Looking For Penny Stocks To Trade?
I assume penny stocks are something you’re interested in right now. That’s likely the case or you wouldn’t be here, right? Aside from that, even if you’re curious and want to learn how to trade penny stocks, you’ve got to start somewhere. So, before I dive straight into this list of penny stocks, let’s go over some basics for our new traders.
What Are Penny Stocks?
The definition of penny stocks isn’t very complex. While some traders will define them as stocks trading on the OTC, there’s actually a standard definition. That’s brought to us by the Securities And Exchange Commission. They state simply define penny stocks as shares of companies trading below $5 per share.
Now, don’t get me wrong, I can see why it might not make sense that penny stocks aren’t defined as stocks under $1. But whatever your personal definition is, I’m giving you the sweet and simple one that the SEC offers. Plus it allows us to write about many more companies that you can then read about.
Are Penny Stocks Risky?
Yes, penny stocks are inherently riskier than blue-chip stocks. Many times you’re dealing with early-stage companies that may or may not even have a business plan outlined. We also saw this year some of the larger companies dropping so far in the market, they became penny stocks. This what great exposure for small- and micro-cap stocks, in general. However, it exposed the shortcomings of companies like Hertz, JC Penney, Pier1, and many others who saw their stocks revalue in the market to these levels.
Aside from the business risk, you’ve also got market risk to consider. First, the companies usually raise funds at much lower valuations compared to the likes of Apple or Amazon. One of the reasons behind that has to do with these companies’ inability to raise traditional capital from regular banks. They end up selling discounted shares that create dilution in the market. Additionally, you’ve got to consider that small moves in stock price equate to large percentage changes in the market.
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A $1 stock that moves 10-20 cents just increased or declined 10%-20%. The lower the price, the less it needs to move to see large changes in percentage. It’s great when stocks go up but when they don’t it presents a very quick way to lose money. That’s why we always stress research first to understand why certain penny stocks may be moving the way they are.
Can You Make Money With Penny Stocks?
This one’s a simple question to answer. In short, yes you can make money with penny stocks. The part that takes time is the “how-to” make money with penny stocks. Learning how to trade, how to research, and how to manage risk are key skills to hold. So while making money in penny stocks is simple, in theory, it takes time to hone skills to become consistently profitable trading them. With all of this in mind, let’s take a look at some penny stocks gaining ground in August. Will these hit your watch list before month’s end?
Penny Stocks To Trade [or fade] #1: Acasti Pharma Inc.
Acasti Pharma Inc. (ACST Stock Report) has been on the move since March. After hitting 52-week lows of $0.25, the penny stock has managed a steady move higher ever since. As of this week, ACST stock has bounced back by 232% to date. During that same period, however, it rallied as high as $0.96 during early June.
Its biggest focus has been on the company’s TRILOGY trials of its CaPre® for the treatment of severe hypertriglyceridemia. Though shares had pulled back from those June highs following an update from the FDA, ACST stock began climbing after an analyst upgrade. In April the company submitted its TRILOGY 1 bringing package to the FDA to proceed with a TRILOGY 2 trial. Essentially the FDA said Acasti needs to conduct pivotal efficacy analyses for its Trilogy 2 study on the full “Intent to Treat” population of the enrolled patients.
Ok, lots of items to note but most recently, there was an update that could lay the foundation for potential milestones. At the end of last month, Acasti completed its revisions to the pre-specified Statistical Analysis Plan for the TRILOGY 2 Phase 3 trial of CaPre, and filed it with the FDA. In a recent business update, the company revealed an important date to keep in mind.
Acasti said remains blinded to the TRILOGY 2 data and is on track to report top-line certain data on or about August 31, 2020. As this date gets closer, it will be interesting to see how the market responds. Will this be on a list of penny stocks to trade or will it fade out before September?
Penny Stocks To Trade [or fade] #2: Sypris Solutions Inc.
Sypris Solutions Inc. (SYPR Stock Report) is also one of the penny stocks that has made a steady climb higher since March. The big difference that I’m sure you’ll see is what has happened in late-July and August. The company offers a range of manufacturing, engineering, design, and other technical services. Its Sypris Technologies segment focuses specifically on the manufacturing of custom-engineered closures for high-pressure critical applications serving the oil and gas industry.
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At the end of July, Sypris announced that it received “significant orders” for its Tube Turns® branded Ultra-High Pressure and Double Bolt closure product lines. Production is expected to be completed prior to year-end. The orders were in relation to gas projects in Brazil and Canada however, terms of the purchases were not disclosed.
Then on August 11th, the company announced that it received an initial contract award from Leonardo DRS Naval Electronics business unit. It’s for manufacture and test electronic assemblies for a shipboard system. Since terms of the agreement weren’t immediately disclosed, speculation has played a big role since then.
This week, SYPR stock announced another deal. However, Sypris reported that it received another order for its Tube Turns® Tool-less® closures. Production will begin immediately and is expected to be completed prior to year-end. The Tube Turns® Tool-less® closure has been chosen for the Alberta XPress Project. Regardless of the disclosure questions up in the air, the markets continue to react favorably to Sypris’ string of recent deals. While terms of the latest deal weren’t disclosed, the company said that this project has an estimated cost of $300 million.
Penny Stocks To Trade [or fade] #3: AutoWeb Inc.
Earnings season is still alive and well. This week we’ve seen another round of reports trigger big breakouts and tragic breakdowns. AutoWeb Inc. (AUTO Stock Report) has reported select preliminary unaudited results for July 2020. Results show lower July revenues in 2020 compared to 2019. However, gross profit and gross margin were both noticeably higher as well as the posted net loss and adjusted EBITDA.
“We are providing our stockholders another intra-quarter update amid the coronavirus pandemic,” said Jared Rowe, President and CEO of AutoWeb. “Our improved results over the past several months are further evidence of the strength of our turnaround. Gross margin has continued to hold above 35%, and we generated positive cash flow and adjusted EBITDA in both June and July. In fact, we drove a higher level of adjusted EBITDA in July than we did for the entire second quarter.”
This update came just a few weeks after AutoWeb formally reported its Q2 results for 2020. The company posted a sales miss compared to estimates. Wall Street expected $17.86 million in sales, however AutoWeb came up short with $17 million. Even this as the case, the company posted an EPS loss of ($0.10), which didn’t compare to estimates of an EPS loss of ($0.30)
Outlook Therapeutics Inc. (OTLK Stock Report) was one of the penny stocks to watch at the end of the week last week. On August 14th the company released earnings, which included a loss per share of $0.03 for the period. But as we’d said, investors and traders weren’t paying as much attention to the financials as they were management’s discussion.
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August could be an important month for the company. While no date has been officially confirmed, there was something interesting revealed in Outlook’s earnings release. But you need a little backstory, first. The company reported that it successfully completed enrollment for its NORSE 2 study, in July. Outlook said it plans to report topline results from that study this month.
“This month we are on track to report topline safety and efficacy results from our NORSE 1 study in wet AMD. The data from this study in addition to the pivotal NORSE 2 data and the results of NORSE 3, which we expect in the third calendar quarter of next year, should be sufficient to support our BLA filing in the second half of 2021.”
Lawrence A. Kenyon, President, CEO and CFO of Outlook Therapeutics
Over the last week OTLK stock has climbed roughly 17%. Wednesday saw shares inch higher, reaching $1.59 during the lunch hour. Will this trend continue through the rest of the month?
