You Usually Think Of Penny Stocks To Buy When They Are Going Up. But During Extreme Dips, Does That Make Certain Stocks More Attractive?
Over the years, plenty of investors have managed to make money buying penny stocks. These stocks usually trade below $5 a share by definition. In general, most would assume that these low priced stocks trade under $1. That would only make sense as that’s when you talk about “pennies”. Needless to say, the Securities And Exchange Commission has designated this definition of penny stocks to top out at $5.
In any case, these small-cap stocks and micro-cap stocks can present a big opportunity and potentially bigger risks. But just know that if you pick the right penny stock to buy, even a small change in price can create a hefty profit. However, if you make the wrong call, there’s obviously the possibility of losing money as well.
Make sure you have a plan going into your trades. But what happens when a penny stock completely tanks? Could it be the bottom of that bear trend? There are a number of things to consider when looking at bottomed out stocks, so keep this in mind. Closing out this week, as the market appears to be waking up, here are 2 penny stocks to watch that have seen big selling and hit new 52-week lows. Does that make them penny stocks to buy or should you wait?
Penny Stock To Watch #1: Dean Foods (DF)
Texas-based milk and dairy products company Dean Foods Co (DF Stock Report) has been in massive trouble for a while. We’re talking multiple quarters of getting beaten down. This penny stock was trading above $3 a share at the beginning of the year. But now, it’s less than $0.80. The consumption of milk taking a nosedive hasn’t helped. Its sales figures have been a disappointment for many quarters now and the company seems to be at a crossroads.
Dean Foods delivered its results for Q2 2019 recently and yet against weak sales proved to be the biggest problem for the company. Losses came in at $33 million and total sales dropped to $1.93 billion. This reflects a year-on-year drop of 5.5%. Dean Foods’ results failed to meet analysts’ expectations as well. The stock has dropped by as much as 50% since it released its results. Can DF stock rebound or will it continue to be a penny stock to avoid?
Penny Stock To Watch #2: Nio Inc. (NIO)
Chinese electric car manufacturer Nio Inc (NIO Stock Report) has been on a roll over the past few weeks after having started off the year in dismal fashion. Due to declining deliveries and buyers’ subsidies from the Chinese government discontinuing, deliveries had dropped considerably.
Naturally, NIO stock was pounded as well. In 2019 alone, the stock has declined by as much as 52%. The crazy part is that this was never a penny stock before. Shares of NIO traded as high as $10.63 earlier this year and now trade under $3.
While it is true that the discontinuation of the subsidies is a major blow for the company, it’s also important to note that policymakers believe the Chinese electric vehicle industry can now support itself on its own. If that is the case then it could mean a better long-term future for the company.
Additionally, Chinese regulators are now considering toughening the barriers to entry into the electric vehicle industry. That could also prove to be a potential blessing for NIO. The company has grown into one of the most important companies in the industry. It is also a favorite penny stock to watch on Robinhood. At last glance, the platform shows over 93,000 users have this penny stock on their list.