One of the important things to realize about penny stocks today is that certain traders can/can’t access certain companies. Thanks to the rise in popularity of platforms like Reddit, social media has helped connect traders from across the globe. What’s more, it has made trading easier than ever thanks to mobile-first platforms like Robinhood and Webull. But with this growth in popularity has come some interesting findings. One of these has to do with the types of stocks that the masses are trading right now. Let me explain.
In the past, when someone would’ve mentioned the phrase “penny stocks” or “small-cap stocks,” the OTC exchange was likely the first thing that came to mind. The OTC or “Over-The-Counter” exchange has been home to myriad penny stocks of all phases of development. One of the issues for some traders – and funds for that matter – is the reporting requirements are lax compared to the Nasdaq and NYSE. For this reason, many traders (and funds) avoided trading penny stocks entirely, opting instead for slightly higher stocks with companies that report no transparent details.
But with the rise of the retail trader, cheaper stocks have become even more popular. Rest assured, OTC penny stocks aren’t the only ones available. In fact, Robinhood and Webull offer access to stocks under $5 that are on the NYSE and Nasdaq, and it’s this group of stocks that’ve grown in popularity. Whether we’re talking about AMC Entertainment (NYSE:AMC), GameStop (NYSE:GME), Support.com (NASDAQ:SPRT), Vinco Ventures (NASDAQ:BBIG), or today’s Sphere 3D (NASDAQ:ANY) breakout, the trend is clear. Traders are “ok” taking risks to buy penny stocks in exchange for big gain potential.Robinhood Penny Stocks To Buy [or avoid]
Keep in mind that just because stocks are trading below $4 right now, it doesn’t mean they are worth the risk. Needless to say, here’s a quick list of penny stocks under $4 right now. Are they a buy or avoid right now?
- Huize Holding Ltd (NASDAQ:HUIZ)
- Aptose Biosciences Inc. (NASDAQ:APTO)
- Transocean Limited (NYSE:RIG)
- Evogene Ltd (NASDAQ:EVGN)
Digital services companies are gaining plenty of attention right now, thanks to the lasting effects of the pandemic. The “stay-at-home economy” and virtual ecosystem have opened opportunities for companies to capitalize on these trends. Huize specializes in offering digital insurance products and services to its clients in China.
This week the company partnered with Hengqin Life Insurance Company to launch what it’s calling “Hui Xin An No.5,” which is an illness insurance product for children. This platform provides coverage for 20 childhood diseases and 10 rare diseases offering options for multiple claims protection for certain illnesses. The news comes just a few days after Huize announced that it would acquire a controlling stake in Hubei Shengs Life & General, a regional insurance agency in China.
“Huize intends to utilize its digital capabilities to empower Shengs Life & General, accelerating the establishment of our open insurance product and service platform covering sales management, product offerings, and back-end support, with the aim to significantly enhance the efficiency of traditional insurance operations. We look forward to the business expansion and realizing revenue growth synergies from this mutually beneficial integration.”Cunjun Ma, Chairman and Chief Executive Officer of Huize
With an overall uptick in insurance stocks recently, HUIZ seems to have mimicked a similar trend so far. You’ll also notice that daily trading volume is also picking up in HUIZ stock as shares attempt to recover from 52-week lows reached late last month.2. Aptose Biosciences Inc. (NASDAQ:APTO)
Biotech stocks are another niche in the stock market today gaining ground. While the last few months have been tough for Aptose, the last few weeks are a bit different. Since reaching 52-week lows of $2.32, APTO stock has been in rebound mode. This week, the penny stock broke and held levels above its 50-day moving average for the first time since June.
One of the recent catalysts traders have circulated is a U.S. patent. Titled “Compositions and methods for treating cancers,” this event has sparked plenty of speculation in the market. It also comes as Aptose is ramping up efforts to jump back on the investor conference trail. This month, the company is set to present at two consecutive conferences. These include HC Wainwright’s Global Investment Conference on the 13th, followed by the Cantor Global Healthcare Conference on the 28th.
The company has zeroed in its efforts on advancing its pipeline of cancer treatments this year. Its luxeptinib is in a Phase 1 a/b study in acute myeloid leukemia and b cell malignancies. Aptose’s APTO-253 treatment candidate for acute myeloid leukemia and myelodysplastic syndromes is also in a Phase 1 a/b study with current patients at the 6th dose cohort.
With the recent momentum, patent win, and upcoming presentations, APTO stock could be one to watch in September if it continues this trend.3. Transocean Limited. (NYSE:RIG)
One of the hottest areas of the “reopening” discussion is energy. Whether it’s green energy or traditional oil & gas, or one of the “bridge fuels,” nothing’s off the table right now. In this light, energy companies ranging from raw material providers, logistics companies, refiners, and even end-retailers are part of the conversation.
Transocean specializes in offshore contract drilling services for oil and gas wells. Transocean owns, in full or in part, a fleet of 37 offshore drilling units. As oil prices have exploded recently, so has momentum behind energy stocks like RIG. What’s more, Transocean got a nice media mention on September 2nd that helped build awareness of the company and its stock.
The company also recently secured a $252 million contract for a newbuild ultra-deepwater drillship, the Deepwater Atlas. This included a mobilization fee of $30 million as well. President and CEO Jeremy Thigpen commented that the company is “extremely pleased to have secured the maiden contract for the Deepwater Atlas; the first of our two 8th generation ultra-deepwater drillships that will enter the market in 2022, both of which will be outfitted for 20,000 psi ultra-deepwater well operations. We are very encouraged by the growing list, across multiple customers, of 20,000 psi opportunities in the U.S. Gulf of Mexico. And, with the only two assets in the world specifically designed to maximize efficiencies for 20,000 psi well completions, we are the undisputed market leader in this space, and thus excited about the future prospects for these state-of-the-art assets.”Evogene Ltd (NASDAQ:EVGN)
Back on the list of penny stocks to watch in September is Evogene. I say this because EVGN stock has been relatively quiet for the better part of the last 2 quarters. However, with the recent focus of retail traders placed on biotech and cannabis, EVGN shares have perked up a bit. Evogene is made up of several operating companies; all centered around life sciences.
Not only has the company reported strong progress with its Biomica business in preclinical trials, but its Canonic cannabis company is also preparing for the launch of medical cannabis products in Israel. Evogene also operates through other companies focused on agricultural technology. These include AgPlenus and Lavie Bio.
In looking at Evogene’s most recent corporate update, you’ll see that the second half of the year could be important for the company. Biomica, for instance, expects to start a first-in-human proof-of-concept trial in its immuno-oncology program along with results for its preclinical trial in Inflammatory bowel disease. Both Lavie and AgPlenus aim to expand their respective pipelines, with commercialization as the hallmark.
Considering the recent trend in the stock market today and fervor for small-cap stocks, in general, EVGN has sparked some interest this week.Should You Buy Small Cap Stocks?
Call them small-cap stocks, penny stocks, cheap stocks; whatever your definition, these low-priced names are red hot today. The important thing to remember is that just as quickly as they rally, they can fall apart. Not only that, but smaller companies are well-known for taking full advantage of big spikes in price by raising capital to take advantage of the market activity. In many cases, these raises can be at steep discounts, which ultimately act as catalysts for a sell-off in the market.
Will that happen to any of these? Nothing has come out related to that topic so far. But it has been something frequently seen by many small-cap stocks this year. At the end of the day, it’s up to you to lay out the proper strategy to capitalize on the market moves and ultimately make money with penny stocks.