Penny Stocks Under $1: Are They A Buy Or Too Risky?
The definition of penny stocks includes companies trading at levels less than $5 per share. But ask any traditionalist, and they’ll tell you that there’s a different definition that involves stocks under $1. The so-called “true penny stocks” present some of the highest risk/reward scenarios in the stock market, and today, we look at a handful gaining momentum heading into the end of the week.
Are Penny Stocks Risky?
Like all penny stocks, the cheapest among the bunch is, of course, risky. But there can be another layer of risk simply due to price metrics in play. A penny stock trading at $4 can drop 40 cents before encountering a 10% loss. Meanwhile, the penny stocks trading for $0.99 or less can experience the same type of blow from only 10 cents or less.
Keep this in mind when you’re looking for some of the most active stocks to watch. Also, just because something is considered “cheap,” that doesn’t mean you should treat it any less than other investments. Trading isn’t a lottery ticket, and you can surely “win” more than lose if you know how to trade and manage risk.
Cheap Penny Stocks To Buy Under $1
- Tenax Therapeutics (NASDAQ: TENX)
- Digital Brands Group Inc. (NASDAQ: DBGI)
- Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE)
- American Rebel Holdings Inc. (NASDAQ: AREB)
Tenax Therapeutics (NASDAQ: TENX)
The biotech penny stock Tenax Therapeutics has experienced a strong pop in the stock market today. Shares recently tapped fresh 52-week lows last week of $0.1257 but have since made a rebound. The company commercializes cardiovascular and pulmonary disease-targeting products with recent data highlighting stronger progress in its pipeline.
Last month Tenax discussed a presentation it made at the Heart Failure Society of America (HFSA) Scientific Sessions. In particular, its oral levosimendan candidate showed a positive impact on trial patients. In response, Tenax Therapeutics’ Chief Executive Officer, Chris Giordano, stated, “The observed safety and effectiveness supports the use of oral levosimendan in Phase 3 testing in patients with PH-HFpEF, a devastating disease with no effective treatment options available. We are grateful to the patients and their families, our investigators, and all the research staff who continue participating in this open label extension.”[READ MORE] Best Penny Stocks To Buy? 7 Short Squeeze Stocks To Watch Now
Meanwhile, the company continues weighing strategic alternatives. Late last quarter, Tenax tapped Roth Capital to support this process. Some of the potential outcomes on the table include a sale, merger or strategic transaction to deliver more value to shareholders.
Digital Brands Group Inc. (NASDAQ: DBGI)
You might not think of penny stocks under 10 cents as an option on platforms like Robinhood or Webull. But, believe it or not, there are several trading at these levels and are listed on major exchanges like the NASDAQ and NYSE. Digital Brands Group is one of these names and it has grown in popularity over the last few days. Most of the attention has come after DBGI stock put in new 52-week lows of around 6 cents.
The company recently revealed that its new multi-brand website saw a 462% jump in eCommerce revenue since launching in October. The site offers women’s brands, and it recorded a 36.5% increase in average order size during the period as well. Pre-order value climbed from $205 to $280. Hil Davis, DBG’s Chief Executive Officer, stated, “…This should drive a meaningful increase in revenues and customer retention as the customer can now shop in one location and build the looks and styles they want across our different brands.”
Volume has continued increasing as price climbs. The last three sessions have seen DBGI stock rebound from lows of around $0.06 to highs of nearly $0.10 so far.
Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE)
Another one of the penny stocks to buy for less than $1 is Faraday Future. The electric mobility company has gone through a management transition as it moves forward in a hopeful launch of its flagship FF 91 Futurist product. The company reached a deal with one of its significant shareholders, FF Top, which appeared to have been one of the hurdles to moving things forward.
“The resolution of governance and related issues with our largest shareholder is a major accomplishment and an important step forward for Faraday Future and all our stakeholders. We can now focus our effort on building the FF 91. We appreciate all parties’ efforts in reaching this agreement,” said Dr. Carsten Breitfeld, Global CEO of Faraday Future.[READ MORE] What Makes Penny Stocks an Attractive Investment?
One of the additional catalysts playing a role is the FFIE stock short interest. According to data from Fintel and TDAmeritrade, the short float percentage in the stock sits around 23%. That isn’t the highest short interest but it is nowhere near something considered “low” by any means.
American Rebel Holdings Inc. (NASDAQ: AREB)
The self-defense company, American Rebel, has seen a bit of a ramp-up as October ended and November began. The company designs products, including safes and, personal security & self-defense items. In a twist, the company has also jumped into the eBike business. Odd but not necessarily uncommon when you’re talking about penny stocks. In many cases, companies will reach outside of their wheelhouse to create shareholder value. In this case, American Rebel acquired Sierra E-Life this year and now has this business arm to potentially capitalize on. This was yet another acquisition made by the company, which followed its buyout of Champion Safes earlier in the year.
In a press release late last month, the company expressed an opportunity thanks to this deal. American Rebel forecasts $5 million in pro format revenue for Q3. That’s thanks to performance in its Champion entities.
“We’re on target to exceed $20 million in annual pro forma revenue for 2022,” said Andy Ross, CEO of American Rebel. “Integrating the Champion and American Rebel operations has been going great, and we expect continued growth. We are actively evaluating potential synergistic acquisitions or partnerships and are bullish about the future of America’s Patriotic Brand.”