Penny stocks have earned a reputation for upholding the “wild west” of the stock market. In many cases, the underlying companies are early-stage businesses with a lot of growing to do. However, you can find opportunities within this niche if you know what you’re looking for. You also can’t forget that there is a dynamic mix of high-risk and reward for buying cheap stocks. Today we look at some of the most volatile: short squeeze penny stocks. Let’s explain.
Penny Stocks TL;DR 30-Second Summary
- Penny stocks are typically any stock traded for under $5 by definition.
- Low prices make thse highly volatile and risky assets to trade. It also is one of the reasons traders look to buy and profit from quick swings in price.
- Short squeeze stocks are becoming a popular topic because the potential rally can be explosive.
- Today we look at 5 short interest stocks to watch that can be bought for under $5 right now.
What’s so great about short squeeze stocks? To understand this, you’ve got to know a few things, including what shorting is and what a short squeeze is. So what is shorting? In practice, this would be a bet against a company. When traders expect share prices to drop, they want a way to take advantage of it. By shorting, these investors borrow shares of stock from their broker, sell them in the open market, then repurchase them at lower prices to return their loan. The important part to remember is that no matter what the price of a stock is, the shares are what need to get returned.
What’s a short squeeze? This is where it can get fun for volatility hunters. If a stock being shorted doesn’t drop and instead climbs, any traders who are short face potential for losses. That’s because as share prices rise, they still need to repurchase stock to repay their loan.
In the event of a “squeeze,” short traders repurchasing shares adds to the generally bullish buying momentum from retail traders and effectively speeds up a breakout move. In some cases, you’ll see instances as we saw with AMC, GameStop, and many others. Though there’s no guarantee of such a massive spike, short squeezes can trigger moves in share price well into the 50% or even multi-100% ranges.
Short Squeeze Penny Stocks To Watch
- Lixte Biotechnology Holdings Inc. (NASDAQ: LIXT)
- SeaChange International Inc. (NASDAQ: SEAC)
- G Medical Innovations Holdings Ltd. (NASDAQ: GMVD)
- Creative Medical Technology Holdings Inc. (NASDAQ: CELZ)
1. Lixte Biotechnology Holdings Inc. (NASDAQ: LIXT)
Earlier this month, we discussed Lixte on a list of penny stocks to watch. The company develops drug candidates to treat cancer. At the time, it announced a significant development with one of its pipeline treatments, LB-100. It was found to boost the responsiveness of particular cancer to immunotherapy.
In response, CEO John S. Kovach, M.D. explained, “Lixte recently initiated a clinical trial in patients with previously untreated extensive-stage small-cell lung cancer in which LB-100 is first added to chemotherapy and an immune checkpoint blocker and then administered with the immune blocker alone in the maintenance phase of treatment (NCT04560972). Lixte is interested in collaborative studies designed to determine whether LB-100 broadly enhances the benefit of immunotherapy. Immune checkpoint blockers are now approved for treatment of at least 20 cancer types.”
Following profit-taking late last week, LIXT stock has once again gained ground in the stock market today.
Is LIXT Stock A Short Squeeze Candidate?
In looking at short float percentage data from Fintel.IO, this biotech stock doesn’t have a huge short float percentage (>1%). However, it is a smaller market cap company with a lower float and, thus, could be another one of the low float penny stocks to watch right now.
2. SeaChange International Inc. (NASDAQ: SEAC)
SeaChange is another one of the active penny stocks to watch this month. Recent attention came following confirmation that the company would be combining with the popular short-form video app, Triller.
Read: Best Penny Stocks to Buy Right Now? 3 For Your List in January
The announcement came late last year with news that this deal could produce a combined company valued at roughly $5 billion. Specifically, this deal will bring TrillerVerz public as a music, sports, fashion, and entertainment app. Users can connect with celebrities, with SeaChange providing video streaming technology for the platform.
Since the deal is expected to get finalized this quarter, eyes are on SeaChange for any new details.
Is SEAC Stock A Short Squeeze Candidate?
With roughly a 9.3% short float percentage, SEAC stock is on this list of penny stocks. Whether that is factored in by traders this week is yet to be seen. However, considering the pending deal with Triller, SEAC could be one of the penny stocks to watch right now.
3. G Medical Innovations Holdings Ltd. (NASDAQ: GMVD)
Virus stocks remain a core focus of the market. New variants have triggered increased volatility as well. G Medical specializes in telehealth and providing medical devices. In particular, its Prizma medical device has become a core point of interest. It allows users to turn their smartphones into medical monitoring devices to share vital and biometric data with care providers. But it isn’t the telehealth tech that’s making waves for GMVD stock this week.
The company reported that its G Medical Tests and Services division partnered with McDade Products to manufacture millions of COVID-19 PCR test kits. According to the company, the first test kit order is for 4 million units, which will wholesale for $3.25.
“With new cases abound, and the world grappling with PCR test shortages, there is a tremendous opportunity to provide safety and relief to the world economy with a significant financial benefit to our shareholders,” said Dr. Yacov Geva, President, and CEO of G Medical Innovations.
Is GMVD Stock A Short Squeeze Candidate?
Based on a short float percentage of less than 1%, GMVD might not fall into the shot squeeze category, according to some traders. However, given its smaller market capitalization and share structure, it could remain one of the low float penny stocks to watch after this news.
4. Creative Medical Technology Holdings Inc. (NASDAQ: CELZ)
Creative Medical has been in a perpetual uptrend for the last week, thanks to some active volatility and speculation in the market. There haven’t been any new updates since the company uplisted to the NASDAQ from the OTC. However, a few potential catalysts are on the lookout for, and I think they’ve played a role recently.
In particular, Creative’s stroke candidate, ImmCelz, may have become a more significant focus. Previously released data last quarter showed an ability to “reprogram” immune cells. “The data disclosed today suggest the ability of ImmCelz™ to achieve superior results in a manner which is amenable to safe, scalable, and rapid clinical translation,” said Dr. Camillo Ricordi, member of the Company’s Scientific Advisory Board.
Read: 5 Cryptocurrencies Up Big In 2022 Trading Like Penny Stocks
The important thing to note with these developments is that ImmCelz™ has already shown efficacy in animal models of autoimmunity and currently has a pending Investigational New Drug application filed with the FDA to treat stroke victims. As the market waits for more clarity on timing, momentum has picked up this month.
Is CELZ Stock A Short Squeeze Candidate?
We can see that CELZ stock doesn’t have a massive short interest. However, it doesn’t mean it’s entirely written off. The data shows a short float percentage of 7.78%. Since its current share structure is much smaller, with fewer than 10 million shares outstanding, that could be something traders are keeping aware of right now.
Conclusion
Are penny stocks worth it? They’re very high risk and can drop quickly. However, with the potential reward so high as well, the first step in deciding if they’re worth the stress is knowing how to trade, in general. If you’re new to penny stocks, take a look at some of the beginner articles below to get you started:
- Former Hedge Fund Trader Teachs How To Trade Like Wall Street Pros
- Penny Stocks Buying Guide For 2022, 3 Tips and Tricks
- Top Penny Stocks Trends For 2022
- Penny Stocks & 5 Stats To Know If You’re Trading Or Investing
- Trading Penny Stocks? 7 Things to Know For Beginners
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