Are These Penny Stocks Worth It?
According to the standard definition of penny stocks, we’re referring to stocks under $5 per share. However, traders aren’t bound to trading “higher priced” penny stocks; most of the time, the hunt is for the cheapest ones to buy. Obviously, with the lower price will come higher volatility. A stock trading for $5 can move 50 cents before it reaches 10%. But when you look at some of the companies in today’s article, even a move of just one penny can make a massive difference in portfolio value.
What are the penny stocks we’re looking at today? Well, we’re looking at the cheapest stocks to buy on platforms like Robinhood (NASDAQ: HOOD) and Webull. Because platforms like those limit access to most OTC penny stocks, finding any public companies trading below 50 cents can be complex.
Rest assured, there are still a handful of penny stocks on Robinhood and Webull trading for pennies. Thanks to the 2022 stock market crash, many Nasdaq and NYSE companies are hanging out in the bargain bin. The thing you’ve got to decide is whether or not they are a “bargain” to take a risk on. With a heavier search volume for “penny stocks on Robinhood” and “penny stocks under $0.10,” it’s worth looking at the “menu” to see which companies are actually at these levels and if there’s any hope for a rebound.
3 Penny Stocks Under $0.10 To Watch
- Kalera Public Limited Company (NASDAQ: KAL)
- The Very Good Food Company (NASDAQ: VGFC)
- COMSovereign Holding Corp. (NASDAQ: COMS)
Kalera Public Limited Company (NASDAQ: KAL)
Vertical farming company Kalera Public recently posted its third-quarter financials. Despite being down nearly 100% for the year, management remained optimistic following the latest results. CEO Jim Leighton explained, “Although our balance sheet is challenged, we are meeting or exceeding our goals on both the top and bottom lines.”
This was reflected in the third quarter revenues, which more than doubled from last year’s Q3. Capacity utilization also jumped double digits to 24% from 11% last year. Meanwhile, it met or exceeded yield targets in all of its US farms.
Plans for Kalera are to expand in select markets that don’t have access to local and fresh produce. Initially, their focus is on lettuce and microgreens categories. The move comes shortly after Kalera announced the divestiture of its international business, Vindara. Kalera has set a goal of becoming cash-flor break-even in its U.S. farms by the end of next year, which this divestiture and refocus on U.S. farms is anticipated to help with.
The Very Good Food Company (NASDAQ: VGFC)
Another plant-centric company, The Very Good Food Company, sits below $0.10. Like all other names on this list of penny stocks, shares have dropped significantly this year. Declining revenues and a big cash burn are two significant contributors to the lackluster performance.
Is VGFC stock worth a place on your watch list? I’ll leave it up to you but let’s take a closer look at the numbers. Regarding cash burn, for example, Very Good Food saw its cash and cash equivalents implode from over $21 million last year during the third quarter to nearly $700,000 at the end of this year’s Q3.
Revenue dropped 31% during the same period and was attributed to an 83% decline in eCommerce sales. The company decided to limit eComm sales because of a higher digital marketing cost-per-acquisition of new customers. There are also plans for Very Good to completely exit the eComm segment by the end of the year.
With obvious hurdles, it’s hard to argue a bullish stance on the penny stock. Although, there has been a management shuffle and Board of Director shake-up. Whether or not that bodes well for the company in the near term is yet to be seen. For now, it’s simply just one of the few NASDAQ penny stocks under $0.10
COMSovereign Holding Corp. (NASDAQ: COMS)
Shares of COMSovereign have recently caught traders’ attention on Reddit and in the FinTwit community. A very cheap price, listing on a major exchange, and speculation-fueled momentum have helped the company gain some notoriety among retail traders.
Nevertheless, the company has faced its share of headwinds throughout the year. As a communications stock, the industry, in general, has gotten beaten up. COMSoverieng develops 4G LTE Advanced and 5G communication systems.
In a CEO Update letter earlier this month, its Chief Executive, David Knight, outlined a proposed strategy for the company. In particular, three areas of interest are revenue generation, financial reporting, and capital.
From a top-line prospective, our wireless connectivity and tethered aerial platform businesses represent our primary sources of revenue. These products are built around unique, proprietary differentiating technologies, and deliver unmatched capabilities to their respective clients. In the wireless business, we are actively fulfilling customer orders through existing inventory and at Drone Aviation , we continue to make progress against its $8.4 million subcontract award.
Whether or not that model translates into meaningful revenue is yet to be seen. However, considering capital constraints and the current share price, it will be interesting to see how COMSovereign manages to regain its operational strength.
Cheap Penny Stocks & Risk
All penny stocks have risk, but the cheapest fold in another lay due to price. What’s more, there are reasons that many penny stocks under $1 and stocks under $0.10 are trading at those levels. It usually doesn’t have much to do with a robust fundamental performance.
In this light, if you’re looking for penny stocks under $0.10, it’s worth noting that underlying companies may be in rough shape, and any trade opportunity may be solely based on stock market technicals alone. With that, leave a comment below and let us know if any of the penny stocks under $0.10 are on your watch list right now.