.98. With this, the company should have access to some needed capital for corporate purposes and the R&D of new and existing compounds.
More importantly, the company announced late in December that it would be engaging in a company-wide restructuring plan. This plan should help to reduce its total annual cost base by almost $45 million. Much of this reduction is due to its merger in synergies with Zyla, which was announced several months ago.
Arthur Higgins, the Chairman of Assertio, stated that “to adapt to the current market environment and maximize shareholder value, we are refocusing and substantially reducing our operating footprint, which is expected to result in significant cost savings. Given recent changes in our product payor mix as well as the continued near term impact from the Covid-19 pandemic, we believe that restructuring the business will allow us to continue to provide our differentiated products.”
With these exciting announcements in mind, is ASRT on the list of penny stocks to buy or avoid right now?
Guardion Health Sciences Inc.
GHSI is another penny stock that we’ve discussed numerous times over the course of the past few months. In that time, investors have continued to show bullish sentiment for Guardion Health. Guardion Health is a specialty health sciences company that works in a unique area of the health and wellness market. The company specializes in the research and production of medical foods and devices.
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These products are aimed at the ocular health market. In its pipeline of products are various medical foods such as Lumega-Z, GlaucoCetin, and more. GHSI produces an extensive range of testing and diagnostic tools used in ocular settings on the medical devices side. A few weeks ago, the company stated that it received product approval from the Malaysian National Pharmaceutical Regulatory Agency or NPRA.
The company also announced that Ho Wah Genting Berhad would be the exclusive distributor of the product in Malaysia. Bret Scholtes, CEO of Guardion, stated that “a key part of our strategy includes expansion into foreign markets, either through licensing, supply and distribution agreements, or direct marketing opportunities. Additionally, this relationship with HWGB is important, as it allows the Company to develop new products that widen our scope in terms of health applications.”
It’s always interesting to find a biotech company working in a unique area of the market. Obviously, this comes with both pros and cons for investors to consider. But with this announcement, GHSI could be considered a penny stock to watch.
Molecular Data Inc.
Shares of Molecular Data were trading around 80 cents at the beginning of 2021. Since then, the penny stock has skyrocketed roughly 125% as of Friday’s close. One of the trends we’ve seen in the market recently is from Chinese penny stocks. Many of these companies have sparse details and minimal amounts of headlines. Yet plenty have taken off similar to Molecular Data stock.
The company itself focuses on China’s chemical trading industry. This involves everything from logistics, warehousing, and even financial solutions for customers. Molecular Data offers its solutions through an eCommerce platform, Molbase. The platform connects buyers and sellers in something similar to an Amazon model. Chemical suppliers can design and set up their online stores, manage products and inventory, and process orders & payments. Buyers can search for products, choose their suppliers to place orders, and facilitate the transaction. This might also include supply chain services, business intelligence services, or logistic and warehousing services.
Molecular Data has placed a focus on sustainability in the chemical industry. We’ve talked about the idea of ESG penny stocks in the past. This centers around companies that implement solutions that focus on environmental, social, and governance impacts on business, employees, and communities. At the end of December, the company gave an update. This included a statement from Dr. Dongliang Chang, Founder of the company, about a recent award.
“…Molecular Data was awarded ‘Best Project in China ESG Practice for Social,’ in recognition of its exemplary work in one of the three central factors in ascertaining the sustainability and societal impact of a business investment. Molecular Data has been also included in the 2020 China ESG White Papers. Looking ahead, we will continue to promote an efficient, sustainable and high-quality development of the chemical industry and remain focused on providing value to all stakeholders in the chemical space.”
With ESG stocks becoming a more prominent interest of traders, will MKD be one of the top names to watch in 2021?
Some Final Thoughts On Penny Stocks
Penny stocks are high-risk. The ability for these cheap shares to move hundreds of percentage points from a change in the price of just pennies is what attracts traders to these every day. But just as quickly as they rise on a nominal move in price, they can fall in value just as quickly. If you’re just getting started with penny stocks, it’s important to keep this in mind.
