When it comes to investing, penny stocks often occupy a unique, if somewhat misunderstood, niche. Penny stocks are low-priced shares, typically trading for less than $5 per share as defined by the U.S. Securities and Exchange Commission. They usually represent small companies that often fly under the radar of mainstream investors. Yet, for those willing to navigate the inherent risks, penny stocks can offer a world of potential.
Penny Stocks, Risk & Reward
The allure of penny stocks lies in their potential for significant returns. A small price increase on a low-priced stock can equate to a substantial percentage gain. For instance, a mere $0.50 increase on a $1 stock represents a 50% return. This potential for rapid and substantial gains is a key factor that attracts many investors to the world of penny stocks.
However, it’s crucial to understand that investing in penny stocks is not without risks. These stocks are often subject to high volatility and can be less liquid than shares of larger companies. Additionally, they often come with limited information available, making it more challenging for investors to conduct thorough due diligence. As such, penny stocks are generally considered high-risk investments and may not be suitable for all investors, particularly those with a low-risk tolerance.
The Value of News, Company Filings, and Alternative Data
Staying informed is not just a strategy—it’s a necessity. News headlines, company filings, and alternative data such as insider transactions and unusual options activity can provide invaluable insights for investors.
News headlines can often trigger significant price movements in penny stocks. For instance, news of a new product launch, a strategic partnership, or regulatory approval can lead to a surge in a penny stock’s price. Conversely, negative news can cause a sharp decline.
Company filings, such as quarterly and annual reports, can offer a wealth of information about a company’s financial health and strategic direction. These documents can provide insights into a company’s revenue, earnings, debt levels, and future plans, helping investors make informed decisions.
– How to Develop a Penny Stocks Risk Management Strategy
Alternative data, such as insider transactions and unusual options activity, can also provide valuable clues about a penny stock’s potential. Insider transactions, for instance, can indicate how those with the most intimate knowledge of the company view its prospects. Unusual options activity, on the other hand, can signal how traders are positioning themselves in anticipation of future price movements.
Making Your List of Penny Stocks to Watch
Armed with these tools, investors can put together a list of penny stocks to watch. This list can serve as a starting point for further research and analysis, helping investors identify potential investment opportunities in the penny stock market.
In the following sections, we will delve into five specific penny stocks that have recently made waves in the market. We will discuss these stocks in detail, highlighting the recent events that have put them in the spotlight.
While investing in cheap stocks comes with its share of risks, it also offers the potential for significant returns. Remember, in the world of penny stocks, knowledge isn’t just power—it’s profit.
Penny Stocks To Watch
Lumen Technologies Inc. (LUMN)
Shares of Lumen Technologies have gotten a much-needed boost in bullish sentiment over the last few weeks. Following a dip to 52-week lows late last month, LUMN stock has recovered thanks to recent development in June.
Most notably, this week, Lumen announced the upcoming launch of its Operator Connect for Microsoft Teams Phone offering. This is part of Lumen and Microsoft’s current collaboration. The company expects this to help them do more for companies that are facing the challenge of modernizing their hybrid workforce.
“Lumen will use these insights to help customers take advantage of the transformative capabilities coming from innovations such as the metaverse and AI,” Lumen said in this week’s update. “Lumen also expects to see an acceleration of sales leads and closures, and increased product expansion, from the collaboration.”
Diversified Healthcare Trust (DHC)
We discussed Diversified Healthcare Trust earlier this year as more healthcare stocks come back in favor. It has seen its share price rise over the last few weeks. The company is a real estate investment trust (REIT) focusing 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. In this case, DHC stock carries one. The last dividend issued by Diversified earlier this year was $0.01 per share.
– 4 Reasons You’re Not Making Money With Penny Stocks
If you look at any DHC stock chart, you’ll notice a significant move since the beginning of May. This has been helped by stronger earnings results for the first quarter of 2023. It’s also supported by some insider trading action paired with heavy speculation on a pending merger. For instance, Director Adam D Portnoy purchased a total of 3,154,641 shares at an average price of $1.38 recently. The trade totaled more than $4.3 million.
Regarding the merger, this week, Flat Footed LLC, a top shareholder of DHC stock, called on the company’s board to address, among other things, a proposed merger with Office Properties Income Trust (NASDAQ: OPI). Flat Footed wants Diversified Healthcare to reject the merger.
Mangoceuticals Inc. (MGRX)
We took a closer look at Mangoceuticals earlier this quarter. Known as MangoRx, it made its IPO at the end of Q1 and only recently managed to experience an uptick in trading action. The men’s health and wellness company leverages telemedicine to deliver products to customers. Recent catalysts include new viral advertisements and inclusion on popular retail trading platforms like Webull.
The company has also begun online direct sales using DataDojo AI and its customer data platform. “We are very excited to be working with DataDojo, whose team and founders are proven experts in marketing technology and e-commerce with over $1 billion generated in direct-to-consumer online sales through the use of their Customer Data Platform,” commented Jacob Cohen, CEO and Co-Founder of MangoRx, “…we believe the use of DataDojo’s AI tools, and CDP can play a significant part in increasing our online sales while maximizing our marketing spend efficiencies.”
Like Diversified, Mangoceuticals has also experienced some insider action. CEO Jacob Cohen reported purchasing 275,000 shares of MGRX stock at an average price of $1. According to the footnotes of the filing, these were purchased via a private transaction.
Now the market is watching MGRX stock after a recent company Tweet. This week, shares moved higher after Mangoceuticals Tweeted, ” Big week ahead for #Mangoceuticals Inc. as we prepare for Press & some amazing updates as promised. We will continue to bring you our @mango_rx #media & commercials as we also prepare to increase our Corporate Communications & #SomeThingsAreBetterHard campaign in a big way!”
D-Wave Quantum Inc. (QBTS)
The quantum computing company, D-Wave Quantum, has been in and out of the spotlight as the conversation around artificial intelligence and machine remains red hot. The so-called “ChatGPT stocks” have gained plenty of attention thanks to the breakthrough tech revealed earlier this year. D-Wave launched its hybrid solver plug-in feature selection as part of its focus on aiding companies to leverage quantum technology to streamline machine learning application development.
Over the last few weeks, QBTS stock has been rising following a mix of upbeat sentiment stemming from earnings, favorable analyst ratings, and June headlines. This month, in particular, news that D-Wave is partnering with Interpublic Group (NYSE: IPG) stoked an already warm fire for the penny stock.
The two companies plan on collaborating on R&D of quantum-hybrid applications for addressing optimization in marketing campaigns. Dr. Alan Baratz, CEO of D-Wave. “We’re excited to work with IPG to bring the power of quantum to advertising optimization, more efficiently harnessing a massive amount of data to create hyper-targeted campaigns that drive desired outcomes for brands.”
List Of Penny Stocks
- Lumen Technologies Inc. (NYSE: LUMN)
- Diversified Healthcare Trust (NASDAQ: DHC)
- Mangoceuticals Inc. (NASDAQ: MGRX)
- D-Wave Quantum Inc. (NYSE: QBTS)
