Penny stocks can be one of the best ways to make money in the stock market. That holds even if broader trends head lower. Take the tech sector, for instance. This week, it’s no secret that major tech stocks lead markets lower. Sector leaders dragged down growth stocks as traders questioned the rise of the 10-year yield. But what’s interesting about this is that the impact on tech penny stocks was mixed. Today I’ll show you some trending stocks under $5, making highs on Wednesday.
Penny Stocks TL;DR 30-Second Summary
- The penny stock definition generally refers to shares of companies trading for less than $5
- It’s important to understand that just because they may be “cheap,” that doesn’t mean they should be treated as lottery tickets. You can make plenty of money with penny stocks as long as you know what you’re doing
- Penny stocks tend to move on their own accord irrespective of what the broader markets are doing
- Today we look at a handful of tech penny stocks that can be bought for under $5 and moving higher as the tech sector drops
With the tech sector pulling back, you might assume that all related names are making new lows. But if you’re trading penny stocks, you know that they don’t all move in unison with the broader trends. Today we’ll look at a few stocks under $5, making new highs. Will they be on your list of penny stocks to buy heading into the second half of the week?
Penny Stocks To Buy For Under $5
Energy Focus Inc. (NASDAQ: EFOI)
Technology takes many forms, and Energy Focus is an example of that. The company specializes in lighting technologies and, in particular, has developed a range of UV-C disinfection products. With how things are going right now, the new virus variants remain a sticking point for investors. In Energy Focus’ case, its solutions are used by everyone from Fortune 500 companies to government agencies. It also raised several million dollars at the end of last year to further streamline its financial situation and reduce its debt.
What’s been going on recently, that is turning heads in the stock market? A trademark filing for Energy Focus’ NUVOSHIELD has prompted new interest in EFOI stock. This is the company’s product that, according to the filing, is for “disinfection purposes including purifying air.”
The filing also comes after the launch of nUVo Virus-Targeted UVC air disinfectors in early December. The company’s nUVo TRAVELER and nUVo Tower are designed for personal and portable means of destroying airborne pathogens. With virus headlines continuing to captivate investors, EFOI stock could be one of the names to watch in January 2022.
Penny Stocks To Buy For Under $5: Data Storage Corp. (NASDAQ: DTST)
One thing to also remember about tech stocks is that it takes time to develop, test, and launch new tech. This was the case with Data Storage during the fourth quarter of 2021. Shares spiked in September after collaboration news, but shortly after, not many progress updates were released.
The deal in September was for Data Sortage’s managed services partnership with Precisely. This company is developing “data integrity software” to deliver security solutions to the Data Storage cloud. If you look at the chart, you’ll see that the market reacted to this news. However, within a few days, DTST stock returned to its quiet trading trend.
This week, it’s a different story, and headlines are the cause of that. Data Storage announced another significant development for its business. Its wholly-owned subsidiary, Flagship Solutions Group, was awarded a multi-million dollar contract with “one of the nation’s most recognized professional sports teams.”
The company will provide an encrypted storage infrastructure to support the team, the stadium, and affiliates. The platform also leverages IBM’s technology solutions to achieve this outcome. “The IBM Power server market has only begun this transition, and we are clearly at the forefront of this emerging multi-billion-dollar market. We have built a robust proposal pipeline heading into 2022 and remain confident in the outlook for the business,” explained Chuck Piluso, CEO of Data Storage Corporation.
Flotek Industries (NYSE: FTK)
One of the more popular penny stocks over the last few weeks is Flotek Industries. Like Data Storage, Flotek is a relatively quiet company regarding press releases. However, a lot has changed since the end of December, at least for the penny stock’s price.
Flotek is another company focusing on disinfectant methods. It also uses data analytics used by the energy industry to boost efficiencies and limit water. The latest news has the company in the crosshairs of a potential buyout. Last month Flotek announced an unsolicited indication of takeover interest. Prudently, the company engaged an advisory firm the aid in this process. Since the news broke, there’s been a flood of speculation in the market.
Adding to this speculation is recent insider trading activity. CEO John Gibson purchased 4,000 shares of FTK stock at an average price of $1.21. Was this something to do with the recent headline? That’s something to be seen, but if you look at the footnotes of the Form 4, you’ll see that the purchase was pursuant to an existing 10b5-1 Plan. For those unaware, this is a prearranged trading plan. This “allows corporate executives to make a plan, at a time when they are not in possession of inside information, to make prearranged trades at specified prices or dates in the future.”
FTK could be a high-risk penny stock to watch with a proposed takeover deal, depending on the outcome.
Final Thoughts On Penny Stocks
There are many things to be aware of when it comes to penny stocks. What has a company announced? Is sentiment or speculation playing a leading role? How will previous updates factor into new developments? These are just a few of the many questions to ask before jumping into a trade. The main goal is to make money, and that starts with putting together your watch list. Based on new details, are any of these on your list of penny stocks to watch for January 2022?
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