What Are Penny Stocks?
Penny stocks are shares of companies trading below $5 and are typically attached to smaller companies. While that is the basic definition, there are plenty of exceptions to note. First, these aren’t always small companies with share prices below $5. Some of the most active penny stocks today are shares of well-established companies with large market caps.
For instance, Banco Santander (NYSE: SAN) is technically a penny stock currently trading below $4. Is it a small company? If you look at the business and the market cap, the short answer is not at all. In fact, Banco Santander has a multi-billion dollar market cap of over $61 billion.
That’s larger than many higher-priced stocks trading on major exchanges. You’ve also got other companies like Nokia (NYSE: NOK), which I’m sure doesn’t need a formal introduction. The telecom company has a market cap of over $24 billion but trades below $5 as of this week.
Are Penny Stocks Worth It?
The answer to this question depends significantly on the individual. Penny stocks aren’t typically known for their safety and long-term investment opportunities. Depending on the market environment, they’re commonly associated with short-term breakouts and massive percentage gains.
Penny stocks are usually highly speculative compared to other, higher-priced stocks. Yet, this isn’t to say that a long-term investment isn’t possible or that these types of companies can’t become market leaders; history has already demonstrated that.
Generally speaking, however, the “worth” of penny stocks lies within your approach to trading. Some penny stocks are more suitable for scalp traders or day traders. Meanwhile, there are plenty that aren’t as volatile and become appealing to swing traders and even long-term investors. You need to determine the type of trader you are and put your list of penny stocks together based on that criteria.
In this article, we look at a handful of some of the most active penny stocks today. We dive into what catalysts could be in play and see if any future milestones or pending events could factor in later this year. Then you can decide if they deserve a place on your penny stocks to watch list.
Penny Stocks To Watch
- Gevo Inc. (NASDAQ: GEVO)
- Tingo Group Inc. (NASDAQ: TIO)
- Sirius XM Holdings (NASDAQ: SIRI)
Gevo Inc. (GEVO)
Shares of Gevo Inc. continue bouncing back from their second-quarter lows. A mix of favorable industry news and company progress has contributed to this move. Gevo specializes in renewable energy and carbon-to-liquid-hydrocarbon conversion processes. These are used as transportation fuels for gasoline, jet fuel, and diesel drop-ins. When they’re burned, they yield net-zero greenhouse gas emissions, according to the company.
In addition to the surge of interest in renewable energy stocks, Gevo also reported when it will report its next round of earnings results. If GEVO stock is on your radar, keep August 10th in mind as this is when second-quarter results come out after the market closes. The market may be hoping for signs of progress following the first quarter’s performance results.
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Its Q1 showed an earnings miss but a sales beat by a wide margin. The market expected $2.81 million in sales, but the company reported over $4 million. CEO Dr. Patrick R. Gruber explained, “As a project developer, we want to be positioned to bring multiple projects forward for investment as they mature and when the overall financial markets settle down and become less volatile…We have a strong balance sheet and intend to use it for projects and enabling deals that can bring in revenue sooner rather than later. The banking crisis combined with the uncertainty around federal regulatory treatment of renewables within the Inflation Reduction Act means that we must act prudently with respect to expenditures and development of our NZ1 project and other projects.”
Tingo Group Inc. (TIO)
The company focuses on financial technology and niches within this market, including agri-fintech. Its Tingo Mobile operates in Africa with a portfolio of products like a device-as-a-service smartphone. It began expanding internationally with farmers.
Other platforms under the Tingo umbrella include a payment super app in partnership with Visa offering B2B and B2c services. Tingo Foods is a food processing business for things like rice, pasta, and noodles. It also has Tingo DMCC, a commodity trading platform and export business for agricultural commodities. With a diverse offering, there are plenty of things that traders are following for new developments.
Shares of Tingo Group have also quietly mounted a strong rally in early 2023. Market action picked up in a significant way and saw TIO stock reach fresh 52-week highs of $5.69. But a short report put a dramatic pause and resulting a sell-off to that move.
Since then, the company has worked to bring some clarity to the supposed issues. Last month, Tingo engaged an independent counsel to review the allegations against the company by the short-seller behind the report. Now, speculation has started to play its role in anticipating feedback from this review process. TIO stock remains significantly lower than its May highs, however, it has slowly rebounded from the $0.94 June lows.
Sirius XM Holdings (SIRI)
We’ve highlighted SIRI stock among a list of penny stocks experiencing a recent uptick in price over the last several weeks. Shares experienced a steep downturn at the beginning of this year. It was primarily due to an economic slump and unimpressive earnings, which sent some investors scurrying for safer grounds.
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The case for SIRI stock is a bit muddled since there hasn’t been any significant improvement in earnings. But the overall sentiment in the stock market appears to have lightened, at least for now. In an interview with CNBC in April, CEO Jennifer Witz said that the quarter itself was expected and the rest of the year is expecting growth.
“Really what we’re trying to do is set the company up for future growth…The economic model is robust as ever.”
Attention has primarily been focused on the short interest in SIRI stock. The most recent data from Fintel reveals a short float of about 33.69% on the penny stock. However, TD Ameritrade data paints a slightly different picture, indicating a marginally higher figure at approximately 34.62%. Meanwhile, speculation may have begun building as the market anticipates the next round of financial results in August. Ahead of this, analysts at firms including Benchmark reiterated their stance. The firm has a Buy rating and a $6 price target.
