No matter how you break up your portfolio, you may want to set aside a potion for small-cap penny stocks. The main reason for that: small-caps are far-outperforming the broader markets. If you take a look at benchmark ETFs like the S&P SPY, the Nasdaq QQQ, and the Russell Small-Cap IWM, you’ll see what I mean. While all three managed to reach all-time highs this year, only one has clearly delivered a meaningful gain so far. Here’s what the numbers look like on paper:
|ETF||Opening Price (1/4)||Opening Price (2/26)||YTD % Change|
Of course, all of these ETFs represent different parts of the market. Yet all of them encountered a pullback this week and a noticeable one at that. However, you should clearly see where strength continues to favor small-cap stocks by breaking things down by the numbers. Now, should all penny stocks be on your watch list? Obviously, that’s something I’ll leave up to you. But what I can say is that if you can handle some risk, it might not hurt to have some on your watch list.
Penny Stocks To Buy
So even with this recent market consolidation, where should you be looking? If you track some of the trends among small-caps, we see building trends in biotech, technology, and even telecommunications. This is a generally stark difference from the broader markets. However, considering smaller companies being tied less to the overall market and more to the individual sector and even company sentiment, it makes sense that there are pockets of momentum in certain names.
With this as the case, will any of these 5 be on your list of penny stocks to buy or avoid heading into March?
- Vislink Technologies Inc. (NASDAQ:VISL)
- Torchlight Energy Resources Inc. (NASDAQ:TRCH)
- Boxlight Corporation (NASDAQ:BOXL)
- NovaBay Pharmaceuticals Inc. (NYSE:NBY)
Vislink Technologies has mounted a stronger recovery to finish out February. Shares had slid over the last few weeks after the company appointed a new Vice President. Now, I’m not sure if there’s any correlation to that, but it was the last update the company made before VISL pulled back. Likely compounded by the broader sell-off in tech, VISL stock seems to have found a support level around $2.95-$3.
This is where VISL shares ran into resistance earlier this year and was also a level that the stock bounced off of on Tuesday and Friday of this week. Additionally, those who’ve followed technical indicators and charting, you’ll notice a golden cross has formed. This is where the 50-Day Moving Average crosses up and over the 200-Day Moving Average. Seen as a bullish pattern, it will be interesting to see if volume ends up confirming a bullish leg higher or if the move stalls.
Regardless, we’ve followed progress on the company for months. There’s been a focus on everything from 5G tech to satellite communications for military applications. Of interest is the company’s Quantum Platform which is set to be introduced early this year. Given the upbeat sentiment in VISL stock as well as the mounting speculation on Quantum’s launch, this could be one of the tech penny stocks to watch in 2021.
Torchlight Energy Resources Inc. (TRCH)
One of the sectors gaining steam this year is energy. Whether you’re talking about oil and gas or renewable energy / clean energy stocks the bull case has managed to remain in tact. Torchlight is unique in that anywhere you breeze over its about section, it would appear to be an oil and gas company. However, over the last few months, that has drastically evolved and could permanently change pending a merger.
Photonics company Metamaterial began gathering votes to takeover Torchlight. Since that began, Torchlight has been making fundamental changes and hitting specific milestones to prepare for the proposed tie-up. This included several conversions of senior debt by its lenders, effectively eliminating debt from its books. The company also lent Metamaterials funds per the terms of the two companies’ merger agreement.
Metamaterial develops high-performance materials and nanocomposite products. The proposed takeover would see Torchlight become a clean energy company instead of your typical oil and gas stock. Now the market awaits final decisions by respective shareholders. In the interim, speculation will likely be a particular catalyst to keep in mind.
Penny Stocks To Buy Under $4: Boxlight Corporation (BOXL)
A company that’s been in and out of headlines over the last few months is Boxlight Corporation. The main focus of the company is on virtual learning and classroom technology. The company’s Clevertouch® IMPACT Plus Touchscreens have been gaining acclaim by schools worldwide.
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This product is an interactive display offering collaboration capabilities to the end-users, in this case, the schools themselves. This week, the company announced its latest deployment of the Touchscreens at Holy Trinity Parish Schools in Kentucky.
Jennifer Huber, the Technology Support Specialist at Holy Trinity Parish Schools, says, “There’s nothing left that we want other than to buy more. Everybody wants a Clevertouch.”
Something to keep in mind is that the post-pandemic world will likely involve much more technological integration. Some schools are going fully virtual, while others are implementing hybrid models. In light of this, Boxlight has become one of the popular penny stocks to watch.
NovaBay Pharmaceuticals Inc. (NBY)
Finally, one of the more interesting pharmaceutical penny stocks discussed recently is NovaBay Pharmaceuticals Inc. The company develops anti-infective products that don’t utilize antibiotics, including topical products. NovaBay has been in the spotlight mostly for its involvement in fighting against Covid-19. A few weeks ago, the company announced that its proprietary hypochlorous acid solution received approval from the FDA for its ability to kill the virus. NovaBay made a claim several months prior, where it then received approval for the formulation.
Justin Hall, CEO of NovaBay, stated that “the FDA requires that any product containing hypochlorous acid used by patients in healthcare is registered as a medical device and may be marketed as either a prescription or over-the-counter product following its intended use label guidelines. Obtaining EPA Registration Number 98003-1 for NovaBay’s Hard Non-Porous Surface Pro is a validation that our HOCI solution is effective against the virus and can be used by consumers safely to disinfect commonly used personal items.”
Most recently, the market has paid closer attention to its Avenova® antimicrobial eyelid and lash spray. NovaBay explained this month that by the end of February, it expects Avenova to be on the shelves of up to 3,000 CVS Pharmacy stores across the U.S. and available through the CVS website. In a Tweet on Friday, Avenova Eye Care tweeted confirmation of this.
Are Penny Stocks Worth It?
This is a question only you can answer. However, what I will say is that with the proper trading education and strategy, penny stocks can be well worth the time to research them. Most importantly, you need to remember that volatility and speculation tend to play a much larger role. Considering the current climate for broader markets, it looking like these are factors you’ll run into no matter which type of stocks you’re looking to buy.