Penny stocks can be one of the best ways to capitalize on stock market volatility. This week that’s been especially apparent as broader indexes jostle. Underpinnings of omicron concern and speculation about the Fed’s decision on interest rates & inflation float have triggered emotional trading this week.
December 15th will mark the official date the veil gets pulled back. Fed Chair Jerome Powell speaks during the afternoon session. His words will be followed closely by investors seeking more direction on the future of the economy heading into the new year.
With this has come plenty of wild trading action, and if you’re like most day traders, volatility is where the excitement is. The rapid shifts in share price create opportunities to make money quickly. Penny stocks are some of the most well-known for amplifying things a bit more. Where you’ll see Apple or Tesla jumping 1% or 2% on a “big day,” there are plenty of stocks under $5 that move 100% or 200% in a single day.
What’s behind some of these massive breakouts? In many cases, news is at the root of bullish or bearish trading momentum and can dramatically influence sentiment in the market. Today we look at five of the top penny stocks to watch that have rallied big on the back of recent news.
Penny Stocks to Watch
- Reliance Global Group (NASDAQ: RELI)
- American Virtual Cloud Technologies (NASDAQ: AVCT)
- NXT-ID Inc. (NASDAQ: NXTD)
- mCloud Tech Corp. (NASDAQ: MCLD)
- Energy Focus Inc. (NASDAQ: EFOI)
1. Reliance Global Group (NASDAQ: RELI)
Insurance stocks have come back into focus this quarter. If you look at shares of larger companies like Cigna (NYSE: CI), Travelers Companies (NYSE: TRV), and Progressive Corp. (NYSE: PGR), they have been in rally-mode since the end of November. In many cases, broader trends have influenced the movement in certain small-cap stocks. In this case, looking at Reliance Global Group, its shares have mimicked a similar move over the last few weeks.
Reliance specializes in customized insurance solutions for its clients and customers. Whether it’s hospital, accident, dental, auto, life insurance, or other related products, the group of companies under the Reliance umbrella has solutions to offer. In addition to the overall insurance industry trend, RELI stock has also continued higher on the back of some recent news that we’ve discussed throughout the month.
The company highlighted the launch of its 5MinuteInsure platform in 8 new states. According to Reliance, this brought the total market to 20 states with a population of over 100 million people. 5MinuteInsure uses artificial intelligence to provide customers with insurance quotes in less than 2 minutes, as well as an opportunity to bind coverage in 5 minutes.
In addition to this, RELI stock has also gained the interest of those looking for potential “short squeeze” penny stocks. In our article, “3 Top Penny Stocks To Watch Under $4 This Week,” short float data showed the percentage short sitting around 30%. With several factors to keep track of right now, RELI could be one of the penny stocks to watch.
2. American Virtual Cloud Technologies (NASDAQ: AVCT)
This morning, American Virtual Cloud Technologies captivated the attention of day traders and volume hunters. The company’s news from Tuesday’s post-market session continued resonating on Wednesday. American Virtual announced entry into a securities purchase agreement to sell shares to an institutional investor. Gross proceeds will total $25 million, and paired with the equity raise in November, it could offer up to nearly $76 million of gross cash proceeds.
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Larry Mock, AVCtechnologies’ Board Chair, said, “This investment will not only strengthen AVCtechnologies’ balance sheet but will also improve its agility in the market. I continue to have the utmost conviction in AVCtechnologies’ growth prospects.”
In December, American Virtual has been on the radar as traders continue focusing on smaller cap tech stocks. Despite companies like Amazon and Microsoft pulling back, AVCT shares have bounced more than 100% at times. Earlier in December, it reported strong revenue growth projected for its Kandy business unit.
This is the company’s cloud communications platform. The company projects revenues to grow from $14.3 million last year to $37 million in 2021, driven by strong subscriber growth. AVCT has been one of the more active penny stocks to watch in December, with all of these headlines to consider.
3. NXT-ID Inc. (NASDAQ: NXTD)
Unlike the other small-cap stocks on this list, NXT-ID has experienced a quiet month so far. The last time NXTD stock saw any meaningful action was in October, after traders speculated on it as one of the potential short squeeze stocks to watch. Though fleeting, there was about a week of activity where NXTD stock managed to rally over 80%. Since then, the share price has steadily retreated to levels even lower than where it was trading at that time.
Regardless, the communications technology company has regained some attention in the stock market today. This time there are formal headlines from the company to consider. NXT-ID announced an award of a US General Services Administration contract. The company will bring its personal emergency response systems to federal, state, and local government purchases as of Q3 2021. These personal emergency response systems are mainly used by the 65+ demographic and can be used to notify caretakers or emergency service providers in the event of an accident.
Thanks to this headline, attention refocused back on NXTD stock. Shares have climbed from around $2.50 to over $3.40 during the morning session on December 15.
4. mCloud Technologies Corp. (NASDAQ: MCLD)
mCloud Technologies recently uplisted to the Nasdaq exchange from the OTC in November via an IPO priced at $4.50 per share. The company specializes in artificial intelligence powering asset management and ESG solutions for clients. mCloud’s processes focus on curbing energy waste and streamlining the energy production processes using its AssetCare platform.
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This week the company announced a new agreement with Virtual Vision, a cloud service provider in Saudi Arabia, to host AssetCare solutions on the V2 Public Cloud for use in the UK.
“V2 hosts and partners with customers key to mCloud’s plans in Saudi Arabia…With AssetCare now hosted in the cloud with V2, we are setup to take our business to scale by offering a robust, highly secure, and compliant environment for Saudi customers.”
Costantino Lanza , mCloud co-founder
What else are traders looking at right now? This week has been an active one for companies with a low float or low outstanding share count. In general, an OS under 20 million is considered low when talking about penny stocks. Look at the MCLD stock profile page. You’ll see that the OS sits below this threshold. That could be another aspect of mCloud gaining the spotlight right now.
5. Energy Focus Inc. (NASDAQ: EFOI)
Rounding out this list of penny stocks is Energy Focus. The company gained attention earlier this month thanks to news that the company launched its nUVo UVC air disinfectors.
James Tu, Chairman and CEO of Energy Focus explained in the associated press release that, “Energy Focus has a long history of proven quality, reliability and success in providing healthy lighting for mission-critical facilities such as the US Navy, National Institutes of Health and many other leading healthcare, government and educational institutions, and we are honored and excited to leverage our technology and innovation to bring consumers as well as public and private organizations these groundbreaking and timely biosecurity products to make life safer, freer and more enjoyable as the world strives towards the new normal.”
There was also news this week that the company plans on raising $4.5 million. Part of this raise is expected to be used to reduce the balance of an outstanding promissory note. Considering the financing is expected to close “on or about” Thursday, it could be something to keep in mind if EFOI stock is on your watch list right now.
Penny Stocks To Buy or Avoid
A lot of people ask if penny stocks are worth it. The higher risk and higher volatility aren’t for everyone. But if you know how to trade stocks and put a clear action plan in place, there’s plenty of potential, in my opinion. The first step is identifying the best companies for your list of penny stocks and beginning your research. Keep in mind that just because there’s news or events, that isn’t a total guarantee of lasting trends in the market. When we’re talking about penny stocks, the moves can come within a matter of hours or even minutes.
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