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Can These Penny Stocks Recover After Latest Drop?

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Penny stock investing can be one of the most rewarding experiences for an investor. That’s you pick the right penny stocks to buy. However, it is not easy to pick the right stocks all the time. It’s particularly difficult if the investor has not done the necessary research.

All investors who hope to make money with penny stocks need to watch the market carefully and notice the latest moves among those stocks. Here is a look at two penny stocks which have pulled back from previous highs. Can they recover or will the slide continue?

Will Rite Aid Corporation (RAD) Become A Penny Stock Again?

Former pharmacy penny stock, Rite Aid Corporation (RAD Stock Report) has had a topsy turvy week. The company is involved in the drugstore chain and the products on offer are primarily for health and wellness. On Thursday, the company announced its earnings for the second quarter and managed to beat analysts’ estimates.

The development naturally resulted in a lot of positivity in the markets. RAD stock jumped by as much as 23%. However, by the end, the stock cooled off sharply and ended higher by just 1.82% at $7.83 in Thursday’s trading session.

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Although the company managed to beat the analysts’ estimates for earnings, it fell short of the estimates for revenues. Revenues came in at $5.37 billion as opposed to analysts’ estimates of $5.41 billion. More importantly, the revenues actually fell by 1% year on year.

However, the fact that earnings per share came in at $0.12 against estimates of $0.02, has stoked optimism. Needless to say, RAD stock continued to slide on Friday. Will it once again become a penny stock or can it recover?

Penny Stocks To Watch: Eros International (EROS) Drops From Highs

On the other hand, a penny stock that has made a sudden downward move was Eros International Plc (EROS Stock Report). After the company had announced last week that it was going to build Microsoft’s video content delivery platform, the stock had enjoyed a lot of positivity.

However, EROS stock experienced a sharp downturn on Thursday. This came after it announced a capital raise. Eros had reached an agreement with an institutional investor to initiate a direct offering.

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As soon as the news broke, EROS stock experienced a nosedive and at one point had declined by as much as 30%. This is something I’ve talked about a lot with penny stocks. It’s not unusual to see these stocks rally in an almost perfect uptrend for days.

Then “out of nowhere” the stock drops because the company announces that it’s raising capital. So it’s important that if you’re looking for penny stocks to buy, you’re taking profit along the way.

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By J. Phillip

I stay on the cutting edge of industry and enjoy finding out about new companies that major outlets and funds haven't heard of (yet). Most of the time you can find me deep in the corporate filings, focusing on fundamentals that could be behind the next big move in certain stock.

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