Are These “Cheap” Penny Stocks Worth The Risk?
Think about penny stocks for a moment. These are shares of companies that trade for less than $5. While the options aren’t unlimited, you’ve got many companies to choose from. When you consider the cheapest penny stocks trade as low as $0.0001, you’ve got to think about all of the names available to trade. For this article, however, I’m not going to discuss the cheapest penny stocks in the market. However, the focus will be on certain names trading below $4 right now.
In the grand scheme of things, when you really think about it, that $4 latte could be costing you more than $4. We wrote an article this week about penny stocks that hit it big. One of them rallied more than 16,000% in less than 15 months. If you think that it was GameStop (NYSE: GME), you’re right.[Related] 5 Penny Stocks That Turned $500 Into As Much As $84,525 In 15 Months
Now, not all penny stocks trade the way GME traded. But it emphasizes that the money spent on that $4 cup of coffee could have been better spent when GME was a penny stock. One share was worth roughly $2.86. At its height, GameStop traded over $4 and currently sits north of $190.
Understand, however, that there are plenty of other penny stocks that underperform and even fall flat on their faces for every massive breakout. But understanding how to day trade or invest can help to stay in winning trades longer while identifying when to cut out of losing trades sooner.
With the latest bout of market volatility in large-cap stocks, traders have begun sniffing out opportunities in small-cap stocks. In fact, we discussed today that benchmark ETFs tracking these smaller companies, the Russell 2000 Small-Cap ETF (NYSE: IWM), has far outpaced large-cap ETFs, including the SPY and QQQ. With this in mind, here’s a list of penny stocks that can be bought for under $4 right now. Just because they’re “cheap,” will they be the best ones to buy right now?
Penny Stocks To Buy Under $4
- ReWalk Robotics (NASDAQ: RWLK)
- Rave Restaurant Group Inc. (NASDAQ: RAVE)
- Waitr Holdings Inc. (NASDAQ: WTRH)
As tech stocks take a breather, bio-tech, or in this case, medical device tech, hasn’t skipped a beat. ReWalk designs and develops products exoskeleton systems. Attention has focused on the company’s device after a flood of tweets and social media posts showed significant progress for some of its customers. In particular, there was a post on Facebook showing the exoskeleton being used in a spot on a CBS news affiliate. This followed news from BBC showcasing one of the product’s users raising money by walking 125 miles. Simon Kindleyside “smashed” his month-long challenge using the suit to walk at least 4 miles a day last month.
Last week, the company signed a deal with BKK Mobil Oil health insurance fund to supply its exoskeleton to those eligible for spinal cord injury in Germany. This now opens a network of more than 1 million beneficiaries. ReWalk has also received more attention after the National Institute for Health and Care Excellence published a briefing on its ReStore Soft Exo-Suit in the UK.
“Publication of the NICE briefing is a critical step in achieving broad adoption of the ReStore Soft Exo-Suit for use in rehabilitation clinics throughout the United Kingdom,” said ReWalk CEO Larry Jasinski, commenting on the achievement. RWLK stock has also been the center of attention for some analysts too. Last week, H.C. Wainwright raised its price target to $3.50 and maintained a Buy on the penny stock.
Rave Restaurant Group Inc. (RAVE)
This week the “reopening trade” has been a stronger focus. Not only resulting from a positive sentiment from this weekend’s stimulus news but also the CDC shed a brighter light on “getting back to normal” this week. The organization said that those who’ve been vaccinated could begin gathering in small groups indoors without masks.
“There are some activities that fully vaccinated people can begin to resume now in the privacy of their own homes,” CDC director Rochelle Walensky said in a statement, as previously reported by The Wall Street Journal. “Everyone — even those who are vaccinated — should continue with all mitigation strategies when in public settings.”
No matter the case, shares of epicenter stocks – those hit hardest by the pandemic – saw a jump. This included restaurant companies like Rave Restaurant Group. The penny stock shot up early on Monday to highs of $1.43 and continued trading strong during the remainder of the session. No news accompanies this move.
However, we can see sympathy sentiment is playing a role. Obviously, a risk to reopening stocks right now is changing case numbers, vaccine shortages, or even findings of a vaccine-resistant strain. For now, however, it doesn’t seem to be the case, and RAVE stock has greatly benefited. If the “reopening trade” persists, will this be on your list of penny stocks to buy?
Waitr Holdings Inc. (WTRH)
When we first began covering WTRH, it was merely a food delivery service working to grow substantially. In the past year. Waitr Holdings has become much more. While it is still primarily a food delivery platform, recent announcements show that Waitr Holdings is getting into the cannabis industry.
This means that it could be the new kid on the block for marijuana penny stocks. While most attention in the food delivery sector is rightfully paid to Doordash and UberEats, among others, smaller companies like Waitr Holdings are still trying to pull their weight.
Recently, the company announced that it would begin delivering cannabis in addition to its normal services. This was a major announcement when it came out last week. Not only does it show that Waitr Holdings is committed to innovation, but it also puts it in a new category of penny stocks to watch. The emphasis on cannabis stocks has become extreme over the past year.
And with cannabis demand growing, the need for delivery is also evident. With only a few major players in this area of the delivery industry, Waitr Holdings could capitalize on a very sizable market. This week analysts at Deutsche Bank upgraded WTRH stock. The firm upped its Hold rating to a Buy. Deutsche Bank also boosted its $3.80 target to $4. Because of this bullish sentiment, WTRH could be a penny stock to watch moving forward. Keep in mind that earnings are scheduled so this could pose as a potential catalyst (good or bad) depending on the outcome.