What Penny Stock Traders Need to Know About Investing Next Month
Investing in penny stocks in 2021 can be a challenging task without the right tools. But, thankfully, we’ve got you covered. Besides the usual know-how of researching all the penny stocks on your list and having a trading education, there are a few things to know.
While these factors apply to investing in penny stocks no matter the time frame, they are especially important to consider in June 2021. The first thing to consider is the end of the pandemic.
While we’ll only talk about how this will affect the stock market in the U.S., it’s worth noting that many countries globally are reporting lower case numbers. However, some countries are still struggling with the pandemic. This is important to note as it aligns with the countries a penny stock operates in.[Read More] 4 Penny Stocks To Watch As Dogecoin, Bitcoin & Cryptocurrency Surge
The next thing to consider is inflation in the U.S., and the fears surrounding it in the long term. This is causing a great deal of uncertainty with penny stocks investors. And for that reason, it’s worth delving into.
Lastly, investors need to understand which industries are trending and why. This is something that is always important. However, the list of trending industries does change frequently. So, with all of these things in mind, let’s take a closer look at investing in penny stocks in June 2021.
3 Things All Penny Stocks Investors Need to Know Right Now
- Covid’s Effect on Penny Stocks
- How Inflation Will Shift the Stock Market
- Which Penny Stock Industries Are Trending?
Covid’s Effect on Penny Stocks
When Covid began last year, the entire stock market dropped in value substantially. This made sense as the economy shut down and the market responded to this in a big way. However, as time went on, many penny stocks started to benefit. This offered the title “reopening penny stocks” to the ones that benefited the most.
But now, more than 50% of the U.S. population has received at least one dose of a vaccine. And in many states, mask mandates are being lifted. So, now is the time to start finding new penny stocks that could benefit. In June, this includes entertainment penny stocks as well as retail small caps and any others that could see increased business from more in-person sales.
Outside of the high vaccination rates, more of the public feels comfortable with going out. This includes eating out, going to outdoor events, and everything in between. We’ve seen companies like Hall of Fame Resort & Entertainment Co. (NASDAQ: HOFV) and Cinedigm Corp. (NASDAQ: CIDM) as just a few that have seen gains as the economy has reopened.
It’s worth considering that globally, other countries are not fairing as well with the pandemic. This includes India, Japan, and a few others. However, with vaccines being distributed at higher rates than ever before, hopefully, these can just be short-term trends. So while the pandemic is ending to a degree, finding penny stocks that could benefit will always be beneficial to your success as an investor.
How Inflation Will Shift the Stock Market
Right now, the fears of short and long-term inflation in the U.S. economy are palpable. While inflation rates are at some of the highest annual levels in over a decade, the stock market is pushing up right now, indicating overall positive sentiment.
The inflation that we are seeing right now is a result of many different factors. The most important is the massive amount of stimulus given out to businesses and the public as a result of the pandemic.
But, the thing about inflation right now as opposed to say, 2008, is that it is expected. When the government gives out trillions in stimulus and financial aid, financial analysts can expect inflation rates to go up. While the PCE inflation rate hit 3.6% last month, many believe it to be a short-term reaction to the pandemic.
“Everyone is waiting to see if this inflation is indeed transitory. [Inflation] might be stickier than markets think.”Mona Mahajan, an investment strategist at Allianz Global Investors
This aligns with the fact that products such as semiconductors are seeing massive supply drops alongside increased demand. In addition, the price of both raw materials such as lumber alongside the increasing price of housing, are both not helping the cause.[Read More] 3 Hot Penny Stocks to Watch as GameStop Enters Into NFTs
So, despite inflation occurring right now, analysts are confident that we could come out of this stronger than before. While this has some penny stocks investors worried, the best course of action is to find a penny stock that could be immune to inflation. This includes, for example, mining companies, biotech, and others.
Which Penny Stocks Industries Are Trending
Arguably one of the most important steps to making a penny stocks watchlist is to understand which industries are trending. Right now, this includes blockchain, tech, and biotech. First, blockchain penny stocks have become extremely popular this year.
This is the technology that backs famous cryptocurrencies like Bitcoin and DogeCoin. Because we have only tapped the surface of its potential, many companies are scrambling to try and find new uses for it. And, as we have covered many times, there are plenty of blockchain and crypto penny stocks to watch right now.
Next, we have tech. This is an obvious industry that is both trending right now and has been trending for the past year or so. While the most popular tech stocks include the likes of Tesla Inc. (NASDAQ: TSLA) and Apple Inc. (NASDAQ: AAPL), tech stocks under $5 are also extremely popular right now. This includes companies like Vislink Technologies Inc. (NASDAQ: VISL) and Ocean Power Technologies Inc. (NASDAQ: OPTT) among others.
Lastly, we have biotech penny stocks. This is an obvious category to understand as trending due to its relation to the pandemic. However a year and a half after Covid began, we are seeing trending biotech stocks with no relation to a Covid-treatment or vaccine.
Because of this, we can see that the entire industry is trending as a whole. Understanding which industries are trending will always be key to seeing potential profits in your portfolio. And while this is not a complete list, it is enough to get you on the right track.
Penny Stocks Continue to Ride High in 2021
2021 is a great year for penny stocks so far. While the last month or so has not been the kindest to the bulls, investors are hopeful about the long-term future. Considering that we are just now entering what seems like the end of Covid, there is a lot of potential on the horizon.[Read More] 4 Robinhood Penny Stocks to Watch in Summer 2021
Knowing where and how to find penny stocks to buy will always be your best strategy. And, having a trading education to back it is also highly important. Considering all of this, investing in penny stocks in June can be easy if you know where to look and how to find value.