I’m not going to lie; we talk about penny stocks a lot. If you’re among the new batch of traders, you must’ve heard about these cheap shares but might not know what you’re looking at. In this article, I’m going to explain to you what penny stocks are. I’ll also give a quick list of names that may have just begun trending in the market.What Are Penny Stocks?
Penny stocks are shares of companies trading for less than $5 per share. Yep, that’s it. According to the Securities & Exchange Commission, this is the requirement to be considered a penny stock. Now, I know some traders may classify stocks under $1 as such. But I’ll stick with the SEC definition because I get to write about more companies.
But how can you find the best penny stocks to buy? At the very least, how do you put together a watch list? The idea for this article isn’t to go over a full synopsis of how to day trade. But I’ll pass along a few tips for those of you just getting started. First, when it comes to penny stocks, volatility plays a big role. If you saw how quickly GameStop rose and fell, you’ve seen what volatility is. That is obviously an extreme example. However, penny stocks are well-known for quick shifts in price. In between the high and the low is hopefully where you’ll capture your gains.
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One of the quickest ways to find penny stocks and build a watch list is to have a screener. It can be as simple as high volume stocks or stocks with unusual trading activity. Others will ‘bottom-feed’ and look for stocks at 52-week lows. There are many ways to identify stocks for your list; it just takes some time.A List Of Penny Stocks Isn’t Your Final Step
Once you’ve made your list, now the hard work begins. It’s time to do a deep dive into the companies. Are there potential catalysts ahead? Have there been recent filings to support growth? Is the company in a popular or trending industry? These are just a few questions to ask. The less the companies fit into your “Yes” column, the easier it is to whittle down a large list of penny stocks to a few specific ones to focus your attention on. With that in mind, here’s a quick list of companies that’ve begun trending. Now I’ll leave it up to you to decide if they’re the best stocks to buy or if they should be avoided entirely.Penny Stocks To Watch
- Surgalign Holdings Inc. (NASDAQ: SRGA)
- Seneca Biopharma Inc. (NASDAQ: SNCA)
- Outlook Therapeutics Inc. (NASDAQ: OTLK)
- Can Fite Biopharma (NYSE: CANF)
The better part of the last year has been rough for Surgalign. Shares have fallen from $5.01 to lows of $1.46 in the 2020 March sell-off. Even after a brief recovery, SRGA failed to maintain its bullishness. That continued this year as well. So why even mention this company?
There are a few things to take a look at when it comes to Surgalign recently. First, the clear uptick in trading volumes between January 28th and the beginning of this week are some of the highest in recent history. Next, Piper Sandler analysts seem to find some potential in the company for such a beaten-down name. This week the firm initiated coverage on the company giving it an Overweight rating, and announced a $4 price target. Based on SRGA’s closing price on Tuesday, that puts Piper’s SRGA stock forecast nearly 100% higher right now.
So what’s going on with the company that might justify such a high rating? Surgalign is a medical company focused on spine surgery. Last month marked the official commercial launch of its ViBone Moldable and completed the first implant of the biologic. What sent shares lower last month was financing to the tune of $37.5 million at $1.50 a share. Armed with cash and a commercial launch, it will be interesting to see if the latest uptick in action continues in February.Seneca Biopharma Inc.
Late last year, Seneca Biopharma began climbing after a relatively flat year in 2020. The initial catalyst seemed to be a 180-day extension to regain compliance with Nasdaq’s minimum bid requirement. This was compounded after news that Seneca would be merging with Leading BioSciences in a deal to form a company that will focus on advancing Leading’s pipeline Phase-3 ready asset, LB1148. In clinical studies, the company will evaluate LB1148’s potential to improve restoration of normal GI function following major surgery and reduce certain postoperative complications such as abdominal adhesions.
Last month Leading BioSciences announced FDA Fast Track Designation for LB1148 was granted. This is intended to facilitate the development and expedite the review of the drug. Aside from the milestones reached already, the important thing to note is that the merger is expected to close “in the first half of 2021,” so the market is likely searching for any further details to this date.
Seneca has also attracted the interest of the institutional community as well. Last week Intracoastal Capital LLC reported a 6.4% stake in the company.Outlook Therapeutics Inc.
Shares of Outlook surged in after-hours trading on Tuesday. The company announced that it had closed on its $35 million financing round. GMS Ventures and Investments, an affiliate of Outlook Therapeutics’ largest stockholder and strategic partner, BioLexis Pte. Ltd., purchased directly or through an affiliate $8.36 million of the shares of common stock offered in the offering.
Now, armed with cash, Outlook is aiming to put the funds toward advancing its ONS-5010. The company is developing ONS-5010 / LYTENAVA™ (bevacizumab-vikg) as the first FDA-approved ophthalmic formulation of bevacizumab-vikg. The drug for use in retinal indications, including wet AMD, DME, and BRVO.
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Outlook Therapeutics expects to file ONS-5010 with the U.S. FDA as a new BLA under the PHSA 351(a) regulatory pathway during the second half of this year. All planned clinical trials for ONS-5010 / LYTENAVA(TM) (bevacizumab-vikg) are fully enrolled or completed. Outlook expects pivotal data toward the middle of this year from an ongoing, fully enrolled Phase 3 registration trial for ONS-5010 (NORSE TWO).Can Fite Biopharma
Can Fite Biopharma is another biotech company that has only come into the limelight in the past few months. The company is a developer of therapeutics for use in cancer treatment, inflammatory diseases, and sexual dysfunction disorders. It currently has several drugs in its pipeline. This includes its lead candidate known as CF101 (Piclidenoson), which is in a Phase 3 trial to see its efficacy in treating arthritis and psoriasis. During trading on February 2nd, shares of CANF stock shot up by around 11%, ending the day at $2.21 per share.
On February 1st, the company announced that it had completed a set of studies to see if CBD rich T3/C15 cannabis fraction induces an effect on liver fibrosis. In simple terms, the company is utilizing compounds from the cannabis plant to see if it can heal liver inflammation.
Dr. Pnina Fishman, CEO of Can Fite, stated that “this data together with our unparalleled expertise in the development of liver fatty disease therapeutics that target A3AR, enable Can Fite to contribute to unlocking the vast potential of cannabis derived compounds for the effective treatment of this pathological condition.”
In the past few years, many biotech companies have turned their focus to the healing potential of the cannabis plant. With a recent trend in marijuana stocks, will CANF be one of the penny stocks to watch this month?Should Penny Stocks Be On Your List In February?
There’s no doubt penny stocks are high-risk and high-reward. But there is something to be said about finding the best ones. We’ve been able to see, first-hand, how these cheap stocks can breakout quickly. Since the volatility can be so high, it’s important to research as much as possible. In this light, pouring through filings and news can help cut through the noise especially considering all of the hype in the stock market today. At the end of the day, if a trade is there to be had, you’ll likely see it, and if it’s not, there’s no harm in sitting one out either.