Penny stocks are an interesting asset class. On any given day, you will see at least a handful experiencing extreme levels and explosive moves. Today, one of the most active cheap stocks under $5 is WaveDancer, Inc. (NASDAQ: WAVD). The company’s trading history is limited, and it’s a relatively illiquid name. Yet Wednesday, it saw its highest trading volume all year. The thinly traded penny stock surged after a tiny headline emerged regarding one of its subsidiaries, Tellenger, Inc.

It was awarded a seven-year contract by a “large systems integrator” to continue supporting a major financial program for a large U.S. Government customer. The company expects total revenues between $12 and $15 million throughout the contract’s performance period.

Meanwhile, the overall stock market is down today.

Why The Stock Market is Down Today

The stock market is down today because of a shock credit rating downgrade for the United States’ long-term foreign-currency issuer default rating. It lowered its rating from AA+ to AAA. Now known as the “Fitch Downgrade,” investors digest what the agency said in justifying their decision.

The firm stated, “In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025…Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook.”

The S&P gave up most of its gains from the last few weeks, essentially resetting to levels from July 18th. This can be seen predominantly in the rotation out of some of the most popular tech and AI stocks. These were previously the forerunners to this year’s bull rally.

Even with this as the case, there are still plenty of cheap stocks to watch on Wednesday. WAVD stock isn’t the only one outperforming the broader indexes. This article looks at a handful of names making substantial moves higher while the stock market is down today.

Penny Stocks To Watch

Rite Aid Corp. (RAD)

Whether it’s sympathy sentiment from other pharmacy stocks or optimism stemming from a perceived opportunity with beaten-down household name stocks following the explosion of TUP stock is up for debate regarding Rite Aid.

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The company’s shares have been sold to some of the lowest levels in a year. But a recent update in action on Wednesday sparked a rally in RAD stock. What may most likely have something to do with earnings, industry headliner CVS Health (NYSE: CVS) reported better than expected earnings and devices its GAAP EPS guidance higher for the year.

This has brought some added optimism for related sector names. RAD stock is one of the lowest-priced, notable names to watch for some. Shares surged to highs of over $2.70 during the morning session. Due to the heavier selling pressure, RAD is also on the list of short-squeeze stocks to watch. According to TD Ameritrade, the RAD stock short float percentage sits around 22.79%.

EQRx Inc. (EQRX)

Shares of EQRx have been in the spotlight over the last few days, thanks to acquisition news. The company, which is developing a platform to tacked some of the most prevalent disease areas, including candidates for breast cancer, announced M&A developments in the works.

The company and Revolution Medicines, Inc. (NASDAQ: RVMD) announced a definitive agreement. The all-stock transaction is expected to add more than $1 billion in net cash to Revolution Medicines’ balance sheet.

“Today’s announcement is a result of a rigorous process run by an independent committee of directors of the EQRx board that thoroughly explored and considered strategic alternatives to maximize value to EQRx stockholders,” said Melanie Nallicheri, president and chief executive officer of EQRx. “With its pioneering portfolio of RAS(ON) inhibitors, designed to defeat RAS-addicted cancers which represent 30% of all human cancers, Revolution Medicines has the opportunity to address one of the largest areas of unmet need in oncology. Deploying our significant capital not only enhances this important vision, it also provides a compelling opportunity for our stockholders to participate in the upside potential of both near-term and long-term value catalysts.”

The deal is expected to close in November.

Ardelyx Inc. (ARDX)

hedge fund penny stocks to buy Ardelyx Inc. ARDX stock

A recent bout of selling pressure took shares of Ardelyx back into the penny stock range over the last few months. The company reported an FDA committee backed its kidney disease drug candidate and recommended its approval. The FDA also granted Ardelyx an appeal for its treatment candidate, Xphozah, and a Complete Response letter for a New Drug Application.

The FDA accepted its resubmission of a New Drug Application for XPHOZAH, which helped lift ARDX stock. A recent presentation at the Jefferies Healthcare Conference this week and a current push to raise the company’s common share count have breathed some new life back into the market.

3 Top Penny Stocks To Watch This Week With Big News

In July, Ardelyx reported that its Tenapanor new drug application to treat hyperphosphatemia was accepted for review in China. “The NDA acceptance for tenapanor for hyperphosphatemia in China marks a significant step forward in Ardelyx’s commitment to bringing our novel therapies to patients with unmet medical needs and our desire to expand internationally alongside best-in-class partners who complement our capabilities and share our mission,” said CEO Mike Raab.

This week the company reported its latest financial results and provided net sales revenue guidance for its IBSRELA product. The company beat earnings and sales estimates for the quarter and expects full-year 2023 net product revenue for IBSRELA to be between $72.0 and $77.0 million.

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