Shares in small companies priced below $5 are known as penny stocks. They’re typically characterized by their high volatility and limited liquidity. This makes them a risky investment choice, but they also provide unique advantages and prospects for traders and investors.
One of the primary reasons to trade penny stocks is the potential for significant returns. Even a minor development can lead to a considerable shift in the stock’s value. Proficient traders and investors who can recognize these opportunities may reap substantial profits. An additional advantage of trading cheap stocks is the minimal entry barrier.
In contrast to other investment options, inexpensive stocks demand relatively little capital. Speaking plainly, novice investors can buy many shares in a low-cost stock with just a few hundred dollars. That can make it simpler for them to experiment with their investment approaches without risking large amounts of money.
Finding Penny Stocks To Buy
Unique opportunities also exist when trading penny stocks. Some of these companies might be in the initial stages of growth and have considerable potential for expansion. They may be trading for less than $5 per share because they are not yet profitable or refining their business model. If you understand the risks, the rewards can be just as exciting, and in some cases, penny stock companies can go on to become notable industry competitors.
For example, one of the popular solar energy stocks this year is Enphase Energy (NASDAQ: ENPH). Believe it or not, it was trading below $5 per share not long ago. In fact, at the beginning of 2019, it was struggling to maintain levels above $4.50. Fast-forward, and ENPH stock sits at nearly $200 per share. This isn’t the case for all penny stocks, of course. But it does emphasize the potential.
Another possibility is merger and acquisition activity. Smaller companies are often sought for acquisition by more prominent firms looking to grow their business or penetrate new markets. If a company is acquired, its stock price can rise substantially, offering a potentially profitable opportunity for investors.
Nevertheless, it is essential to recognize that trading penny stocks carries risks. These stocks may experience abrupt and considerable price fluctuations due to their high volatility and limited liquidity. Some companies could be fraudulent, and investors may become victims of scams. Thorough research and analysis of any company are crucial before investing in penny stocks. Today we look at a few more cheap stocks to watch before next week, continuing the list from our update “Best Penny Stocks To Buy Now: 3 To Watch Before Next Week.”
Penny Stocks To Watch
Oatly Group (OTLY)
Even when the stock market is down like it is today, at least a handful of penny stocks are moving higher. Oatly Group is an example of that on Friday. Shares of the alternative dairy company jumped higher and retested their 50-day moving average following news earlier in the week.
Oatly released its latest quarterly and full-year 2022 results. One of the highlights included the 2023 guidance of revenue growth between 23% and 28%. Thanks to the Q4 revenue beat, sentiment has been bullish in recent sessions. CEO Toni Petersson also noted, “Our supply chain is back on firmer footing, we have clear line of sight to reaching profitability, and we have the liquidity needed to fully fund our growth investments and reach financial self-sufficiency. Therefore, we believe we are well-positioned to start playing offense in 2023.”
Credit Suisse analysts recently reiterated their Neutral rating on the penny stock. The firm also has a $3.30 price target set.
Kinross Gold (KGC)
When you’re looking for some of the cheapest penny stocks in the stock market today, chances are you’ll come across plenty that trade at or near their lows of the year. In many cases, they’re trading at these low levels due to selling pressure for one reason or another, and Kinross Gold is an example.
Shares of the gold stock have traded lower most of the year. It tapped fresh 2023 lows earlier in the month as companies in the mining space felt pressure from the slide in the overall market. Closing out the week was a much different story. KGC stock bounced to highs of $3.95 in early trading without any immediately apparent news catalyst. It’s also worth noting that the penny stock has climbed for the last two weeks. Friday, KGC stock breached a major moving average (the 200-DMA) for the first time since mid-February.
In the company’s last update, CEO J. Paul Rollinson explained the outlook for Kinross. He said, “As we have exited from Russia and Ghana and are developing our Great Bear project in Red Lake, Ontario, our portfolio is now more weighted in the Americas. We are excited about the Great Bear initial mineral resource estimate, which we announced earlier this week. We believe we have a world-class development project at Great Bear and two cornerstone production assets, Tasiast and Paracatu, that together produce over 50 per cent of our gold.”
As precious metals stocks rally, gold penny stocks like KGC have come back into focus.
QualTek Services Inc. (QTEK)
Telecom and energy services infrastructure company QualTek Services saw its stock price jump in the stock market today. The move comes after Oppenheimer analysts announced a $3 target but downgraded the stock to Perform. Nevertheless, the company’s recent financing win has helped boost sentiment at the end of the week.
QualTek announced the closing of a new money incremental term loan for $55 million. “QualTek will use the runway afforded by this financing to continue to take decisive action to strengthen our balance sheet and position us to maintain our industry leadership position well into the future,” said QualTek’s Chief Executive Officer Scott Hisey.
With this new funding, QTEK stock has traded with some of its highest one-day trading volumes in months.
Jounce Therapeutics (JNCE)
Shares of Jounce caught some attention earlier this week thanks to several catalysts, including insider trading activity. The company develops targeted cancer therapies as well as predictive biomarkers. Earlier this year, the company announced plans to restructure, which included a workforce reduction of roughly 57%. The company also said it would seek business development opportunities for its JTX-8064 and vopratelimab programs.
This month, Jounce received an unsolicited acquisition offer for 100% of the company. The deal outlined a buyout at $1.80 per share and other contingencies to complete the arrangement. This comes in addition to events from February 23, 2023. What’s interesting about this is a new SCHEDULE 13D filing came from Tang Capital Partners. It showed the fund taking a 10.2% stake in Jounce. Coincidentally, the controlling shareholder of Concentra Biosciences, LLC, who made the offer to Jounce, is also Tang Capital Partners, LP.
What’s helping JNCE stock today? After the market closed on Thursday, Jounce announced that patients from its INNATE Phase 2 trial in ovarian cancer experienced “deep and durable responses” based on a pre-planned informal data review.