Themes have helped traders identify different penny stocks to add to their watch lists this year. Whether it’s short squeeze penny stocks, meme stocks, or high volume stocks, these themes have become some of the most popular in the stock market today. In addition to these and many others, there’s another theme beginning to gain some interest. This theme has to do with a company’s float, specifically, how low the float is.
What Are Low Float Penny Stocks?
Low float penny stocks are stocks with a lower amount of shares trading in the public float. The definition of “Float” refers to the number of shares issued to the public and are available to trade freely. Compared to the total Outstanding Share count or “O/S,” the public float doesn’t include things like restricted stock.
Therefore, the public float will never be larger than the O/S, though it could be equal in some cases. Remember that the float isn’t usually a fixed amount and can change depending on what restricted shares or newly issued shares are sold directly into the market.
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So, at the very least, those looking for low float penny stocks to watch can hunt for stocks with a lower O/S. It’s a “quick and dirty” method of finding low-float penny stocks. However, it isn’t guaranteed that all penny stocks with a lower O/S will experience the same volatility as true low-float stocks.
Why Do Traders Look For Penny Stocks With A Low Float?
This leads to the next question of why does this even matter? I won’t get too wordy because we still have a list of penny stocks to discuss, but a lower float means fewer shares in public hands. In many cases, when there’s higher demand from buyers and lower supply, this creates the classic ECON 101 scenario of the potential for higher prices.
If you look at some of the historic breaks this year, you’ll likely be able to pair some of the high triple or quadruple-digit 1-day moves with at least a few low float penny stocks. Again, like a low O/S, a low float doesn’t guarantee stocks will break out. However, it is good to know in the even above average momentum comes into play. Today we look at three low float penny stocks that could be on traders’ watch lists right now especially after companies like Net Element (NASDAQ:NETE) and Evaxion Biotech (NASDAQ:EVAX) became the latest low float stocks to turn heads earlier in the Thursday session.
Low Float Penny Stocks to Watch
- Xcel Brands Inc. (NASDAQ:XELB)
- Healthcare Triangle Inc. (NASDAQ:HCTI)
- Jupai Holdings Ltd. (NYSE:JP)
Xcel Brands Inc. (NASDAQ:XELB)
This month Xcel Brands has already given a brief glimpse into why low float penny stocks can be so exciting to watch. On November 2, shares spiked from $1.41 to highs of $2.25 within a single day. This 59% move came on the heels of considerable industry momentum in the consumer products industry. Right now, however, XELB stock is hovering around the lower end of that range.
Xcel specializes in branded apparel, footwear, accessories, and even home-goods offering products to a broad audience. Some of its brands under management or ownership include Halston, Judith Ripka, Isaac Mizrahi, and others. By using a diverse marketing strategy, Xcel retails its products through TV, brick & mortar retail, and eCommerce channels.
Though newswires have been quiet, the market may be focused on the next round of earnings. In light of solid results from some of its industry peers, Xcel is already coming off a big second quarter. The company reported a 700% increase in net product sales compared to Q2 2020, with quarter-over-quarter growth of 30% to $4.5 million. In addition, the company completed another acquisition, LOGO Lori Goldstein brand, which Xcel cited as an asset helping it gain “significant market share” during the quarter. The big question now is can that growth trend continue during the second half of 2021?
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Healthcare Triangle Inc. (NASDAQ:HCTI)
With an O/S of roughly 35 million, HCTI stock could be considered somewhat of a “low float” penny stock. What’s more, if you look at a few other data sources, some show a float amount sitting around 4 million shares. With that, it’s important to understand that volatility could be higher assuming this low float figure.
The company operates public cloud services for hospitals, life science companies, and health systems. Healthcare Triangle offers compliance, data processing, analytics, and documentation automation platforms to its clients. Furthermore, it’s a newcomer to the public arena after having just IPOed last month.
This week, Healthcare Triangle piqued some additional interest that stemmed from the crypto/blockchain tech area of the market. The company announced the release of Blockedge Glu. This platform provides the framework for a blockchain adaptation of the pharmaceutical supply chain and is in partnership with blockedge.io.
FDA’s requirements alone are not the driving factor behind accelerating the blockchain transformation of pharma supply chain”, explained Chairman and CEO of Healthcare Triangle, Suresh Venkatachari.”Blockedge Glu is designed to make this adoption right by addressing major challenges involved by providing a framework which reduces the complexities of integrating existing large and complex IT systems with one or more blockchain networks while also providing a transformation methodology that servers as a playbook for IT and business leaders to implement, what’s becoming to be, the multi-year transformation program.”
Thanks to this news, momentum continued building in HCTI stock, with shares reaching new November highs on Thursday.
Jupai Holdings Ltd. (NYSE:JP)
Rounding out this list, Jupai Holdings has seen some above-average trading volumes over the last few weeks. Since the start of October, JP stock has also begun climbing higher after a long period of little to no volatility. With some financial data sites showing a float of fewer than 10 million shares, traders hunting for low float penny stocks may have this on their list.
The company is no stranger to swift breakouts and breakdowns in the market. Earlier this year, JP stock jumped from around $2 to nearly $5 within 48 hours. Since then, things have settled down a low. It’s also important to note that there haven’t been many headlines from the company lately. However, financial stocks have been a topic of discussion.
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Jupai manages money for high-net-worth individuals in China. Last quarter the company reported changes in its business strategy to comply with changing market conditions. In particular, CEO Jianda Ni explained, “Under the new regulatory framework promoting the sustainable development of our industry, we remain optimistic in Jupai and the long-term prospects of China’s wealth management industry. We will continue striving to provide a diverse portfolio of high-quality products and services for China’s high-net-worth individuals.”
As companies begin rolling out Q3 results, JP appears to have become one of the names to know as daily volumes have picked up heading into November.
Some Final Thoughts On Low Float Penny Stocks
Understanding what a low float is and knowing how to trade volatile stocks are important when looking at names like these. It isn’t uncommon for big moves to occur within minutes. On top of that, you’ve also got to weigh risk and reward because just as quickly as moves to the upside can happen, the downside drops come just as quickly. In light of recent market moves, will any of these be on your list of penny stocks to watch right now?
