Are Penny Stocks A Buy Under $1 Or Too Risky?
According to the definition of penny stocks, we’re discussing stocks under $5 per share. However, if you’re reading this article looking to make quick money, chances are you’re thinking something along the line of stocks trading for pennies.
This article will look at this niche: penny stocks to buy for under $1. They are some of the most volatile. They’re some of the highest risks. But they’re also some of the biggest gaining stocks to watch in the stock market today.
Let’s cover a few of the apparent risks first. For starters, not all cheap stocks (or any stocks, for that matter) are guaranteed to go up. Sure, history suggests that the broader market, in general, is a bull market. But that isn’t the same for individual stocks. When you’re talking about smaller companies, the chances of them failing can be far greater than for them succeeding.
Penny Stocks & Risk
The “emerging growth” phase companies can give a true “ground floor” opportunity. But with that ground floor comes more significant chances of failure. Issuers obtaining funding, building a large enough workforce, and many other factors play a part.
On the other hand, if things end up working out, it can mean a massive payday for early investors. When it comes to penny stocks under $1, most are looking to trade them instead of taking a long-term position and investing. Due to their speculative nature, penny stocks, in general, are highly volatile.
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That means “today’s” runners could be “tomorrow’s” biggest losers. If you understand this and manage risk, penny stocks might be right for you. Will some of these names make it onto your watch list this week, or is the risk too high to handle?
4 Cheap Penny Stocks To Buy Under $1
- Volta Inc. (NYSE: VLTA)
- GoHealth Inc. (NASDAQ: GOCO)
- Compugen (NASDAQ: CGEN)
- Cosmos Holdings (NASDAQ: COSM)
Volta Inc. (NYSE: VLTA)
While the EV industry may have gotten a few black eyes this year, investors aren’t counting it out. Some are hunting for the most beaten-down names for their watch lists as broader markets attempt a recovery. Volta Inc. once traded above $10, but recent November lows saw the penny stock trading closer to 60 cents.
Volta is a unique EV charging company. It provides traditional electric vehicle charging but also folds multimedia into its offerings. Specifically, the company is creating an EV charging network that uses charging stations as advertising billboards. For example, companies like Michelin have partnered with Volta to bring its “Motion For Life” campaign to Volta’s media network.
In the third quarter, Volta’s installed base increased by 173 stalls. That brings Volta’s installed base of total stalls connected as of September 30, 2022, to 3,093. This growth represented a 45% year-over-year increase as Volta has seen its stalls span 31 states and territories.
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GoHealth Inc. (NASDAQ: GOCO)
GoHealth has seen a strong rally over the last three days. The move began on Tuesday and lasted through the week’s second half. GOCO stock managed to bounce from lows of $0.38 to highs on Thursday of $0.60 as insurance stocks gained interest from safe-haven investors. Generally speaking, insurance stocks are considered “recession-resilient,” which is relevant now.
Also helping things is the recent earnings per share beat reported earlier this month. Analysts expected a loss per share of 27 cents. GoHealth reported a loss of 23 cents.
“The market is in need of unbiased third parties to help support the Medicare shopping and enrollment process. The challenge has been the misaligned rewards structure and the lack of trust in the industry. GoHealth is leveraging our Encompass solution, our health plan relationships, our proprietary technology, and our experienced, high-quality sales agents to solve these industry challenges and act as a trusted partner to beneficiaries.”CEO Vijay Kotte
Adding some additional fuel to the fire was a new 13G filing from Elevance Health, Inc. It showed the firm’s 9.99% stake in GOCO stock with nearly 33 million shares.
Compugen (NASDAQ: CGEN)
Compugen stock has come a long way since October despite trading below $1. Last month CGEN stock reached lows of $0.51 and since then has bounced back nearly 100%. This week shares are trading higher following key milestone updates even after missing earnings. So, first, let’s look at these earnings.
Compugen missed EPS estimates but gave a somewhat compelling outlook on its pipeline. In its Q3 update, CEO Anat Cohen-Dayag, Ph.D. explained, “We are excited to be presenting new encouraging clinical data from the fully enrolled platinum-resistant ovarian cancer cohorts treated with COM701 in combination with nivolumab with or without BMS-986207 at the upcoming ESMO-IO conference. We believe COM701 combinations warrant further investigation in this indication. This opens the door for us to evaluate our drugs in a more favorable competitive landscape compared to NSCLC. For this reason, we have decided to pursue this indication, and we are evaluating the various options for the planned NSCLC studies.”
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Since the conference is coming up at the beginning of December, speculation has already begun building. In addition, the company received a $7.5 million milestone payment triggered by AstraZeneca’s Phase 2 initiation of AZD2936, a PD-1/TIGIT bispecific antibody derived from Compugen’s COM902 platform.
Cosmos Holdings (NASDAQ: COSM)
Cosmos Holdings has been bouncing back from recent lows like other companies on this list of penny stocks. The penny stock dipped after the company announced a $7.5 million offering. Since the discount was steeper than the market price at the time, traders reacted negatively to the news. However, COSM stock has been in bounce mode since the offering closed. Proceeds from the offering were earmarked for pending or potential acquisitions, payment of certain liabilities to existing warrant holders, as well as for working capital.
Coincidentally, the news came a few days before the company reported a letter of intent with Smart for Life, Inc. (NASDAQ: SMFL). The two plan on cross-marketing products and services in their reciprocal markets. Greg Siokas, CEO of Cosmos, noted, “We believe our EU distribution organization can achieve significant revenues with the Smart for Life brands. Our management team is hard at work, developing the various synergies with Smart for Life products which may realize significant commercial success through the Cosmos distribution channels.”
This week’s news of the company’s appeal to the Nasdaq exchange has turned heads. It was in response to Cosmos Holdings’ receipt of a non-compliance letter from the Nasdaq Stock Market for failure to maintain a minimum closing bid price of $0.10 per share for ten consecutive business days. Cosmos requested a hearing with Nasdaq to address this issue. As a result, COSM stock will continue to trade on the Nasdaq exchange beyond the November 21, 2022, deadline previously set.
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