Are Penny Stocks Under $1 A Buy Now Or Too Risky?
Thanks to the stock market crash in 2022, there’s a nice list of cheap stocks to choose from. According to the standard definition, penny stocks are shares of companies trading for $5 or less, and this year has seen a massive influx meeting that criteria.
Whether it’s a new start-up or household names falling on hard times, buying penny stocks in 2022 has been relatively simple, thanks to the larger pool of names. Of course, traders seek out such companies with the hope of capitalizing on short-term volatility. You’ve also got a select few looking to invest in penny stocks for the long term.
No matter what type of investor or trader you are, the #1 factor to understand best is the risk involved. Low-priced stocks can fluctuate in price quickly. But the lower the price, the higher the volatility simply due to price action. A stock that trades at $4 needs a 40-cent move to see a 10% change.
That is much different for a stock that trades for 10 cents. Even the slightest move in price can mean massive changes in position value. Today we look at some of the lowest-priced stocks in the market: the ones trading for under $1. This continues the list from our article, “Best Penny Stocks To Buy? 6 To Watch Under $1 Right Now.”
We’ll see what has acted as a catalyst in recent days and what, if anything, could be on the horizon to pay attention to. Then you can decide if any are worth adding to your watch list.
Penny Stocks Under $1 To Watch
COMSovereign Holding Corp. (COMS)
As one of the cheapest penny stocks on this list, COMSovereign has been watched closely by retail traders over the last several weeks. That’s due, in part, to the sporadic breakout trend the stock has shown. COMS stock has jumped over 100% on multiple occasions in a single session.
This month has been an active one for COMSovereign headlines. The foremost of which was a CEO update. Chief Executive David Knight outlined a 3-pillar strategy that he hopes will turn things around for the company.
“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.“
A recent proxy statement filed with the SEC shows a proposal for a reverse stock split of COMS stock. At the upcoming January 18, 2023, shareholder meeting, there will be a vote on a proposed split in the range of 1:75 to 1:225. The plan is to get the share structures in a place that would reflect a higher price, and as we’ve seen this year, reverse split stocks have attracted some attention from retail traders. DBGI stock, for instance, is one of the more recent making waves in the stock market this month.
With attention on the CEO update and upcoming shareholder vote, COMS stock may have turned some heads during the tail end of 2022.
Tricida Inc. (TCDA)
Other than reverse split stocks, retail traders have also focused on beaten-down penny stocks that have announced plans for “strategic alternatives.” Sometimes this results in a merger, buyout, or complete overhaul that management hopes will bring back shareholder value. Tricida is one of the companies in this category after bad news resulted in the penny stock imploding this month.
The company reported topline results from a Phase 3 trial of its veverimer, which didn’t meet its primary endpoint. Shortly after the news, Tricida announced that it engaged Stifel to serve as an advisor on a review of, you guessed it, strategic alternatives to “maximize” shareholder value. Fortunately or unfortunately, prominent insiders and funds exited positions. Orbimed Advisors sold out of its ten million+ share stake along with Director Robert Alpern, who dumped over 150,000 shares at the end of November.
Some presume now that with larger holders “out,” it could equate to less resistance in the market. Whether or not that holds true is to be seen; however, speculation has become a catalyst due to the unknown outcome of the strategic review process. We know from the last update that the strategic review may include consideration of the sale of the company and/or its assets.
Kalera Public Limited (KAL)
Like Tricida, Kalera Public saw a massive sell-off in 2022 that has taken shares to record lows. The vertical farming company recently posted its third-quarter financials. Despite conditions in the stock market, management remains optimistic following the latest results. CEO Jim Leighton said, “Although our balance sheet is challenged, we are meeting or exceeding our goals on both the top and bottom lines.”
Third-quarter revenues more than doubled from last year’s Q3. Capacity utilization also jumped double digits to 24% from 11% last year. Meanwhile, according to management, it met or exceeded yield targets in all of its US farms.
Kalera plans on expanding into select markets that don’t have ready access to fresh produce. The initial focus is on the lettuce and microgreens categories. Kalera aims to become cash-flow break-even in its U.S. farms by year-end 2023. In addition, helping boost the outlook from a market perspective was a newer filing from GEM Global Yield LLC this month. The firm reported a 9.3% stake with just over 8.53 million shares.
Next month the company will host a shareholder vote on whether or not to conduct a 1:100 reverse stock split to help meet the minimum price requirements of the NASDAQ exchange. So there are a few things to remember if KAL stock is on your list of penny stocks right now.
Polished Inc. (POL)
The rebranded name of what used to be 1847 Goedeker Inc. is Polished Inc. The company offers a shopping destination for home goods, furniture, and appliances but has had a rough time weathering broad market trends in the stock market since the rebrand. Even with this as the case, POL stock caught an uptick over the last week thanks to speculative trading action stemming from its November corporate update.
One of the main points of interest is the previously announced internal investigation by its Audit Committee. The focus is on employment and inventory management practices, and plans are to button up the investigation by year-end. Needless to say, it has helped spur some of the action in the stock market recently.
List Of Penny Stocks Under $1 To Watch
- COMSovereign Holding Corp. (NASDAQ: COMS)
- Tricida Inc. (NASDAQ: TCDA)
- Kalera Public Limited (NASDAQ: KAL)
- Polished Inc. (NYSEAMERICAN: POL)
- Helbiz Inc. (NASDAQ: HLBZ)
- Nuwellis Inc. (NASDAQ: NUWE)
- Stryve Foods Inc. (NASDAQ: SNAX)
- Faraday Future Intelligence (NASDAQ: FFIE)
- Hycroft Mining Holding Corp. (NASDAQ: HYMC)
- OneConnect Financial Technology (NYSE: OCFT)