Investing in penny stocks can be a high-risk, high-reward game. The lure of potentially making big profits in a short amount of time can be tempting. But it’s important to understand the risks involved. Penny stocks are typically low-priced, small-cap stocks that trade for under $5 per share, often issued by small, less-established companies with limited financial history. Due to their low price and market cap, cheap stocks tend to be more volatile and speculative than larger, well-established stocks.
The recent stock market crash has caused many well-known companies to face considerable selling pressure, leading to breaching or testing the $5 price level and entering penny stock territory. This has resulted in many new and experienced traders flocking to penny stocks, trying to capitalize on potential gains.
However, it’s important to note that education and research are crucial in making informed decisions when it comes to trading. While potential profits can be tempting, the high risks involved should not be ignored. So make sure you thoroughly research companies, look into their financials, understand their business models, analyze industry trends and understand how to plot stock charts before making any investments.
In this article, we will look at a few penny stocks currently trading for under $5 and have been seeing momentum in the market. We will explore what’s driving their momentum, potential future catalysts, and additional information to provide insight into what traders are looking at.
Penny Stocks To Watch
Nektar Therapeutics (NASDAQ: NKTR)
Shares of Nektar Therapeutics have been on the watch list for the last few weeks. As attention picks up around penny stocks under $1, NKTR stock has found its place on a few radars in 2023. The company specializes in oncology and immunology treatment development.
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The company reported Phase 2 topline data for its rezpegaldesleukin lupus treatment candidate earlier this year. It was the source of heavy bearish sentiment causing the stock to drop significantly. Since then, the market seems to be looking for further updates on more data. Though it did not meet the intended endpoints, management remains optimistic about its potential.
“We believe that these study results seen in the ISLAND study show that rezpegaldesleukin had a positive impact on disease activity in patients with moderately-to-severely active systemic lupus erythematosus,” said Brian L. Kotzin, M.D., Chief Medical Officer of Nektar.
“These data also further support rezpegaldesleukin’s ability to expand regulatory T cells and the potential for this T regulatory cell stimulator to be used as a novel approach in the field of autoimmune disease.”
With a refocus on its current pipeline to “reach value-enhancing milestones,” as management said in its February earnings update, the market seems to have taken notice.
Sirius XM Holdings Inc. (NASDAQ: SIRI)
Household stocks are actually becoming a popular search topic thanks to the stock market sell-off this year. Some of the most well-known brands have seen their stock prices implode in the wake of the inflation-fueled pullback over the last several months. Even billionaire Richard Branson’s Virgin Orbit (VORB) filed for bankruptcy after failed operations and a lack of capital.
While that is an extreme example, other household stocks are simply trying to reclaim losses. Sirius XM is one of these names, and the latest uptick in momentum seems to have caught the attention of retail traders. Some of the more recent catalysts include the appointment of a new CFO and the company’s reaffirmed 2023 guidance.
It’s also worth noting that some alternative data from our article Penny Stocks To Buy Now? 3 With Unusual Options Volume Today. In it, we highlighted the interesting activity in the SIRI stock options market. The June 16th $4 strike Calls saw the highest volume at the time. Though this isn’t the case at the beginning of the week, it is something traders have monitored.
Virios Therapeutics LLC (NASDAQ: VIRI)
Biotech penny stocks have been a hot topic lately. They’re well-known for their volatile and speculative trading trends. Virios Therapeutics is one recent example, as share prices have ticked higher over the last few weeks.
Virios has been on our radar since the beginning of the year after it released details on an FDA meeting to discuss its fibromyalgia treatment program. Coincidentally, this candidate, IMC-1, was the source of pain last year when the Phase 2b study didn’t show “statistically significant” results compared to placebo in treating fibromyalgia patients.
The company said it had an End-of-Phase 2 Meeting scheduled with the U.S. Food & Drug Administration in March to discuss the progression of IMC-1 into Phase 3 development. Furthermore, patient enrollment for its exploratory Long-COVID treatment study is complete. Now, top-line results from this exploratory trial are expected in mid-2023.
However, the sticking point lately seems to be the results from this March FDA meeting. No further updates have been released to date, but as with the sector, speculation may have begun playing a role as April goes into its second week.
Altamira Therapeutics (NASDAQ: CYTO)
Another one of the biotech penny stocks to watch is Altamira. On Monday, the company reported highlights from a peer-reviewed article that showed the efficacy of its oral betahistine (AM-125) treatment for posterior canal benign paroxysmal positional vertigo. The analysis showed “statistically significant” improvements in dizziness handicap for the treatment over the standard of care procedure alone.
In response, CEO Thomas Meyer, Ph.D., stated, “Following the positive outcomes in surgery-induced AVS in the TRAVERS trial, we feel vindicated in our choice of BPPV to advance the clinical development program for AM-125. Where marketed, BPPV has traditionally been one of the most frequent indications for oral betahistine. We look forward to submitting the IND application shortly, which will be an important milestone on our way to transfer the innovative AM-125 program to one or several partners as we are repositioning the Company around our RNA delivery technology.”
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The update comes a few weeks after Altamira released animal data from its SemaPhore delivery platform. It showed a meaningful impact on the restriction of tumor growth with an mRNA therapeutic delivered using SemaPhore.
On the heels of these milestones, CYTO stock has caught some attention over the last few weeks. Since hitting 52-week lows of $1.17 late last month, the penny stock has rebounded more than 100%.
