Anyone looking for the best penny stocks to buy usually wants to leverage the mix of speculation and price action to their advantage. Any given day can see at least a few worthy stocks under $5 explode significantly higher.

Imagine taking an asset class like tech stocks and added not just a sprinkle but a bowl full of volatility, then strapping a rocket ship to it. We’re talking about the extreme margins of the term “growth stocks,” which typically include some of the most popular technology companies driving investor interest. Right now, those top tech stocks have been given a special name: Magnificent 7 Stocks.

What Are the Magnificent 7 Stocks?

If you’re wondering what the Magnificent 7 stocks are or want to know the origin, we can help. The idea can be tracked to a research note issued by Bank of America analyst Michael Hartnett in May. They essentially dethrone the popular FAANG stock moniker and establish a new breed of juggernaut tech stocks.

The Magnificent 7 stocks include:

  1. Meta Platforms (NASDAQ: META)
  2. Apple (NASDAQ: AAPL)
  3. Amazon (NASDAQ: AMZN)
  4. Alphabet (NASDAQ: GOOGL)
  5. Microsoft (NASDAQ: MSFT)
  6. Nvidia (NASDAQ: NVDA)
  7. Tesla (NASDAQ: TSLA)

This group of 7 tech stocks is cited for helping boost the stock market during the beginning of 2023. It was a period that would have otherwise been put to task thanks to myriad headwinds at the time. These headwinds were fueled by inflation and economic concerns. However, the boom in AI tech helped spark fresh momentum into the market with the Magnificent Seven stocks leading the charge.

Obviously, the rally has stalled in recent weeks leading up to the Jackson Hole meeting, Fed Chair Jerome Powell’s speech and the September Fed Meeting. There are also eye-opening Treasury yields and continued worries over geopolitical and economic events that could stoke fears during the second half of the year. Regardless, the Magnificent 7 stocks or as some call them “The Fantastic 7 stocks,” have brought a lot of attention to higher-risk names. Penny stocks, in particular, may have become an inadvertent benefactor of this attention.

Penny Stocks To Watch

Whether or not we get “the next Magnificent 7 stocks” that arise from the world of stocks under $5 is to be seen. However, in this article, we look at a handful of popular stocks to watch that are in the popular tech sector and turning heads this week.

Rekor Systems Inc. (REKR)

tech penny stocks

Shares of Rekor Systems surged to new 52-week highs on Tuesday. This move follows the increased momentum seen in most tech stocks in recent weeks. Thanks to the rise of NVDA stock and its upcoming earnings report, speculation has begun flooding the market and impacting tech stocks. One group, in particular, has been AI stocks, and Rekor is right in the middle of this trend.

The company focuses on AI tech to provide insight to build safer and more efficient cities, using intelligent infrastructure. Rekor most recently announced it Q2 earnings with mixed results but an overall bullish sentiment. The company posted a sales beat but missed EPS expectations by a tight margin.

Penny Stocks To Buy This Week? 4 To Watch Under $5

“Rekor is leading the charge to be the premier provider of Roadway Intelligence and data-driven mobility insights on a global scale. Our cutting-edge, AI-driven solutions are revolutionizing public safety, urban mobility, and transportation product lines and enabling us to achieve consistent and predictable revenue-a rarity for any development-stage technology company,” said Robert A. Berman, Chair and CEO, Rekor.

Following the results, analysts began weighing in on the company. B. Riley, for instance, kept its Buy rating but boosted its price target after “strong” Q2 results. The firm increased its $3.75 target to $4.

2U Inc. (TWOU)

Education technology or “EdTech” company 2U Inc. saw a strong rebound this week. The latest move comes just a few days after putting in fresh 52-week lows of $2.83. 2U reported less-then-stellar quarterly results and missed both EPS and sales expectations.

2U specializes in developing online learning platforms. It’s behind edX and helps connect more than 78 million people with learning opportunities. “We are seeing tangible benefits from our platform strategy and refreshed marketing framework which we implemented a year ago,” added Paul Lalljie, 2U’s Chief Financial Officer. “Our results for the second quarter reflect a shift in timing of planned second quarter revenue to later in the year. Based on the strength of our platform strategy and robust pipeline, we are affirming our revenue guidance while increasing our adjusted EBITDA outlook.”

Besides the news, there are very recent catalysts that may be in focus. These involve big names buying shares of TWOU stock, including Cathie Wood. Her Ark Autonomous Tech and Robotics, as well as Ark Innovation funds, purchased more than 1 million shares, making it one of the penny stocks to watch this month, according to some. In addition, Chief Product Officer Aaron McCullough snagged 45,700 at an average price of $3.14 on August 17th.

The RealReal Inc. (REAL)

The Real Real stock REAL stock price

What if you could buy things like Louis Vuitton, Coach, Chanel, Gucci, and other high fashion brands on consignment? This is what The RealReal is. The company is an online (and in some places, physical) marketplace for authenticated luxury goods.

Shares have been moving higher for the last few months and it began when the company reported its first-quarter results. It beat estimates for earnings per share but missed sales expectations by a slight margin. “Our strategic shift to re-focus on the higher margin portion of the consignment business is showing results. In the second quarter of 2023, GMV and revenue exceeded the mid-point of our guidance, and Adjusted EBITDA exceeded the high-end of our guidance range for the quarter,” said John Koryl, Chief Executive Officer of The RealReal.

Penny Stocks To Buy? 4 To Watch With Big News This Month

In reviewing second-quarter results, The RealReal beat EPS estimates once again and missed sales expectations by a wider margin. Revenue Guidance came in between $540 million to $560 million, with the higher end of the range above expectations of $555.26 million. Now, notable funds (not insiders) may be starting to find opportunities.

Scion Asset Management, run by notable “Big Short” investor Michael Burry, appears bullish. In the latest round of 13F’s from institutional investors like Scion, Burry reported a stake of 1.5 million shares.

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