Penny stocks are shares of companies that can be purchased for $5 or less. In many cases, they’re even cheap, which means traders & investors can buy hundreds or even millions of shares of penny stocks at any given time. Ideally, the goal is leveraging the cheaper prices in exchange for compounded gains. But obviously, it doesn’t come without risk. Just as quickly as these low-priced stocks can climb, they can also drop. We’ve seen this first hand during the last three trading sessions.
For example, the overturning of Roe v Wade focused on what some call “Plan B stocks” or companies involved in developing contraception. The first half of this week saw speculative trading momentum spark big moves in cheap stocks like Evofem Biosciences (NASDAQ: EVFM) and Agile Therapeutics (NASDAQ: AGRX).
While both remain much higher than where they finished last week, they’re both trading significantly off of their recent weekly highs. We’ve also seen an uptick in short-term momentum for stocks under $1, a more general trend in the stock market today. Once again, several of these penny stocks under $1 that outperformed earlier in the week have dropped significantly from their highs as the week has progressed.
Are Penny Stocks Worth It?
Are penny stocks worth it? The short answer is yes, but it’s essential to understand that uptrends don’t go on forever, and downtrends aren’t guaranteed to reverse. Therefore, knowing how to trade penny stocks (or stocks, in general) is something to have a good grasp on before jumping into this volatile area of the market.
We’ll discuss ways to start learning how to trade later in this article. For now, let’s look at a few of the penny stocks that have surged in recent sessions but may have been missed by the social media crowd.
- Yatsen Holding Limited (NYSE: YSG)
- Decibel Therapeutics Inc (NASDAQ: DBTX)
- AcelRx Pharmaceuticals Inc. (NASDAQ: ACRX)
Penny Stocks To Watch
Yatsen Holding Limited (NYSE:YSG)
One of the penny stocks we’ve followed for most of June is Yatsen Holding. The company specializes in beauty products offered in China. Everything from color cosmetics to topical serums falls into Yatsen’s portfolio.
With a revitalized view of China-based public companies, YSG stock has benefited from an extended bull run. Since the beginning of June, shares have climbed from $0.50 to highs this week of $1.46. No significant headlines have been released this week, but the latest ESG report may be something that has resonated with the market.
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Yatsen released details of this report earlier this month. The company has focused on its long-term, sustainable, and environmentally friendly operational strategy. Meanwhile, with the Q2 earnings season still to come, traders may be speculating on how Yatsen performed over the last three months.
The company was able to solidify a 68.5% increase in net revenues last quarter. The gross margin was also higher at 69% compared to 68.6% during the previous year’s first quarter. Net loss also decreased in Q1 by 8.7%, and the non-GAAP net loss dropped 33.6%. In light of recent attention on cheap stocks, YSG has been one of the names to watch heading into the final days of June.
Decibel Therapeutics Inc (NASDAQ:DBTX)
Another penny stock turning heads is Decibel Therapeutics. The biotech company reported positive data from one of its ongoing clinical trials this week. In particular, Decibel’s Phase 1b trial of its DB-020 in patients receiving cisplatin chemo showed favorable results.
Patients dosed with the drug candidate demonstrated tolerability with only mild to moderate adverse events.
“These data support the approach and rationale for DB-020 and represent an important step forward in the development of DB-020 for patients receiving cisplatin chemotherapy. We are tremendously encouraged by the favorable safety profile and protection against ototoxicity we have observed in the trial as of the interim analysis,” said John Lee, Chief Development Officer of Decibel.
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What’s more, if DBTX stock is on your list, pay close attention to another piece of info from that update. Decibel said that it plans on reporting more data from the interim analysis at an upcoming medical conference.
AcelRx Pharmaceuticals Inc. (NASDAQ: ACRX)
Another one of the biotech penny stocks on the list is AcelRx Pharmaceuticals. It’s one of the more heavily beaten down names and currently trades below $0.30. This week, however, has seen shares of ACRX stock pop both during regular market hours and the extended-hours sessions. The company has released no recent updates; however, there could be a few things to note.
One of the most notable was the update that the FDA modified the company’s DSUVIA Risk Evaluation and Mitigation Strategies requirements with healthcare setting audits. The program was designed to reduce the risk of respiratory depression from accidental exposure. DSUVIA is an approved product in the US, and Europe (under DZUVEO) indicated for the management of acute pain that would require an opioid analgesic.
How To Trade Penny Stocks
There are plenty of ways to trade penny stocks. These include scalping, day trading, swing trading, and investing in penny stocks. Here’s a brief overview of each:
Scalping Penny Stocks
Scalping is a typical trading style used by active traders. The basic idea of scalping, as the name suggests, is to execute many trades throughout each day and take profits based on rapid price changes.
Day Trading Penny Stocks
Day trading is about finishing a trade before that day’s closing bell. Holding a position overnight is not usually part of the game plan.
Swing Trading Penny Stocks
Swing trading penny stocks refers to a style of trading used by traders trying to make gains over a more extended period. This is usually longer than that of a day trader or a scalper.
Investing In Penny Stocks
Investing in penny stocks is entirely different from trading. Long-term investors will prepare to hold positions for several months to several years. Those investing in penny stocks tend to rely more heavily on company fundamentals or broad market events compared to price action or speculation.
Check out some of our articles on penny stock basics:
- 4 Reasons You’re Not Making Money With Penny Stocks
- What Is Stagflation & Why Does It Matter For Penny Stocks? [Answered]
- How to Find the Best Penny Stocks to Buy in 2022
- Can You Buy Penny Stocks In An IRA? The Answer May Surprise You
- Penny Stocks To Buy: 5 Tips For Trading Stocks Under $5
- What Are Penny Stocks? A Beginner’s Guide To Making Money Trading
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