The focus of this article is on penny stocks to buy for under $5. We look at recent trends, hot topics of discussion, and other details for you to look into. It’s up to you to decide if they’re the best penny stocks to buy or if they should be avoided entirely.
Best Penny Stocks To Buy In August
What some assume to be one of the quietest months for trading, August has been a behemoth for big breakout stocks. This week, Bed Bath & Beyond (NASDAQ: BBBY) became the latest former penny stock to explode. Shares reached nearly $30 as the retailer surged in price, squeezing out short positions in their tracks.
The move continues the trend with penny stocks in August, where low-priced shares quickly graduate from the sub-$5 range. We saw it with AMTD IDEA Group (NYSE: AMTD), Magic Empire (NASDAQ: MEGL), Kaspien Holdings Inc. (NASDAQ: KSPN), Heart Test Laboratories (NASDAQ: HSCS), Applied DNA Sciences (NASDAQ: APDN), Ontrak Inc. (NASDAQ: OTRK), and countless others. These popular penny stocks are helping drive home the reason why August is a month for learning how to day trade properly. Those who were able to properly enter and exit these trades are most likely looking at significant gains.
The month is only halfway through. With plenty of trading left in August, we take a look at some of the more active penny stocks today, trading below $5. Will they be the next breakout names, or should you avoid them at all costs?
FUBO Stock Skyrockets Over 100%
FuboTV (NYSE: FUBO) is the latest name on the list of penny stocks to graduate in August. The now former penny stock caught the wave that was sparked by BBBY stock. The continuation of the interest in meme stocks is undeniable at this point. Strong earnings were an initial catalyst, and since we first discussed FuboTV at the start of August, shares have exploded by more than 145%. Check out some of this month’s FUBO stock updates:
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Penny Stocks To Buy [or avoid]
- SmileDirectClub Inc. (NASDAQ: SDC)
- Desktop Metal Inc. (NYSE: DM)
- Canopy Growth (NASDAQ: CGC)
- Skillz Inc. (NYSE: SKLZ)
SmileDirectClub Inc. (NASDAQ: SDC)
Shares of SmileDirectClub have been on the list of penny stocks to watch this month. Fintwit popularity, short squeeze speculation, and unusual options action have helped spark a noticeable move in SDC stock.
In the article, “Penny Stocks To Buy Now? 4 Short Squeeze Stocks To Watch,” we discussed SmileDirect in more detail as the move in the market has been completely opposite of its latest financial results. The oral health company missed sales and EPS for the quarter. It also set 2022 guidance below estimates.
Nevertheless, the story of the week is short squeeze stocks and SDC is looked at as a candidate. According to data from Fintel.IO, the short float sits around 23.31%.
Desktop Metal Inc. (NYSE: DM)
Shares of Desktop Metal caught a nice pop on Tuesday. Other than the sweeping optimism in cheap stocks, DM stock has been on the move and steadily rising since the massive drop in May. First quarter results were the direct catalyst to this sell-off, which took the price of DM stock down to lows of $1.26.
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Now that second-quarter results are out, sentiment has become much more upbeat. Desktop reported a sales beat with $57.57 million for the quarter compared to estimates of $54.7 million. The company also reaffirmed its 2022 guidance, unlike some of the other companies in the stock market this year. Many have opted to pause their 2022 outlook due to uncertainties in certain industries. Regarding Desktop’s outlook, the company expects to hit $260 million in revenue, which would be up 131% from 2021.
Presentations at the Jefferies Industrials and Oppenheimer Technology conferences have added more fuel to the fire. The 3D printing company continues jumping this week.
Canopy Growth (NASDAQ: CGC)
Marijuana stocks have been heating up a lot lately and Canopy Growth is no stranger to this trend. Earlier in the week, we discussed CGC stock on a list of penny stocks with high short interest. With a 9.35% short float, according to Fintel.IO, it isn’t the most heavily shorted name. But it has become a point of interest for traders, especially under recent circumstances. In the stock market today, short squeeze stocks have turned heads in a major way.
Following its fiscal 2023 first quarter results, the sentiment was mixed at the beginning of August. Canopy reported C$110.1 million in revenue and a loss per share of C$5.23. Of particular note, its international medical cannabis net revenue doubled versus Q1 FY2022. Canopy’s BioSteel revenues also hit a record in Q1 FY 2023 and were up 169% from its previous year’s quarter.
New legislation has come into focus and traders & investors have gotten their attention piqued. Considering that there is a risk-on sentiment in the market, it will be interesting to see how cannabis and other industry stocks respond to Wednesday’s FOMC Meeting minute outcome.
Skillz Inc. (NYSE: SKLZ)
Unlike CGC stock, Skillz has a relatively higher short float percentage right now and could be on the watch list as a result. SKLZ stock short float sits just over 17%, according to Fintel.IO. Other outlets like TDAmeritrade peg this figure slightly higher at 18.41%. Does it fit your criteria for a short squeeze penny stock?
Whatever the case, Skillz has slowly recovered from 52-week lows of $1.15 this quarter. Though the mobile gaming platform company still has a long way to go to meet last year’s highs, SKLZ stock is getting some love from day traders this week. Heavy speculation in the options market has also given a tone of bullish sentiment. Specifically, this week’s $2.50 Calls lit up the boards with more than 7,500 contracts trading compared to less than 5,500 contracts of open interest.
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The company was recently called upon to launch “the next round” of UFC mobile games. “UFC & Skillz are excited to invite developers to build a new UFC branded game designed to bring out the competitor in all of us. In this unique game opportunity, developers will have the opportunity to build a competitive mobile game,” explains the Skillz website.
The big question to ask now is, can this bullishness last longer than a few days, or will it come to a stretching halt as it has so many prior?
Final Thoughts
With the massive rise in prices across the stock market today, it’s important to keep your trading game plan and strategy in mind. Don’t let FOMO (fear of missing out) cloud your judgement and if something “feels” too hot, it may be best to take a step back and reassess things. For now, these are a few of the penny stocks to watch. This is why we ask: are these the best penny stocks to buy or should they be avoided completely because things are too hot?
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