If you’re looking for penny stocks to buy, chances are you’re focusing on momentum and volatility. Some of the most volatile stocks within this niche are priced at extreme lows. While there are plenty of risks to weigh, like why the penny stocks are trading as low as they are, the potential upside can be just as massive.
In this article, we look at a handful of some of the cheapest names in the stock market today. These companies have share prices below the $5 threshold – some below $1 – and are turning heads this week. Whether or not the risk is worth the potential reward is up to you. But, for this article, we’ll dive into recent catalysts, any updates from the week, and, of course, any potential catalysts to account for in the future.
Best Penny Stocks To Buy
It’s important to understand that just because they’re cheap, penny stocks that can be bought for under $1, for example, may not be for everyone. Knowing how to handle extreme volatility and having a keen understanding of how the stock market works are important. When it comes to cheap stocks, they can explode seemingly out of nowhere.
Take, for instance, one of the hottest sub-$1 stocks today, Crown Electrokinetics Corp. (NASDAQ: CRKN). The penny stock’s trend has clearly been bearish without many indicators that any upside momentum would be in play. Nevertheless, Crown announced that its fiber optics division added its third customer to expand the US presence of the company.
CRKN stock exploded over 100% within the first 15 minutes of the trading day. Will that last? It’s something yet to be seen, but it’s important to understand how aggressively some low-priced stocks can move. That goes for both directions. With this backdrop, let’s take a closer look at some of the top penny stocks under $5 to watch this week.
Olaplex Holdings (OLPX)
Like Crown, Olaplex shares have been extremely depressed since mid-February. A mixed reaction to recent earnings results combined with multiple analyst target cuts has contributed to the negative sentiment in the stock market this year. However, there are a few things that may be worth paying closer attention to. One of them is what was said in the February business update by CEO JuE Wong:
“As expected, the fourth quarter represented a challenging end to fiscal 2022, reflecting the rapidly changing market dynamic that began mid-year. Our priorities in 2023 are to reset our base and invest in our core to provide a more powerful platform for growth. We are focused on increasing investments in sales, marketing, and education while continuing to bring to market efficacious products that professionals and consumers love and trust.”
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The tech-based beauty company saw its share prices climb to start the week. There weren’t any immediate news catalysts to point to. But there are a few other things to account for right now. The uptick in trading action is one thing. The other is some unusual options activity in the stock’s $4 strike Calls expiring April 21st. More than 6,600 contracts were traded during the early morning session. This is compared to just 33 contracts of Open Interest. The OLPX stock $5 Calls expiring in April also saw a significant uptick in volume compared to Open Interest.
Faze Holdings (FAZE)
Beaten-down Esports brand Faze has seen its share price rebound over the last few weeks. Once it hit new 52-week lows of $0.3655, FAZE stock managed to claw back by 100%. Behind the move have been several new milestones announced by the company in March, including the promotion of a new VP of Brand & Creative Strategy and securing a win at the Intel Grand Slamm in Counter Strike.
The latter update came this week as FAZE stock climbed from Friday. The company explained, “Prior to yesterday’s tournament, only three teams had ever completed this major milestone in CS:GO history, making it one of the most coveted prizes in competitive esports. With their win, FaZe Clan’s CS:GO team was awarded a $1,000,000 prize for the Intel Grand Slam plus $200,000 in tournament cash prizes.”
With earnings coming up this week, it could be a volatile environment for the Esports penny stock. In its last earnings update, Faze reported lower earnings per share and a loss of $130.6 million for the third quarter. But were able to increase sales by 12% thanks to growth in brand sponsorships, content, and, of course, Esports. The big question is, can that growth continue, and will Q4 figures show that as the case?
Altimmune Inc. (ALT)
It isn’t unusual to see higher-priced stocks succumb to selling pressure that has recently taken them below the $5 threshold. In general, the stock market’s sell-off has made its impression on plenty of stocks over $5 that are now in the penny stock range. Altimmune is a former penny stock that experienced an explosive move in 2022, which took it from under $ to over $23. But just as positive news can act as a catalyst as it did for CRKN stock mentioned earlier, it can also bring bearish sentiment and, in turn, heavy selling.
Earlier in March, Altimmune announced results from phase studies of its pipeline treatments in obesity and diabetes. While results were initially shown as “positive,” adverse events from the weight loss trial were cause for concern. Nausea, vomiting, diarrhea, and constipation were among the adverse events identified in some patients who took the weight loss treatment pemvidutide during the 24-week trial.
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Fast-forward to this week, and ALT stock has continued a rebound that began at the end of last week. Furthermore, some analysts, including JMP Securities, remain steadfast in their outlook. The firm reiterated its Market Outperform rating last week and maintained its $26 target.
Silvergate Capital (SI)
Beaten-down crypto bank Silvergate Capital has suffered multiple blows from different areas of the market. The most recent has been the run on regional and smaller banks. Silvergate shares have slumped from as high as $239.26 in 2021 to as low as $1.10 this month. Nevertheless, a turnaround in bank stocks and cryptocurrency prices has aided in a more favorable sentiment (for now).
News that Silicon Valley Bank has come to a buyout agreement with First Citizens BancShares brought more optimism to the market, in general. Regional banks benefitted more directly. While this may be the short-term bullish sentiment some have sought, plenty of risks could still be involved.
One of the main factors is the bank saying that Silvergate Capital could be delisted from the New York Stock Exchange. It has further stated it has an orderly wind-down of bank operations, and voluntary liquidation of the bank was the “best path” for the group. If SI stock is on your list, this might be something to remember.
List Of Penny Stocks
- Olaplex Holdings (NASDAQ: OLPX)
- Faze Holdings (NASDAQ: FAZE)
- Altimmune Inc. (NASDAQ: ALT)
- Silvergate Capital (NYSE: SI)