Top Industries for Penny Stocks Investors to Watch
Finding the best penny stocks to buy in 2021 is all about understanding industry trends. While having a trading education and a strategy will help greatly, considering how and why certain markets move will also be a major benefit. And, given that we are living in extraordinary times, there are a few industries that are moving quickly.
Right now, this includes biotech penny stocks, energy penny stocks, and ESG penny stocks. These are three very broad categories, however, they all contain potentially valuable companies. Understanding the industry that a company works in is not the only step, but it is important. The next thing to consider is the individual company. What do its financials look like? Is it profitable? What products does it have in its pipeline? These are very important and should be asked every time you find a penny stock to watch.
While the markets have been moving mostly sideways with lower than average volume, there is still plenty of potential to be had. And while making a watchlist will always be a great benefit, looking at larger market trends will without a doubt, be a valuable tool in your belt. With this in mind, let’s take a look at three industries and eight corresponding penny stocks to watch.
3 Industries That Could be Valuable for Penny Stocks Investors
- Biotech Penny Stocks
- Energy Penny Stocks
- ESG Penny Stocks
Biotech Penny Stocks
Biotech penny stocks have been on fire since around a few months after the pandemic began. While initially, Covid had a detrimental effect on all penny stocks and the stock market as a whole, very quickly things began to turn around. At first, investors were focused on companies that were either producing a Covid vaccine or a treatment.
Soon after, the focus began to broaden toward biotech stocks of all shapes and sizes. And now, around a year and a half later, many investors continue to keep this keen focus on the biotech industry. With biotech penny stocks, there are a few important things to consider.
First and foremost, does it have any products that are commercialized or near the end of the trial stages? This is important because it illustrates how close a company could be to seeing revenue.
Second, how much funding does it have? With biotech, capital is the main source of growth. Because companies often will produce no revenue until a product is commercialized or licensed out, free-flowing cash is extremely important. This is often brought in through brought-deal offerings, stock sales, or other dilutive measures. While the amount is important, it’s equally important to consider how long operations can continue on the amount of cash a company has.
The last thing to note is that biotech is extremely volatile and speculative. Because prices move so quickly every time news is announced, investors need to stay ahead to stay on top. With this in mind, biotech remains full of potential. It all comes down to knowing how to spot value.
Biotech Penny Stocks to Watch
- Jaguar Health Inc. (NASDAQ: JAGX)
Energy Penny Stocks
Energy penny stocks have also become extremely popular during the pandemic. Similar to biotech, the energy industry took a massive dive as the pandemic hit. And this made sense as fewer people were traveling and commuting, thus a massive decrease in demand for all types of fuel. Unlike biotech, however, this large downturn remained for many months following the onset of Covid.
But, as states and countries began to reopen, the energy industry quickly began to bounce back. And now that vaccine rates are at an all-time high, we are seeing higher demand for oil and gas than in over a year or so. Many investors expect this demand to continue increasing as reopening occurs on a more widespread basis.
One of the other major impacting factors on energy is President Biden and the global shift toward renewable energy. Biden has pledged to bring the U.S. toward complete renewable dependency. While this does mean fossil fuel penny stocks may take a dive in the long term, this opens up a new opportunity for renewable energy penny stocks. This includes uranium, solar, wind, and any other type of clean energy source.
While most investors tend to play energy penny stocks for the long term, there are quite a few that could be geared more toward short-term swing traders. With energy, we can break it into two categories that may seem obvious. Renewable and fossil fuels. Both could be interesting plays in any time frame, but investors should know what their strategy is before investing. Considering this, the future of the energy industry continues to look bright.
Energy Penny Stocks to Watch
- Ring Energy Inc. (NYSE: REI)
- W&T Offshore Inc. (NYSE: WTI)
- Uranium Energy Corp. (NYSE: UEC)
- Tellurian Inc. (NASDAQ: TELL)
ESG Penny Stocks
If you’re not familiar with the term ESG stocks, let’s go into detail about what it is. ESG itself stands for environmental, social, governance. While this definition is relatively loose, it simply means any company that has the long-term goal of positively impacting the environment or society as a whole. This could be renewable energy stocks, companies that are working on recycling technologies, and many more.
Because the definition is so broad, there are a lot of companies that fit inside it. Similar to alternative energy, companies in this niche are benefiting greatly from President Joe Biden’s stance on a renewable future. For this reason, many investors are searching for long-term ESG stocks to buy. These stocks have been gaining in popularity for years, but have only recently begun to take off.
Many investors choose ESG stocks for long-term holdings. However, when news comes out regarding a new environmental policy or a breakthrough regarding a technology related to ESG, corresponding stocks can go up. However, it’s always important to consider what the company does, and not just the relation it holds to the ESG market. For more information, investors could consider EV, solar, hydrogen, and in the past few years, cannabis, as ESG stocks. And while one company in an industry may be in this category, not all fit its description. Sound complicated? It is. But, considering it wholly will help to make it simpler.
ESG Penny Stocks to Watch
- Ideanomics Inc. (NASDAQ: IDEX)
- Ault Global Holdings Inc. (NYSE: DPW)
- ElectraMeccanica Vehicles Corp. (NASDAQ: SOLO)
Which Industries Are You Investing In?
Finding the best and most prominent industry for penny stocks can be challenging. But, with the right information at hand, and a dedication to research, it can be much easier than previously imagined. In 2021, there are a lot of factors to consider.
However, given that there is so much going on, we are seeing large movements across the stock market. This is a positive sign for investors and something that can be in use as an advantage. With all of this in mind, which industries are you investing in?