Will These Penny Stocks Continue to Bring in the Bulls?
The second week of March has been a major turnaround for both blue-chip and penny stocks alike. On March 11th, the Dow and S&P 500 both climbed by over 1%, setting intraday records. This comes as President Biden signed a very sizable covid-relief package to the tune of $1.9 trillion.
In the past few weeks, sentiment in the market has been extremely volatile. While intraday trading has turned bullish many times, overall markets have seen a downtrend in that time frame. But, over the past week, the market has proven itself to be very bullish. We’ve seen several days of substantial gains for companies like Tesla (NASDAQ: TSLA) and Apple (NASDAQ: AAPL). And, this bullishness has extended greatly to penny stocks.
The newest stimulus package includes $1,400 checks given to most Americans and billions awarded to individual states. Many investors expect retail stocks to jump in value as Americans will have plenty of funds to begin purchasing goods. Ian Shepherdson, an analyst at Pantheon Macroeconomics, stated that “the most immediate impact in the macroeconomic data will be in retail sales numbers, where some of the $410 billion in direct payments will appear in both the March and — especially — April reports. We also expect to see a rapid response, though not as quick as in the retail sales data, from states and local governments.”
So with this bullishness in the air, here are four stocks to watch as we turn the corner in March. Will they be on your list of penny stocks to buy, or will you avoid them entirely?
Top Penny Stocks to Buy [or avoid] in March 2021
- Nokia (NYSE: NOK)
- Qutoutiao Inc. (NASDAQ: QTT)
- Allied Esports Entertainment Inc. (NASDAQ: AESE)
- Ring Energy Inc. (NYSE: REI)
Penny Stocks To Buy [or avoid] #1: Nokia
One of the more popular penny stocks of the past few months is Nokia. Only a day ago, the tech conglomerate announced a patent licensing agreement with Samsung. This deal will offer Samsung the right to use Nokia’s innovations in video standards in exchange for a royalty payment. Jenni Lukander, President of Nokia Technologies, stated that “we are delighted to have reached an agreement with Samsung which further validates Nokia’s decades-long investments to R&D and contributions to multimedia and video technology standards.”
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Additionally, the company launched its first commercial service enablement platform for its O-RAN development. Pasi Toivanen, Head of Edge Cloud BU at Nokia, stated that “embracing open collaboration is key to developing 5G use cases and harnessing the true power of the technology. Nokia’s Service Enablement Platform added a new intelligence layer to the RAN and enabled the creation of high-value-added use cases.”
While Nokia is part of the tech industry, it also works in communications and 5G. These industries have seen major increases in popularity over the past year. With more people at home than ever before, the need for access to tech and high-speed data transfer is more palpable than ever.
#2: Qutoutiao Inc.
Another penny stock that we’ve been covering for quite some time is QTT. On Thursday, March 11th, shares of QTT shot up by almost 20% on the release of its fourth-quarter financials. In the report, net revenue decreased year-over-year by around 21% to just shy of $200 million. This, however, is an increase of 15% quarter over quarter.
The company also managed to reduce its net loss margin from 33% in Q4 2019 to 6.3% in Q4 2020. This is a substantial drop and should not go unnoticed. Eric Tan, CEO of Qutoutiao, stated in response that “through dedication and innovation, we have come through a year of unprecedented uncertainty and changes in the marketplace, we are very pleased to be able to put our business on a much firmer footing and to grow profitability from here.”
For some context, Qutoutiao is an operator of mobile platforms in China. It aims to bring value and entertainment to its wide breadth of customers. This includes its large portfolio of artificial intelligence-powered applications such as Midu Lite, Midu Novels, and more. Because of the pandemic, the demand for new and original content is higher than ever. This has been a major benefit to companies like Qutoutiao.
Because it has so many content streams, the company has been able to maximize its advertising revenue. Its main platform, known as Qutoutiao, offers its Chinese customers the ability to read articles and watch videos from a large bank of content providers.
#3: Allied Esports Entertainment Inc.
Allied Esports is as its name suggests, a provider of Esports entertainment. This includes everything from gaming to online poker and much more. A few days ago, an unsolicited acquisition proposal from Bally’s Corp., offered $100 million for Allied Esports in either cash, stock, or a combination of both.
While no updates have come out in response to this, the board’s working with stockholders to make a decision. The deal would require the termination of a contract with Element Partners that it holds to sell the World Poker Tour. This deal, worth over $78 million, would be canceled in exchange for the $100 million offering of the whole company.
Only a month ago, the company announced the renewal of the naming rights agreement for the HyperX Esports Arena in Las Vegas. Daniel Kelly, Director of Marketing at HyperX stated that “HyperX is excited to retain the naming rights sponsorship of the HyperX Esports Arena Las Vegas as a sign of our commitment and dedication to esports and the gaming community. Allied Esports is a key partner for us, proving their ability to be a best-in-class esports destination, and we look forward to continued success with them.”
This location, which is the first of its kind, provides a global destination for all types of Esports. Given the nature of the pandemic, esports have become extremely prominent over the past year. While the deal mentioned above to acquire Allied Esports is nowhere near finalized, it is an exciting opportunity for the company and one to keep an eye on.
#4: Ring Energy Inc.
Another penny stock in focus right now is REI. Since December of last year, shares of the energy company have shot up by over 360%. Ahead of its fourth-quarter financials release on March 16th, let’s take a look at the bullish case for Ring Energy. Ring Energy is an oil and gas exploration and development company working in the Permian Basin.
This is an extremely fuel-rich area of the U.S. and covers a large part of Texas and New Mexico. A few weeks ago, Ring announced an update on its financial situation ahead of the Q4 data release. The company claimed that it could lower its debt by over $47 million during the fourth quarter in the announcement. With over $313 million in outstanding debt, the company remains heavily committed to lowering this amount. With any publicly traded company, debt on the books is something for investors to consider.
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Additionally, the company stated that it could push production past current estimates with over 9,307 net barrels of oil equivalent per day produced during the quarter. Over the past five consecutive quarters, Ring has managed to have free cash flow. The company states that it should be entering 2021 with a better balance sheet than before and ready to take on the industry challenges presented to it. Whether this makes REI a penny stock to buy is up to you.