What’s the definition of penny stocks? If you’re newer to trading you might not realize that the Securities and Exchange Commission defines these as stocks under $5. While it might not make sense at first, the long and short of it is that the pool of small companies with lower share prices is vast and accounts for a large portion of the retail market.
Whether you’re a novice or experienced trader, the same trends and topics are evident. First, penny stocks carry plenty of risks. This can be attributed to price risk, volatility risk, and even company risk.
But, aside from the risks involved, there’s plenty of opportunities to capitalize on big rewards as well. If you take a look at current trends in the stock market today, I’m sure you’ll see what I’m talking about. Almost on a daily basis, Reddit traders using platforms like Robinhood and WeBull are scouring the market for low-priced stocks. In many cases, at least a handful end up breaking out big.
Just how big? The last few weeks have seen some penny stocks (now former penny stocks) rally into the multiple triple-digit percentages. Now, I will say that many have just as quickly retreated in share price but the point is that you can make big money with penny stocks and if you can handle a little risk, these low-priced stocks may be a good option for you to look into.Best Penny Stocks To Buy [or avoid]
Will any of these be on your list of penny stocks to buy this month or should you avoid them entirely?
- MannKind Corporation (NASDAQ: MNKD)
- MICT Inc. (NASDAQ: MICT)
- Inuvo Inc. (NYSE: INUV)
- Aerpio Pharmaceuticals Inc. (NASDAQ: ARPO)
- RLX Technology Inc. (NYSE: RLX)
We’ve discussed MannKind over the last few months as shares have bounced between $3 and $6. Despite the last month or so being difficult in the market for MNKD stock, the company has remained steadfast in its mission to expand its offering.
In fact, over the last week, MNKD has been much stronger and that may have a lot to do with the comapny’s latest earnings update. At the start of the week, MannKind reported strong Q2 results with an increase of 54% in revenue and, specifically a 43% boost in Afrezza net revenue for the quarter. Afrezza is the company’s prescription glucose management product. The dry insulin powder is inhaled by patients to control high blood sugar meant for those with type 1 or 2 diabetes. This jump in sales was driven by increased manufacturing activity during the quarter. Something else to note is that aside from this commercial product, MannKind is working on the potential commercial launch of its Tyvaso DPI product.
MannKind’s collaboration partner, United Therapeutics (NASDAQ: UTHR), previously submitted an NDA to the FDA for its Tyvaso DPI product. This is a potential treatment for pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease. In response to the strong Q2 performance, Michael Castagna, Chief Executive Officer of MannKind said, “I am really proud of how our team has executed so far in 2021 supporting the growth of Afrezza and preparing for the potential commercial launch of Tyvaso DPI.”
With this as the backdrop for a recent rally in MNKD stock, it could be a sign to have it as one of the penny stocks to watch heading into the second half of the month.2. MICT Inc. (NASDAQ: MICT)
Another one of the penny stocks that has climbed recently is MICT Inc. Shares have risen from lows of $1.74 last week to highs this week of $2.06. One of the catalysts adding to this momentum was an analyst rating from Alliance Global. The firm started MICT with a Buy rating and $4.25 price target at the start of August.
Furthermore, some industry momentum could also be helping give MICT stock a boost. It’s subsidiaries, GFH Intermediate Holdings and Micronet Ltd are involved in the rapidly evolving fintech and computing solutions industries. Obvioulsy the former has been a big focus in 2021. Everything from growth in retail trading and online banking to digital currency and virtual payments have grown in popularity. Some of the conditioning to a digital financial platform can be credited to the global lockdowns last year. Now that economies are reopening, some of the pandemic-era habits remain in place with fintech being one of them.
Last quarter saw the full development of the ocmpany’s stock trading platform with the soft launch and full roll out earlier this summer according to the company. With second quarter earnings slated for release next week, anyone looking at MICT stock right now should keep August 16th in mind. The company also plans to host a question and answer portion during its earnings call before the opening bell.3. Inuvo Inc. (NASDAQ: INUV)
On the “cheaper” side of things, Inuvo Inc. is a sub-$1 stock that has recently begun to perk a bit following its second quarter earnings results. Despite missing on EPS, the company beat Wall Street’s expectations when it came to sales estimates. What’s more, second quarter revenue for 2021 was 66% higher than that of the same quarter last year. attributing to this growth, Richard Howe, CEO of Inuvo said Inuvo’s IntentKey and ValidClick product lines experienced strong growth.
“During Q2 the IntentKey performed 74% better than our clients’ goals and its 50% year-over-year and 37% sequential growth are indicative of those results. We expect to see a continuation of double-digit year-over-year growth throughout the second half of 2021 and would expect Adjusted EBITDA to turn positive when monthly revenue run rates exceed $5.5 million.”Richard Howe
Inuvo’s product focus on providing its clients with targeted media and display advertising solutions for eCommerce applications. Obviously, with a rise in digital retail sales over the last year, companies in this category have gotten some attention. Clearly for Inuvo, its revenue growth is evidence of that. Howe also gave guidance and set some expectations for the second half of 2021 saying, “We expect to see a continuatioinn of double-digit year-over-year growth throughout the second half of 2021 and would expect Adjusted EBITDA to turn positive when monthly revenue run rates exceed $5.5 million.”4. Aerpio Pharmaceuticals Inc. (NASDAQ: ARPO)
Biotech has certainly been a hot industry this year. Thanks to the global pandemic and focus on vaccine stocks, initially, retail traders have seen opportunities arise. In the case of Aerpio, the last few months have been strong for its stock. Since early May, shares of ARPO stock have increased more than 75% so far.
Aside from excitement in biotech, the company’s recent milestone have also helped add momentum in the stock market. In particular, Aerpio has been in the middle of a merger with Aadi Bioscience in a transaction to create a company focused on advancing cancer treatments.
Aadi’s precisiontherapies target genetically defined cancers with alterations in what are known as mTOR pathway genes. In short, mTOR connects other proteins and acts as a major component of two distinct protein complexes in regulating different cellular processes. While the transaction hasn’t closed (yet), analysts have already grown bullish on the proposed deal. earlier this quarter, HC Wainwright analyst Robert Burns upgraded Aerpio to a Buy and gave a $22 price target. Burns explained that the Aadi deal was “transformative” and that the merger could put the company on a “solid path towards becoming a self-sustaining, commercial-stage enterprise with a differentiated lead product having applicability across multiple specialty oncology indication.”
With this transaction expected to close in the third quarter, there’s now about a month and a half left to meet that milestone.5. RLX Technology Inc. (NYSE: RLX)
Shares of RLX stock have been treading water over the last month. This comes after a botched IPO earlier this year saw its share price plumet from $35 to lows of $4.05 in July. Another contributing factor were fears that Chinese regulators would bring more rules to e-cig companies like RLX. You also can’t forget the confusion over Chinese IPOs and the access to US exchanges.
Needless to say, the last few weeks seem to have brought some steadying to the market for RLX stock. The e-vapor company’s shares have slowly bounced back by roughly $1 in that time. Now, heading into next week, RLX could be back in focus for some. The reason being is that the company is set to report quarterly results for Q2 2021 next Friday.
The company isn’t overly vocal on the newswires. However, we can look at its previous quarter’s results for a bit more guidance. Net revenues grew over 48% quarter over quarter (Q1 2021 vs Q4 2020). Gross margins were also up quarter over quarter by nearly 43% and gross profit jumped 59.1% during that same period.
Chao Lu, Chief Financial Officer said, “Building on rapid revenue growth and continued efforts in improving operating leverage, our gross margin and non-GAAP net margin have remained steady in the first quarter. We will continue to pursue user value creation by enhancing our suite of product offerings and strengthening our brand leadership in the market.”Looking For Penny Stocks To Buy? Start With Research & Education
If peny stocks are something that appeal to you, then understanding how to trade them is the first step. We see too many people jump right into day trading without any understand of how to actually do that. Most treat it similarly to a game of craps or roulette. But the fact of the matter is, you can learn to be consistently profitable trading even with cheap stocks like these. The key is having a proper strategy in place. If you’re just getting started trading, check out some of these articles: