The Appeal of Penny Stocks: Are Inexpensive Shares Under $1 a Good Bet?
Penny stocks priced at less than one dollar seem very appealing. Just a small investment could potentially lead to huge returns. It’s understandable why speculative traders love gambling on these ultra-low-priced shares. But is it realistic to expect consistent profits from penny stocks under a dollar?
The attraction is clear. While the SEC defines any stock under $5 as a “penny stock,” it’s the sub-dollar ones that really capture attention. Even small price movements can translate into triple-digit percentage gains. Of course, losses can mount just as fast.
Finding Overlooked Penny Stocks
Are cheap penny stocks really undiscovered gems waiting to be found? For experienced traders with high-risk appetite, bargain basement stocks may provide a chance at big rewards. But for novice investors hoping to strike it rich quickly, penny stocks often lead to letdown rather than instant profits.
The key is analyzing fundamentals, not hype. By examining financials, leadership, market conditions, and potential catalysts, you can better judge if a penny stock is a wise bet. Gut feelings and wishful thinking won’t cut it in this world. You need realistic expectations if you want to identify real opportunities.
However, that doesn’t mean hype can’t help the cause. Look at a company like Connexa Sports Technologies (NASDAQ: CNXA). There weren’t any headlines that came out recently but a low price and some speculation helped propel CNXA stock more than 200% from its previous close on Monday.
– What Do Successful Penny Stocks Traders Do?
Sometimes the odds seem stacked against profiting greatly on penny stocks under a dollar. For most individual investors, the excessive risk and stress often aren’t worth it. But with thorough research and reasonable goals, it is possible to uncover overlooked gems other traders have ignored. Just don’t bet everything on it. Approach penny stocks with eyes wide open. Consider consulting a financial advisor if you have doubts.
Penny Stocks Under $1 To Watch
- Aurora Cannabis (NASDAQ: ACB)
- Avalo Therapeutics Inc. (NASDAQ: AVTX)
- Canoo Inc. (NASDAQ: GOEV)
Aurora Cannabis (ACB)
Aurora is another one of the marijuana penny stocks to watch. It has been making its own news in recent weeks. Some of the latest were regarding its sale of the Aurora Sun Facility being completed via Bevo Farms’ acquisition. Bevo is one of North America’s largest suppliers of propagated vegetables and ornamental plants.
In an update, Aurora’s CEO, Miguel Martin, also mentioned, “Bevo has successfully repurposed the Aurora Sky facility in Edmonton, and we’re excited to further support their continued growth. Bevo’s acquisition of the Aurora Sun facility further demonstrates the close synergies between our companies and the value that our partnership creates for shareholders.”
The company also reported Q1 fiscal 2024 results. Aurora beat sales estimates by a wide margin, $55.91M versus $46.80M. Aurora also pointed out that there was meaningful Adjusted EBITDA growth realized. Miguel Martin noted the strong performance and explained, “We are pleased to have generated strong net revenue and record adjusted EBITDA during Q1, which positions us well for what we believe will be a successful fiscal year 2024.”
This week Aurora issued an update on the approval of transferring to the Nasdaq Global Select Market to the Nasdaq Capital Market. This became effective today (Sept. 19).
Avalo Therapeutics Inc. (AVTX)
Avalo Therapeutics has been focused on rebuilding itself in the market. Shares of the biotech penny stock tested fresh 52-week lows earlier this month below 10 cents per share. Since then, AVTX stock has recovered by more than 30%, partly thanks to headlines related to several of its treatment candidates.
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In a deal with AUG Therapeutics, Avalo is selling its rights, title, and interest in assets related to AVTX-801, AVTX-802, and AVTX-803 for $150,000. The terms also include the potential for a milestone payment of up to $15 million apiece, totaling up to $45 million if the first FDA approval is for an indication other than a Rare Pediatric Disease.
“In AUG’s hands, these programs could advance to provide reliable treatments for patients in need. This divestiture also reaffirms Avalo’s unwavering commitment to executing our strategic focus on our immunology assets, which we believe hold the greatest value and potential for our shareholders,” stated Dr. Garry A. Neil, MD, Chief Executive Officer, and Chairman of the Board at Avalo Therapeutics.
Canoo Inc. (GOEV)
Canoo is developing mobility technology solutions specific to the EV arena. Its platform includes purpose-built vehicles and accessories, including things like advanced battery packs.
The company recently announced earnings and its finalized incentive package with the Oklahoma Cherokee Nation. The combined value of this incentive plan is up to $113 million over 10 years. Since the news broke, shares of GOEV stock have steadily climbed back from their recent August lows. This week the penny stock sits right around $0.50.
In its most recent quarterly update, company CEO Tony Aquila said, “We are pleased to close the chapter involving the legacy SEC matter. Today we introduced the LDV 190, which has been in development for some time, including in customer trials. Our facilities are nearing substantial completion as we’ve achieved a 20,000 unit run rate for our battery module line in Pryor and robotics and assembly line in Oklahoma City for our MPP1 platform. And we closed another Fortune 100 customer agreement to purchase vehicles for its national fleet. We entered the revenue and income generation phase with the advancement of our contract with the Department of Defense, and we delivered vehicles to NASA.”
Based upon our current projections, Canoo expects Adjusted EBITDA of $(120) million to $(140) million and Capital Expenditures of $70 million to $100 million for the second half of 2023.
Like ACB, GOEV stock has transferred to the Nasddaq Capital Market this month.
