Are Penny Stocks A Buy Under $1 Or Too Risky?

The penny stock definition generally refers to stocks under $5. But if you’re an active trader, you know that isn’t the whole story. If you take out all other variables and leave the price as the only one, the cheaper the stock, the higher the volatility.

With that also comes a chance to significantly leverage small price moves in exchange for hefty gains. This article looks at a few more cheap penny stocks under $1 to watch right now. These so-called “true penny stocks” present some of the highest risk/reward scenarios in the stock market today.

Penny Stocks & Risk

This is a continuation of our article “4 Cheap Penny Stocks To Buy For Under $1 Right Now,” where some of those stocks have gone on explosive rallies from just a few cents worth of price action. While they aren’t for the timid, anyone able to stomach massive swings in position value might find stocks under $1 a particular interest, especially under the current market conditions.

Here are a handful of penny stocks under $1 that are gaining interest this week. Whether or not they’re the best to buy right now is up to you and your trading strategy. Furthermore, like most “true penny stocks,” the moves made “today” might not be the ones continuing “tomorrow” as these types of stocks tend to trend based on market momentum.

[Read more] Best Penny Stocks To Buy? 5 To Watch For November 2022

Nevertheless, these companies are turning heads right now and may be worth a closer look, depending on your approach to trading. Remember that just because they can be purchased for pennies doesn’t mean the risk is any less.

best penny stocks to buy under $1

Cheap Penny Stocks To Buy Under $1

  • SmileDirectClub
  • New Gold Inc.
  • Sesen Bio Inc.

Penny Stocks To Watch #1. SmileDirectClub (NASDAQ: SDC)

Thanks to the stock market crash this year, plenty of brand-name companies are trading at much lower prices. SmileDirectClub became popular via social media ads, influencer campaigns, and other traditional marketing strategies as a direct-to-consumer smile enhancement company. Unfortunately, the smiles haven’t been on the faces of investors since making its public debut in 2019. At one point, SDC stock traded as high as $21.10. This month, the company’s stock hit record lows of $0.622. With SmileDirectClub sitting roughly 97% off its IPO highs, is there anything worth watching?

For those hunting for cheap stocks to buy, the answer to that is yes at the moment. Shares of SDC stock spiked on Monday thanks to earnings speculation. SmileDirect is set to deliver its next round of results on Monday, with the market apparently hoping for a better report than last quarter.

In its Q2 results, SmileDirectClub reported a wider loss and forecasted lower demand than expected. It also missed the market on earnings per share and sales estimates. CEO David Katzman explained the focus moving forward in the company’s Q2 update.

“Despite top-line challenges, our cost control actions taken in the first quarter reduced our expense base and minimized the impact to our bottom line while delivering an improving cash flow result during the second quarter…We recognize that re-engaging top-line growth through innovation is important to the long-term success of our business.”

With earnings on the horizon, this could pose a high-risk situation, depending on the results. Keep this in mind if SDC stock is on your list right now.

2. New Gold Inc. (NYSEAMERICAN: NGD)

The safe-haven trade has gotten some new attention thanks to rising rates and higher inflation. That’s due in part to last week’s Fed mix-up and the hawkish stance taken by Chairman Jerome Powell. The market weighed Powell’s comments more than the initial FOMC statement, which was a bit more dovish than some initially expected. Powell quickly put the brakes on the optimism that briefly ensued at the conclusion of the November Fed Meeting at the 2:30 PM ET press conference.

Gold mining stocks have regained some of their shine as traders weigh the economic forecast of FOMC members, including Chairman Powell. New Gold Inc. has enjoyed a bullish move over the last few months as markets pulled back. Since early September, the gold stock is up more than 50%. One of the recent catalysts helping lift the penny stock toward the $1 mark stems from New Golds Q3 earnings results.

Last week the company reported its latest round of performance data. Though it missed earnings per share estimates, it beat sales expectations thanks to its $151.2 million for the quarter compared to the $149.11 million anticipated.

CEO Renaud Adams explained, “The third quarter saw our operations recover from their respective challenges during the first half of the year…Rainy River is focused on continuing its ramp-up of mining the open pit main ODM zone in the fourth quarter. Underground production commenced during the quarter, and the priority continues to be feeding the mill with higher grade Intrepid underground material, which I anticipate in the very near term.”

Thanks to the current economic climate and potential near-term prospects, NGD stock could be on the watch list heading into the end of 2022.

3. Sesen Bio Inc. (NASDAQ: SESN)

This week Sesen Bio continued its slow and steady climb that began last month. Much of the excitement has stemmed from its proposed merger with Carisma Therapeutics. The combined company plans to develop Carisma’s chimeric antigen receptor macrophage (CAR-M) therapies.

Sesen expanded upon this event in its latest quarterly update. In particular, it would seem the deal is anticipated to come to completion, and Carisma has already gotten several items on the docket for upcoming industry events. These include multiple abstracts at the Society for Immunotherapy of Cancer this week. The abstracts provide clinical trial data on its Phase 1 CT-0508 trial for patients with HER2+-related cancers.

Carisma recently entered into a strategic partnership with Moderna (NASDAQ: MRNA). The focus is on advancing and commercializing in vivo CAR-M therapies for up to 12 targets for cancer treatment. Carisma received a $45 million up-front cash payment and an investment by Moderna in the form of a $35 million convertible note as part of the collaboration. Carisma also has a partnership with Novartis (NYSE: NVS). It will operate as Carisma’s contract manufacturing organization for the clinical supply of CT-0508.

[Read More] Penny Stocks & What To Watch In The Stock Market This Week Nov 7-Nov 11

With the merger expected to close “in the next two to three months,” some speculative momentum has built up in the penny stock. The new symbol is expected to be CARM if and when that happens.

List Of Penny Stocks To Buy For Under $1

This is a continuation of our article “4 Cheap Penny Stocks To Buy For Under $1 Right Now,” and the complete list of 7 can be found below:

  1. SmileDirectClub (NASDAQ: SDC)
  2. New Gold Inc. (NYSEAMERICAN: NGD)
  3. Sesen Bio Inc. (NASDAQ: SESN)
  4. Tenax Therapeutics (NASDAQ: TENX)
  5. Digital Brands Group Inc. (NASDAQ: DBGI)
  6. Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE)
  7. American Rebel Holdings Inc. (NASDAQ: AREB)

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