Penny stocks can be your best friend or your worst enemy when it comes to making money in the stock market today. Few places exist where you can turn $100 into $1,000 in a single day. But then again, few places also exist where your investment can become worthless within a matter of minutes.
So if you’re looking for the “best” penny stocks to buy, have a good definition of what is best for you. Are you looking at penny stocks with unusual volume to day trade, or are you trying to find the best penny stocks to invest in for the long term?
Today, we look at some of the hottest stocks to watch, which can be bought for under $5. Remember, just because they may appear “cheap,” that doesn’t mean they won’t be any less risky.
Penny Stocks To Buy Under $5
Tellrian Inc. (NYSE: TELL)
Energy penny stocks have raced higher this month. Thanks to the Russia-Ukraine conflict, energy prices have been boosted. Tellurian has taken center stage as things like liquified natural gas are gaining momentum. The company’s plans to advance its Driftwood LNG project have also helped captivate interest in the penny stock.
This project is expected to see construction begin in April with financing processes already in the works. With its outstanding debt paid and new natural gas wells in production, it has positioned itself to capitalize. In particular, CEO Octavio Simoes explained last month that “Tellurian is optimally positioned with fully executed market-based LNG SPAs and a permitted project. Bechtel will begin construction of Driftwood LNG in April, and we will seek to conclude the financing process shortly thereafter.”
TELL stock continues hitting new highs during early March from a technical perspective. We’ve also discussed the options market action recently concerning Tellurian. Today, there have been significant levels of open interest through the April 14th expiration date. The highest levels sit at the March $3.50 Calls and April 14th $4 Calls.
Transocean Limited (NYSE: RIG)
Sticking with the global energy industry, Transocean has also gained plenty of attention recently. The company provides offshore contract drilling services to oil and gas companies. Considering the issues Russia’s marketplace has faced, most oil and gas companies or companies with exposure to the niche have gained this month.
Despite mixed earnings from the company concerning last year’s performance, Transocean management remains optimistic on 2022. CEO Jeremy Thigpen discussed this year’s strategy saying, “As we move into 2022, we are more optimistic than we have been in the past seven years. Energy demand remains resilient driving oil prices to seven-year highs. As a result, we are experiencing a growing list of opportunities from customers across the globe who value our high-specification floating fleet and our strong and consistent operating performance.”
Similar to Tellurian, Transocean’s options market is hot right now. Not only are there several strikes with above-average volume, but there are also plenty of strikes with high levels of open interest. In particular, the March 18th $4 Calls have the highest open interest as of this article, with more than 27,000 contracts.
Meanwhile, there have been surges in today’s volume at the April 8th $4 and $5 Calls. Though it isn’t always a clear indicator of bullish or bearish movement, unusual options activity has been looked at for gauging general market expectations. In this case, the market appears to be taking a more bullish stance on energy stocks like TELL and RIG based on the options markets.
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Imperial Petroleum Inc. (NASDAQ: IMPP)
Shares of Imperial Petroleum have surged since the end of February. The shipping company isn’t necessarily an “energy producer,” however, its place in petroleum and crude oil logistics places it on this list of penny stocks.
Imperial owns 3 M.R. product tankers and one Aframax oil tanker with a total capacity of over 255,000 deadweight tons. Following the closing of a recent $12 million financing round, eyes are on the company’s next steps. Imperial directly highlighted acquisitions of additional vessels as one of the earmarks for the funds.
Considering the surge in momentum boosting energy stocks, Imperial has followed suit. When it comes to penny stocks like this, it may also be worth paying close attention to what the plans are for the company, and you can look at previous updates to get some clues. In this case, the company’s most recent investor deck gives some ideas as to what the company aims to accomplish this year. In particular, Imperial expects fleet coverage for 2022 to come in around 73% if all options are exercised. The company also said that several charter extension options are in place, which are also at higher rates. Here’s a snippet from that deck:
Are Penny Stocks Worth It?
There are many pros and cons of trading penny stocks. But if you know some of the basics, you’re already in a good position. Research is critical for identifying potential opportunities in the market or things that should be avoided. This article took a deeper dive beyond simple headlines and focused on alternative data. Things like options flow and even going directly to a company’s website to read discussions on future outlook can help when it comes time to make your trading decision.
It’s also worth noting what is going on in the stock market today. Geopolitics has made a considerable impression on different industries. Energy is one of these and has greatly benefited from the global conflict pushing energy prices higher in 2022. Whether or not this remains the case for the long-term is to be seen. For this reason, it is best to have a clear strategy laid out and a plan in place to ensure you’re able to capitalize on the current trends in the stock market right now.