Heading into the New Year, penny stocks are red hot, and for good reason. While the broader markets themselves have been relatively flat this week, stocks under $5 a/k/a “penny stocks” have offered significant levels of volatility. This is what day traders look for, of course. Now if you’re looking for ways to invest (vs trade), volatility might not be something you strive to find. Needless to say, these cheap stocks are more known for their short-term breakouts than anything else.
This isn’t to say that all penny stocks should only be traded. This is also saying that not all penny stocks are bad to invest in. Everyone has their own strategy, obviously. But I feel like this fact needs to be hit home a bit harder in light of recent trends. This “trend” I’m referring to is the lack of followthrough that many of these penny stock breakouts have seen. Take ATIF Holdings (ATIF Stock Report) this week, for instance. The penny stock surges from under 80 cents to over $2 in less than a day. Where it lacked followthrough came after the stock was unhalted on Monday. ATIF gave back more than half of its move.Do You Know How To Trade Penny Stocks?
The sad part is many novice traders felt the FOMO and ended up becoming bagholders of ATIF. A good rule of thumb is if a trend is truly strong, there will be more opportunities to buy a dip. Unfortunately, without followthrough, you don’t have a strong trend and the trade ends up being better suited for high-speed day traders than anything else. Can ATIF stock rebound? Anything is possible and if it does, even better for those who got caught in the hype on Monday.
Regardless of what the future holds, my point is that you need to pay attention to the trends the market shows. High volatility most likely suggests a shorter-term breakout that could end up breaking down just as quickly. Again, if a trend is truly strong, there are fewer chances of “missing out”. Sometimes it’s better to sit back and wait for a trend to form than try to “catch” the move.
But I digress. Everyone has a strategy and if it works for you then all the better. Heading into the New Year, there are a few penny stocks to watch right now that have shown hot trends recently. Will they be on your 2021 list?Hot Penny Stocks To Watch
- DPW Holdings (DPW Stock Report)
- Gannet Co Inc. (GCI Stock Report)
- Seneca Biopharma Inc. (SNCA Stock Report)
Speaking of volatility, DPW Holdings is no stranger to wild swings. Earlier this quarter, the penny stock ran from $1.70 to highs of $10.94 in a matter of just a few days. The company is the epitome of a holding company and has many moving parts. It has exposure to several popular industries via its numerous subsidiaries. This includes things like energy, data processing, electric vehicles, military/defense, as well as healthcare through investments. One of the healthcare companies that DPW invested in has become a point of focus recently.
Alzamend Neuro focuses on treatments and cures for Alzheimer’s disease. DPW has an investment in Alzamend through its subsidiary, Digital Power Lending, LLC. Alzamend Neuro® announced this week that it submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission to go public. The public offering is expected to begin after the SEC completes its review process.l
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What might also be a focus right now, considering more attention on electric vehicle stocks, is DPW’s Coolsys subsidiary. Last month, the company announced that its Coolsys Electronics company had created a program to allow its ACECool vehicle chargers at a large range of fast-food franchises. This will likely include locations in California, Nevada, and Canada. Heading into 2021, there appear to be several hot industries that DPW has gained exposure to. With the potential IPO of one of its investments, this could be yet another thing to keep in mind especially with the way the IPOs have been lately.Hot Penny Stocks To Watch #2: Gannett Co Inc.
Something you really see discussed lately are communications stocks. Gannett Co is a long-standing name in communications and traditional news print. It’s also the parent company of a “little” outlet called USA Today. While things were rough early on in 2020, the last few months have been considerably stronger for the stock. Since late October, GCI stock has managed to rally over 200%. Much of the positive sentiment stemmed from the company’s ability to refinance its high-yielding debt, improving its capital structure. This also included cutting the fat on the company and shedding certain assets and contracts.
“During 2020, we have made great strides in several areas, despite the challenges posed by the pandemic. We have significantly reduced the balance of our term loan and are on track to repay approximately $100 million more by early 2021. We have seen continued improvement in our revenue trends throughout the fourth quarter, and our integration work has facilitated the early termination of the external management agreement.”Michael E. Reed, Incoming Chairman and CEO
With a fresh face of sorts, the media company continues shining in the market. Heading into the new year, traders are likely to focus on a potential continuation in recovery efforts as well as the direction incoming CEO Michael Reed takes the company.Hot Penny Stocks To Watch #3: Seneca Biopharma Inc.
Heading into 2021, you can’t forget about biotech stocks. Seneca Biopharma Inc. has quietly mounted a recovery move that began in November. Unlike the other penny stocks on this list, SNCA shares aren’t as active. That is, until recently. The second half of December saw the penny stock trading volume levels well-above average. Much of the early spike came after the company was granted a 6-month extension to regain compliance with NASDAQ’s bid price rule.
What’s more, is that the new year could see Seneca merging with Leading BioSciences. The two signed a definitive agreement whereby a wholly-owned subsidiary of Seneca will merge with Leading. The focus of the new company will be building upon Leading BioSciences’ LB1148. This is the company’s lead treatment for restoring normal gastrointestinal function after major surgery. The company will then begin trading under the name Palisade Bio Inc. with the symbol PALI.
The merger also comes with a fresh $22.5 million investment from Altium Capital to fund the development of clinical programs. This includes LB1148, which is Phase-3 ready. Tom M. Hallam, Ph.D., chief executive officer of Leading BioSciences stated in a recent PR, “We are excited to commence pivotal studies with LB1148 in our first indication to reduce the time to return to normal postoperative GI function following neonatal open-heart surgery. This oral therapeutic has the potential to be transformative for improving outcomes in multiple surgery indications.”