What Epicenter Stocks Are On Your List Right Now?
In this article, we’re going to discuss some penny stocks that fall under the “epicenter” category. Let’s first begin by defining a few things.
What Are Epicenter Stocks?
Epicenter stocks are shares of companies that were hit hardest by the global pandemic in 2020 but could potentially recover the strongest in an economic reopening. It was originally coined by Tom Lee of the market research firm, Fundstrat. Lee has explained that the epicenter theme will be the one to watch in 2021. He said that people need to keep in mind that institutional investors weren’t risk-on. Furthermore, epicenter stocks or cyclicals have proven to be “un-killable,” with companies managing operating leverage for future value. Lee thinks the multiples on epicenter stocks “could surprise” the market.
What Are Penny Stocks?
Going a bit further in developing a basis for this article, knowing what penny stocks are could set a tone for the epicenter trade, in my opinion. Penny stocks are defined as shares of companies trading below $5. The unique part about penny stocks today is that many are still those with underlying companies that had never traded below $5 before the pandemic. With the case of epicenter penny stocks, there could be a few key tailwinds to consider as multiple catalysts could play a role with some of these companies this year.
Penny Stocks To Buy Or Avoid Right Now?
So, with these definitions down, are epicenter penny stocks ones to buy right now, or is this “just a fad”? According to Lee and others who believe in the broader “reopening trade,” this may be less of a fad and more of a trend to watch closely. With vaccine distribution going on right now, countries have already begun lessening the requirements for things like social distancing and group gatherings.
Meanwhile, the “Reddit Army” has helped give confidence to retail traders in 2021. Many of the companies that have become targets of retail trader frenzies have somewhat of an underlying “epicenter” focus. Look at companies like Express, Nokia, and even GameStop, and they all have potential benefits if economies fully reopen.
Epicenter Penny Stocks To Watch
- New Age Inc. (NASDAQ: NBEV)
- Hall Of Fame Resorts (NASDAQ: HOFV)
- Neptune Wellness (NASDAQ: NEPT)
- Tuniu Corp. (NASDAQ: TOUR)
- Chico’s FAS (NYSE: CHS)
Epicenter Penny Stocks To Buy [or sell] #1: New Age Inc.
If New Age seems familiar, that’s because it probably is. The company was one of the early players in CBD-infused beverages during the early hype in marijuana stocks. Since then, however, the company has focused on evolving its model to become an omnichannel operator. Focusing on building brands, New Age has built its healthy products brands through a series of mergers, acquisitions, and licensing deals.
This month, the company expanded on this with a letter of intent to acquire Japan-based Aliven Inc. Tokyo-based Aliven is an eCommerce and direct selling company with anticipated to bing annualized net revenue of $20 million to New Age’s group of brands. Aliven sells everything from skincare infused with cultured stem cells to infrared technology products for increasing blood flow.
“We had good growth in Q4 2020 in Japan, NewAge’s largest market. Now, with the addition of Aliven we believe we can accelerate our pace. We expect to fully integrate Aliven into NewAge, and envision imminent cross pollination of our products, including our NONI+CBD Shots where we have first mover advantage in Japan.”Joseph Wadsworth, NewAge President for Japan and North Asia
#2: Hall Of Fame Resorts
Travel and leisure stocks could be a big benefactor of the reopening of global economies. However, as I’ve said several times before, the makeup of the “new normal” will likely be a hybrid of pandemic-era trends mixed with pre-pandemic norms. In this sense, entertainment is likely to be one of these hybrids. Where live entertainment was a mondane practice, the pandemic saw digital entertainment become the go-to. With this also came digital gaming, an increase in things like sports betting, and other virtual means of entertainment.
Hall Of Fame Resorts has a multi-pronged approach for this. First, the company operates destination assets. In particular, its building Hall of Fame Village powered by Johnson Controls. This is right near the site of the NFL Hall of Fame (if you couldn’t guess by the company’s name). Hotels, interactive media areas, etc. are all planned for this build.
Outside of this, Hall Of Fame is also getting into things like fantasy football, which it aims to launch ahead of the 2021 football season. However, in light of the reopening trade, the focus could be on the company’s plan for taking advantage of pent up demand for live events.
“Having already hosted multiple larger sporting tournaments at their National Youth Football and Sports Complex, the Company has many more scheduled over the course of the year.”President and CEO Michael Crawford, Hall of Fame Resorts Q4 & Full Year 2020 Business Update
#3: Neptune Wellness
Retail doesn’t have to extend only to traditional models. The rise in cannabis legalization and awareness has seen many of these companies designated as “essential” during the pandemic. Neptune Wellness focuses on natural, plant-based lifestyle products, including cannabis.
The stock had been down in the dumps after reporting its fiscal Q3 2021 results last month. Neptune missed on EPS, and sales were down from a year-ago period. However, this doesn’t mean that there aren’t things to make a note of right now. Neptune acquired a controlling interest in Sprout Foods in February. This deal opened the company’s model to the organic, plant-based baby food and toddler snack industry.
Another highlight of this deal was that this was a portfolio investment of Morgan Stanley Expansion Capital. Investment funds managed by MSEC will become a major shareholder in Neptune and partner with the company to grow Sprout within Neptune’s brand portfolio of consumer product goods.
This week Neptune launched a second brand in its cannabis portfolio. The company entered into a letter of intent with Société québécoise du cannabis, the province’s sole legal retailer for recreational cannabis, for the sale of Neptune’s new cannabis brand, PanHash™. This complements the company’s MoodRing cannabis brand and increases Neptune’s cannabis footprint in its affordable product offerings in Canada.
#4: Tuniu Corp.
Similar to Hall Of Fame Resorts, Tuniu could be in the spotlight as tourism begins returning. This isn’t a North American-focused company. But it does have exposure to the global travel industry. In this case, Tuniu is a China-based online travel company. It offers things like packaged tours and travel-related services. Most of its business is through its Tuniu website.
The company doesn’t release many updates. However, we can see that Tuniu has made several leadership changes this year. This included appointing new directors to the company. One of them, Jiangtao Liu, also came with the closing of transactions contemplated under a share purchase agreement between subsidiaries of JD.com Inc. as well as Caissa Sega Tourism Culture Development Group Co., Ltd last November.
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With a return of tourism, in general, as well as the potential for renewed U.S.-China trade talks, it will be interesting to see what happens next with TOUR stock.
#5: Chico’s FAS
Traditional retail has also gotten a bit of a facelift thanks to the pandemic. Where a vast majority of companies had a “brick-and-mortar-first” model, lockdowns forced these companies to adapt or die. Many evidently ended up failing, but others were able to weather the storm much better. The ones that did take up a brick-and-click model or, at the very least, began building the framework of an eCommerce platform.
Chico’s FAS is one of the companies that has made it out of 2020 alive. Unscathed? No, but that hasn’t meant it hadn’t been one to ignore. In fact, since the start of the year, CHS stock has combed from around $1.50 to highs this week of over $3.60. Chico’s pointed out in its year-end filing that its ability to invest in things to make it a “digital-first” organization helped drive higher consumer engagement and a year-over-year digital sales increase of 17.5%, led by its Soma Brand digital sales increase of 72%.
In its most recent update, Chico’s brand, White House Black Market, entered a partnership with Ladies Who Launch. The nonprofit has a mission to empower women entrepreneurs.
Kimberly Grabel, SVP of Marketing, Chico’s FAS, Inc., said, “We design fashion to allow women to express themselves and feel empowered in both their career and personal lives. Our customers are strong, confident, powerful women who are dedicated to supporting other women and helping them find success. Partnering with Ladies Who Launch is a natural extension and further showcases our ongoing commitment to this mission.”