If you’re looking for penny stocks to invest in right now, you’ve got your work cut out for you. That’s because the initial strategy when approaching cheap stocks is to trade them in the short term instead of holding them forever.
There is a lot more risk involved when looking at these volatile stocks. Holding them means tying up money in companies that are usually in start-up phases. On the other hand, it can also mean buying into companies that have fallen on hard times.
But that doesn’t mean they aren’t worth taking a closer look for a potential long-term play. So for the purposes of this article, let’s define “investing in penny stocks” as holding for a period where short-term capital gains aren’t an issue and long-term capital gains become the focus.
In this case, we’re talking about a tax applied to assets held for more than a year. So assuming you want to “invest” in penny stocks, the idea is holding for a year or longer.
Are Penny Stocks Worth Investing In?
Is it worth it? Let’s take a look at some examples. A company like Carvana (NYSE: CVNA), for instance, could have been one of the best penny stocks to invest in based on the last year of performance.
CVNA stock didn’t become a penny stock until December 7, 2022. But even before then, shares were hovering between $5 and $10. The last 12 months-to-date saw the former penny stock rally from $6.68 on November 7, 2022, to as high as $57.19 earlier this year. The auto retail stock still sits significantly higher at roughly $34 per share, up 408% over the last year.
Then you’ve got other companies like Hims & Hers Health (NYSE: HIMS). This time last year, HIMS stock sat at lows of $4.20. It saw a high of more than $12 earlier this year and still sits more than 75% higher after reaching highs of $7.40 in the stock market today.
While these are unique situations, they’re not as uncommon as you might think. In fact, some of the other household name stocks you know and love have also been or still remain penny stocks today. Popular grilling brand Traeger Inc. (NYSE: COOK), Virgin Galactic (NYSE: SPCE), PLBY Group (NASDAQ: PLBY), and Mesa Air Group (NASDAQ: MESA) are just a few examples.
Penny Stocks To Watch
So what does that mean for investors in the stock market today? That means caution, precision, patience, and proper psychology are good assets to have when playing the long game. While you might be looking for penny stocks to invest in, this article will focus on a handful of some of the most active stocks under $5 today. Whether or not they’re “investment grade stocks” is up to you.
- Lumen Technologies (NYSE: LUMN)
- Outlook Therapeutics (NASDAQ: OTLK)
- BigBear AI Holdings (NYSE: BBAI)
- Aldeyra Therapeutics (NASDAQ: ALDX)
Lumen Technologies (LUMN)
Lumen Technologies is a telecommunications company that provides network services globally. This month the company announced winning a significant contract valued at approximately $110 million. The contract is with the U.S. Defense Information Systems Agency (DISA). Lumen will provide secure, mission-critical network services to the Department of Defense. The contract spans five years and includes the operation and maintenance of DISA’s fiber infrastructure.
It covers colocation facilities, dark fiber, and diverse end-to-end network infrastructure. New fiber builds and system upgrades will also be part of the contract. These upgrades will employ advanced technologies to enhance network resilience, reduce latency, and improve availability.
This news has come as a warm welcome for traders looking at LUMN stock over the last few weeks. Shares took a dive at the beginning of the month thanks to mixed Q3 earnings results. Since the breakdown, shares of LUMN stock have bounced back by more than 80%.
Outlook Therapeutics (OTLK)
Outlook Therapeutics, a biopharmaceutical company, strives for FDA approval for its ophthalmic formulation of bevacizumab to treat retinal diseases, particularly wet Age-Related Macular Degeneration (AMD).
The company updated on its Type A meetings with the FDA regarding the Complete Response Letter (CRL) for ONS-5010’s Biologics License Application (BLA). The FDA necessitated an additional clinical trial for approval, and a preliminary agreement on trial design was reached, targeting a BLA resubmission by end-2024, with potential approval around mid-2025, contingent on final agreement and successful trial completion.
“We are confident that we can meet the additional requirements that the FDA is requiring for approval of ONS-5010. The retina community of patients, physicians, and payers are all in need of an FDA-approved bevacizumab that meets ophthalmic standards for the treatment of wet AMD, and we remain focused on achieving this critical treatment option,” said Russell Trenary, President and CEO of Outlook Therapeutics.
This month HC Wainwright boosted its OTLK stock forecast price target on the company. The firm maintains a Buy rating and now has a target of $2, 365% higher than recent trading levels.
BigBear AI Holdings (BBAI)
BigBear.ai is a key player in AI-powered military and business intelligence solutions. They serve the global supply chain, autonomous systems, and cybersecurity markets1. Pangiam provides near-field vision AI technology, aiding in operations for airlines, airports, and US government agencies.
Earlier this week the company inked an agreement to acquire Pangiam for approximately $70 million in an all-stock transaction. The acquisition is aimed at creating a comprehensive Vision AI portfolio by integrating Pangiam’s facial recognition and biometrics with BigBear.ai’s computer vision capabilities. This merger is expected to be a foundational step in the rapidly growing AI application sector, particularly in Vision AI.
BigBear.ai currently works with over 20 US Defense and Intelligence customers, along with 160 commercial enterprises, and the acquisition of Pangiam is projected to significantly extend its customer base to include major airlines, airports, and identity verification companies.
Additionally, it is anticipated to boost BigBear.ai’s contracts with the Department of Homeland Security and U.S. Customs and Border Protection. Mandy Long, CEO of BigBear.ai, has expressed that the acquisition will lead to the creation of a full-vision AI portfolio, a first in the industry. Kevin McAleenan, CEO of Pangiam, noted that the merger will allow the companies to pursue larger opportunities, enhance technology development, and accelerate growth.
Aldeyra Therapeutics (ALDX)
We discussed Aldeyra Therapeutics earlier this month in the article 5 Most Active Penny Stocks Today & Why They’re Moving Now. The immuno-mediated treatment company inked a deal with a notable industry leader. In this case, Aldeyra signed a deal with AbbVie Inc.
The deal sees AbbVie gaining an option to buy a co-exclusive license to develop and commercialize reproxalap in the US. There is also an exclusive license to develop and commercialize reproxalap outside the US. What does Aldeyra get in return? The company receives a refundable option fee of $1 million as well as an upfront payment of $100 million minus fees. Aldeyra would be eligible to receive up to $300 million in milestone payments. Reproxalap is being developed as a potential treatment of dry eye disease.