Penny stocks are defined as stocks trading for under $5. They typically include start-up or emerging-growth stage companies starting from the grassroots. There are also companies that may have previously been market leaders but have fallen on hard times.
In the stock market today, there are hundreds of household name stocks that once dominated industry headlines but are now trading for pennies on the dollar. Partially due to company-specific shortfalls and partially due to the stock market sell-off.
If that’s something you’re looking for, then you have quite a wide moat to select from. Some of the most popular stocks over the last few years have found themselves trading below the $5 threshold. Remember when Lucid (NASDAQ: LCID) graced the stage of the EV world to revolutionize luxury in the sector? Shares reached highs of $64.86 as early investors felt the FOMO of the rapid surge in LCID stock. Fast-forward to 2023, and the EV stock is a shell of its former self, trading below $4.
What about one of the most famous, umm, “lifestyle brands” world-renowned for its bunny logo? Yes, PLBY Group (NASDAQ: PLBY). When the company made its presence known, share prices shot to highs of $63.04, but now PLBY stock is quite literally trading for pennies, sitting below $0.60.
Are Penny Stocks Worth It?
With some penny stocks trading at levels nearly 100% lower than their previous highs, it begs the question: Are penny stocks worth it? If you were to have bought LCID stock or PLBY stock at their highs, you’re down significantly on the position.
So why would trading them as penny stocks be worth your time? It obviously depends on your trading strategy. Unrelated to PLBY or LCID, however, penny stocks can be worth it if you understand how to manage risk and handle volatility.
In this article we’ll look at a few of the top penny stocks to watch. Decide if their recent catalysts are worthy of your attention and a potential spot on your watch list.
Bioxcel Therapeutics (NASDAQ: BTAI)
This week, BioXcel Therapeutics disclosed favorable findings from a third-party audit. This was concerning data integrity at a TRANQUILITY II Phase 3 Trial site. There was no further misconduct or fraud found beyond a previously reported instance.
The audit also supports the reliability of the trial data and a potential supplemental New Drug Application (sNDA) submission for BXCL501 for treating agitation in probable Alzheimer’s disease.
“We believe these results of an audit by a respected, independent firm validate the integrity of data from the single site in question and add to the body of clinical evidence we intend to include in our sNDA submission,” said Vimal Mehta, Ph.D., CEO of BioXcel Therapeutics.
The positive audit results, alongside the statistically significant trial data, may bolster investor confidence. That may be one of the reasons that BTAI stock has climbed. Shares moved from below $2.40 to over $3.40 during premarket trading on Wednesday.
LianBio (NASDAQ: LIAN)
Another one of the biotech penny stocks to watch on this list is LianBio. The company specializes in bringing treatments to Asian markets. This week, it announced inking a deal with Bristol Myers Squibb, who holds LianBio’s exclusive rights to develop and commercialize mavacamten. The deal sees LianBio getting a one-time payment of $350 million.
Yizhe Wang, Ph.D., Chief Executive Officer of LianBio. “The LianBio team executed a successful clinical development and regulatory strategy in our territories and has built robust launch infrastructure in anticipation of mavacamten’s potential approval in China next year. As the global owner, BMS is ideally positioned to continue to build on the value we created for mavacamten in China and to optimize patient access to this important new medicine across these territories.”
The company also reported on the presentation of data from a Phase 2a study of its infigratinib in gastric cancer. LianBio presented the data at the ESMO Congress, claiming it was “encouraging” and highlighted the potential of the treatment’s clinical benefit to patients.
Pagaya Technologies (NASDAQ: PGY)
Pagaya Technologies announced a collaboration with a top five bank in the US and a top four auto captive lender. This expansion is expected to substantially grow its network volume and approve more consumer loans and new and used auto loans.
Ultimately, that could potentially increase revenues without additional credit risk. The CEO, Gal Krubiner, emphasized this partnership as a significant step towards working with leading financial institutions in the US. That also aligns with Pagaya’s mission of creating a more inclusive financial ecosystem.
What could this mean for Pagaya? The new partnerships could be seen as a positive development that might attract more market attention. So far, it has led to a positive impact on PGY stock price in the stock market today. An upcoming earnings call on November 2nd might provide further insights into the company’s financial health. If PGY stock is on your watch list, keep that date in mind.