Trading penny stocks, a place infamous for its high stakes within the financial market. It’s a world that can be incredibly unpredictable. Yet, armed with the right knowledge, steady nerves, and a well-planned strategy, these low-priced stocks can unlock potential investment opportunities. In this article, we’ll break down more low-priced stocks to watch and continue the list from Penny Stocks to Buy? 3 Stocks To Watch Under $5.
Understanding Penny Stocks
In its simplest form, penny stocks are the shares of small-cap companies, usually trading for less than $5 per share. Traded primarily on over-the-counter (OTC) markets and occasionally on major exchanges, these stocks captivate with their low entry price, making them seem like a bargain with huge potential. Yet, it’s essential to remember that the terrain can be rugged with high risk and volatility.
Unearthing Potential Penny Stocks To Buy
Spotting the “best penny stocks” to buy isn’t about trusting your gut; it’s about dedicated research. Grasp the company’s business model, financial health, and standing within the industry. Use financial news, watchlists, forums, and stock screeners as your compass to stay updated on promising penny stocks.
When scouting for the “penny stocks to trade,” focus on crucial factors like surging trading volumes, noteworthy news or catalysts (new contracts, products, or earnings reports), and robust technical indicators. Remember, not all penny stocks are glittering gold. Your mission is to pan out the valuable nuggets from the riverbed full of rocks.
Strategizing is key when compiling your list of potential “penny stocks to buy.” Diversify your portfolio with stocks from varied sectors to shield against sector-specific risks. Keep your watchlist dynamic, adding new promising stocks and removing those that no longer match your criteria.
Trading Penny Stocks: Protecting Your Capital
If there’s a golden rule to trading penny stocks, it’s this: safeguard your capital. This rule gains importance with low-priced stocks, given their inherent volatility. Employ limit orders to manage the price you’re willing to pay or accept, and always ensure you have a stop-loss order in place.
Familiarize yourself with the stock’s trading pattern, and remember—rushing won’t do you any good. Patience, in the penny stock market, is indeed a virtue and impulsive trades could lead to pitfalls. Avoid getting swept up in the hype. It’s best to arrive at your decisions through thorough research, analysis, and your trading strategy.
Balancing Risk & Reward in Penny Stocks
Risk management with penny stocks is not a choice; it’s a necessity. Given their volatile nature, low-priced stocks can make dramatic moves. Implementing a stop-loss order can help cap potential losses, and a take-profit order can ensure you capture profits when the stock hits your target price.
Don’t put all your eggs in one basket—never risk more than a small percentage of your total portfolio on a single trade. This way, your overall portfolio won’t take a hard hit even if a trade doesn’t pan out as expected.
The key to potential success in penny stocks isn’t about striking it rich on a single trade but about consistency and disciplined trading strategies. Regular research, risk management, and emotional control are your three trusty companions in this journey. Learning from your trades—the ones that hit the jackpot and, more importantly, the ones that didn’t—is also crucial.
Despite their high-risk nature, penny stocks could potentially offer opportunities for those ready to put in the effort and manage risks wisely. Remain patient, stay disciplined, and keep learning. Now, let’s dive into this list of penny stocks to watch.
Penny Stocks To Watch
SoundHound AI Inc. (SOUN)
Shares of SoundHound AI have remained on the list of penny stocks to watch for months. Since the launch of the Artificial Intelligence technology wave, companies within the space have gained attention. SoundHound, in particular, offers conversational intelligence with voice AI options for businesses to give “conversational experiences” to customers.
Analysts have been circling with Cantor Fitzgerald recently, boosting its price target from $2.80 to $6.20. The firm also has an Overweight rating. The momentum in the stock market that has built behind SOUN stock has turned heads as shares climb back toward 2023 highs.
Meanwhile, this month, it has been more than just AI hype driving the excitement. The company announced that it is joining the Russell 2000 and Russell 3000 indexes. Commenting on the milestone, CEO Keyvan Mohajer said, “SoundHound’s inclusion in the Russell represents another significant milestone in our journey as a public company, significantly broadening our visibility and awareness among the investment community. It’s also indicative of our strength and deep expertise in voice AI, a technology that is rapidly changing the way we live and work.”
SOUN stock has now come within striking distance of fresh 2023 highs. This level is set at $4.97, which was a level reached in early February.
Lumen Technologies Inc. (LUMN)
Lumen Technologies is another one of the penny stocks that have recently gotten a much-needed boost in bullish sentiment. Following a dip to 52-week lows earlier this month, LUMN stock has recovered thanks to recent development.
Most notably, the company 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 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.”
The company also partnered with Microsoft and Google to create the ExaSwitch platform. It’s being developed to offer customers a way to quickly route traffic between networks without a third party needed. “Large network backbones no longer need a physical location to connect. Instead, optical switching will be used to establish high-capacity optical links between metro sites. And it’s so much more than just internet peering; it’s an on-demand network connection for quickly deploying needed capacity across all types of data traffic exchanges,” said Andrew Dugan, Chief Technology Officer.
Rigetti Computing Inc. (RGTI)
Shares of Rigetti Computing stock continued bouncing higher in the stock market today. The penny stock began surging shortly after reporting its latest round of earnings in May. While it missed both EPS and sales estimates, commentary from management appears to have been a sticking point for bullish traders.
“I’m pleased to report that we believe we are on track and progressing toward the nearer-term strategic priorities and technology roadmap we announced in February 2023. Following the implementation of our updated business strategy we announced in February 2023, which is designed to improve our focus, operating efficiency, and preserve cash resources, we are starting to see positive impacts,” said Dr. Subodh Kulkarni, Rigetti’s Chief Executive Officer.
The quantum computing company has gained interest as the sector grows in popularity. Rigetti is expecting to launch its Ankaa-1 quantum processor to customers in mid-2023. This month, it was awarded a US Patent titled “Parametrically activated quantum logic gates,” helping to add to the positive sentiment in the stock market.