These Penny Stocks Could Be A Hedge Against The Backdrop Of Coronavirus
When it comes to the stock market and volatility, there’s a lot to consider. One of the first questions that should come to mind is “Why is this happening?” Understanding the fundamental makeup behind a move in the market. If that move is up, why is the market going up? If that move is down, why is the market going down? Getting a good understanding of the “why” can really help you build a strategy to trade with the trend.
Right now, there are a few things at play. Some are short- to mid-term and some are a bit more long-term. So keeping time-frames in mind, you can also get an understanding of how to trade penny stocks or how to invest in penny stocks if you find short or long-term catalysts.
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So what about right now? In my opinion, we have the coronavirus, which could be more short term when compared to the other factor, the financial situation across the globe. That second factor could be a bit more long-term from a fundamental perspective.
Penny Stocks That Hedge Against Risk
With the government planning to implement a stimulus package that could be worth over $1 trillion, it may be a signal for financial stocks. We’ve also got economies across the globe already in a slowdown without the impact of coronavirus. Now that this COVID-19 is a factor, this slowdown could become even slower. The scenario doesn’t signal all doom and gloom, however. That’s because there are ways to hedge against this.
One of the ways investors protect against financial risk is by looking at safe-haven stocks. Some of the most popular, historically, have been gold stocks. Since the sector took a dip earlier this month, there are plenty of these leading gold companies that are now trading as penny stocks. Ahead of a potential uptrend for gold, here’s a list of a few top gold stocks to watch right now.
Penny Stocks To Watch: IMC International Mining
One of the few gold penny stocks that didn’t drop during the last pull-back was IMC International Mining (IMCX – Free Report) (IMIMF). In fact, the stock has held a consistent channel between $0.40 and $0.48. Just last week, shares of IMC International event tested its 52-week high for the second time this year. With trillions of dollars slated to be directed to taxpayers, the argument in favor of gold as a safety net continues to grow.
Now, if this is the case, then small-cap gold stocks could be the specific set of stocks to watch right now. The reason being is that during times of a gold boom, these cheaper, small-cap names tend to outperform their larger-cap counterparts. With IMC International, directly, the company is in the middle of a potential acquisition. This isn’t just a deal to bring on another asset. It’s a deal that could change the make-up of the company’s operation as it stands today. In this deal, which the company expects to close during the middle of this month, IMC would acquire Thane Minerals in a multi-million dollar deal. As previously announced in February, a Thane acquisition would also include its 100% owned Cathedral property as well as bring on a new board member, Greg Hawkins.
Aside from the location and increased potential for gold discovery on Cathedral, Hawkins brings over 50 years of mining experience with 4 of his last founding endeavors getting acquired themselves for upward of $1.8 billion. Will his talents help IMC International next?
Penny Stocks to Watch: Yamana Gold
Shares of Yamana Gold stock (AUY – Free Report)(YRI) have been in rebound-mode this week. After hitting lows of $2.23 on Monday, the gold penny stock has managed to bounce back as high as $3.65 on March 18. This move comes as the market turned its attention back to safe havens amid the latest stimulus packages presented to the public.
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More government expenditure could put a strain on longer-term prospects and as a hedge, gold stocks have started to shine. When it comes to Yamana gold stock specifically, it hadn’t traded below $2.25 since last June.
Call it a BTFD moment or call it consolidation, whatever you label Yamana gold stock right now, it has managed to turn around quickly. Much of the build-up over the last few weeks came as Yamana announced plans to focus on growth and streamlined operations. In February, the company announced the sale of certain royalty assets to Guerrero Ventures for $65 million.
“The Sale Transaction marks another step in the Company’s efforts to optimize its portfolio and improve its financial flexibility. The sales consideration is expected to advance the Company’s generative exploration program and for other purposes, including contributing to the Company’s dividend reserve fund,” Yamana stated.
Penny Stocks To Watch: IAMGOLD Corp
IAMGOLD Corp (IAG – Free Report) has been one of the more interesting gold penny stocks to watch recently. Not only has it managed to hit higher highs this week, IAMGOLD is a bit of an anomaly. Prior to this latest move in gold, there was some concern over the company’s operations.
In a recent earnings update, company President and COO Gordon Stothart said, “While IAMGOLD’s management explained how 2019 was a year of challenges, it also plans to commit itself to become a lower-cost producer. With our strong balance sheet and pipeline of growth projects complementing our core operating assets, we are optimistic about the future at IAMGOLD.”
Full-year production totaled 762,000 ounces at an all-in sustaining cost of $1,124 per ounce. This was in line with the guidance of $1,090-$1,130 per ounce. In 2020, IAMGOLD plans to produce 700,000-760,000 ounces at an all-in sustaining cost of $1,100-$1150 per ounce. Will 2020 be a turnaround year for IAMGOLD stock?
Disclaimer: Pursuant to an agreement between Midam Ventures LLC and IMC International Mining Corp. (CSE: IMCX) (IMIMF), Midam has been paid $200,000 for a period from January 7, 2020, to February 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to March 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to July 9, 2020. We may buy or sell additional shares of IMC International Mining Corp.(CSE: IMCX) (IMIMF) in the open market at any time, including before, during or after the Website and Information, to provide public dissemination of favorable Information about IMC International Mining Corp. (CSE: IMCX) (IMIMF). Full disclaimer here.
