Why is the stock market down today? The simple answer is inflation. One of the most watched economic indicators the Federal Reserve uses to gauge its levels is PCE data. The Personal Consumption Expenditures (PCE) Index measures the change in the price of goods and services purchased by consumers. The latest report suggests that the overall inflation rate may be on the rise.
While some investors may shy away from penny stocks due to their perceived risk, others see the potential for significant gains. With the PCE Index data pointing towards inflation, it’s worth watching penny stocks that may benefit from this trend.
When searching for penny stocks to buy, it’s important to conduct thorough research and analysis. Some potential areas to consider in an inflationary environment include commodities, such as gold and oil, and companies in industries that may experience increased demand, such as healthcare and consumer goods. Even though that may be a logical case and accurate for some stocks, penny stocks tend to be disconnected from broad market trends.
Today we look at a handful of penny stocks to watch with the stock market down today.
Diversified Healthcare Trust (DHC)
Healthcare stocks are in focus, especially during high inflationary periods. Thanks to news and industry momentum, Diversified Healthcare Trust has seen its share price rise over the last week. The company is a real estate investment trust (REIT). Its focus is on healthcare properties in the US.
One of the notable things about REITs is that they declare dividends for their investors. When it comes to penny stocks, dividends aren’t the norm. But, in this case, DHC stock carries one. The last dividend issued by Diversified earlier this year was $0.01 per share. That might not seem like a large sum, but when you’re talking about a stock already trading for pennies, it can make a difference.
The company scored big in February after one of its investment businesses, AlerisLife Inc. (NASDAQ: ALR), was acquired by ABP Acquisition for $43.8 million. Diversified owned 31.9% of AlerisLife. In addition, the clock has started ticking on the company’s upcoming earnings results. Diversified is set to report its Q4 financials on March 1st. For the third quarter, Diversified beat analyst estimates for revenue and reported a loss per share of six cents. This was also better than analysts expected for the quarter.
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Pitney Bowes Inc. (PBI)
Shipping stocks have also benefited thanks to increased reopening rates in places like China recently. Pitney Bowes is a logistics company focused on global shipping and mailing. It provides technology, logistics, and financial services to over 90% of the Fortune 500. The company also services small business, retail, enterprise, and government clients.
The company’s earnings results were announced late last month and remain a topic of discussion on Fintwit. CEO Marc B. Lautenbach commented, “We have made important progress in the quarter against several initiatives that are key to our long-term objectives…Although financial performance did not meet our expectations, we have seen significant improvements which lay the groundwork for future success. Our SendTech and Presort businesses continued to deliver a solid and predictable performance, reaping the benefits of the investments we have made in those businesses over the last several years. Importantly, our Financial Services business performed very well, and Global Ecommerce made substantial progress in ramping network volumes, profitability, and service levels.”
The acquisition of Skymail International’s resort assets in Salt Lake City is expected to add more than 100 million First Class mail pieces annually to its Pitney Bowes Presort Services Network to make drop-offs and pick-ups easier. The U.S. Department of the Army also awarded it a $375,000 enterprise postal systems and services contract. Like Diversified, Pitney also offers investors a dividend. The last one paid was $0.05 per share.
NGL Energy Partners (NGL)
As discussed above, energy stocks can benefit during higher inflation periods. NGL Energy has been in rally mode since the start of the year, and recent headlines have helped to prompt an even more significant surge. The midstream energy company transports, stores, markets, and provides logistics services for crude oil and natural gas liquids. It also treats and disposes of produced water generated by oil and natural gas production processes.
Not only did the company beat recent earnings estimates, but it also raised its fiscal 2023 adjusted EBITDA guidance. NGL reported an EPS of $0.19 compared to $0.12 estimates. It also recorded revenue of $2.14 billion for the third quarter. Adding more optimistic sentiment to the market was insider buying in NGL stock. The most recent came from CFO and EVP Bradley P. Coopper, who picked up 50,000 shares at an average price of $2.79.
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This week NGL’s news of redeeming Senior Notes due this year has helped continue the flow of bullishness in the market. The news echoes statements made by NGL CEO Mike Krimbill in its February business update. Krimbill said, Paying off the 2023 notes is a key strategic goal as we look to drive down absolute debt and further reduce leverage.”
With this as the backdrop, NGL stock could be on the watch list right now for many retail traders.
iBio Inc. (IBIO)
Small biotechnology companies have been incredibly volatile lately; iBio is one example. The company’s shares exploded last Friday following news headlines. It announced the disclosure of MUC16 as the target of its latest immune-oncology program. iBio utilizes artificial intelligence to develop its platforms. Thanks to more interest in AI stocks or “ChatGPT stocks,” any stock with those letters (AI) has gotten a bit more attention this month.
“The targeting of a very specific, pathophysiologically relevant, region of MUC16 is a testament to the versatility of our AI technology, as it successfully shows it can be applied to a broad range of targets,” said iBio’s Interim CEO and Chief Scientific Officer, Martin Brenner. “This success adds to the growing list of target classes to which we have made differentiated antibodies using our patented epitope steering technology.”
Jumping ahead a week and though IBIO stock has sold off slightly, shares continue trading higher than where they started at the start of 2023. One thing to pay attention to is a recent prospectus filed, which shows a proposed offering of up to $100,000,000. Whether this presents potential risks of dilution is to be seen.
List Of Penny Stocks To Watch
- Diversified Healthcare Trust (NASDAQ: DHC)
- Pitney Bowes Inc. (NYSE: PBI)
- NGL Energy Partners (NYSE: NGL)
- iBio Inc. (NYSEAMERICAN: IBIO)