May 27, 2020 (Penny Stocks via COMTEX) -- Penny stocks are well-known for high risk. They’re also known for high-reward and the latest bout of market volatility has triggered some big moves this month. Before I get into this list of penny stocks , let’s go over some basics. First, just because certain penny stocks are moving higher, doesn’t mean they’re the best to buy “right now”.
Sometimes we’ll see an initial run to highs followed by an aggressive pull-back then continue higher. But during the time of the “drop”, emotions can play a big part in selling shares “too early” or making rash decisions to “catch a falling knife”. In many cases, waiting for certain penny stocks to stop dropping is just as valuable as buying “at the bottom”.
Emotions are key. Learning how to control them is the third most important thing to learn. The first two are how to open a penny stock brokerage account and how to deposit money. Needless to say, traders are here to make money with penny stocks. So why jump into a volatile trade when waiting a little while could offer better entry points at times. On the other hand, waiting for a little can also help avoid jumping into a losing trade.
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This is what I referenced with “catching a falling knife”. Sometimes a trade might bounce briefly before continuing lower. In that instance, some traders decide to buy penny stocks thinking they’re capitalizing on the bottom. But instead, the knee-jerk reaction causes them to ignore other technical aspects of the trade and buy right into holding the bag.
So before you go jumping into the next big trade, understand why a stock is moving. It might not be a bad idea to use free apps like WeBull to open up a paper trading account and practice before playing with real money. The point is, don’t just jump in because a social media post said so. Keeping this in mind, these can be bought for under $4 a share right now. But just because they’re “inexpensive” based on price, does it mean they’re the best penny stocks to buy right now?
Shares of Stein Mart ( SMRT Stock Report ) enjoyed another big day of trading momentum on Wednesday. The retailer ran into a huge issue earlier this year. Similar to other brick and mortar retailers, SMRT stock dropped in a big way. What’s more, at the time of the free-fall, Stein Mart was entering into a transaction to become a private company. An affiliate of Kingswood Capital Management, L.P. said it would acquire the company’s shares at a price of $0.90 per share. Obviously, at the time, shares surged.
A few weeks later, the “S” hit the fan. First, shoddy earnings results saw SMRT stock drop from $0.87 to $0.67 in a single day. That drop continued for most of March and the stock ended up hitting lows of $0.28. However, as we know, SMRT stock didn’t stop there. Not only did the company close all of its stores, the deal with Kingswood was also terminated. Coronavirus hasn’t been kind to brick and mortar retailers as we’ve seen. J.C. Penney and countless others have declared bankruptcy.
While the “B” word hasn’t been thrown around yet, Stein Mart appears to have found some renewed interest this week. This month the company began reopening. Our store teams have been anxiously looking forward to reopening their stores and serving their customers once again, either inside or curbside. Our customers are a big part of the Stein Mart family and they have been missed," said Hunt Hawkins, Chief Executive Officer. Biggest question: is this a move based on simple sector hype or are there some legs to it beyond “hopes of reopening”?
Ascena Retail Group ( ASNA Stock Report ) saw a strong push during mid-day trading on Wednesday. The penny stock rallied to highs of $2.09 on some of its biggest share volume in recent history. The company is also finding itself navigating the tumultuous waters of brick and mortar retail. Ascena offers apparel, shoes, and accessories for women under the Premium Fashion segment (Ann Taylor, LOFT, and Lou & Grey).
It also offers products for the Plus Fashion segment (Lane Bryant, Catherines, and Cacique) and for tween girls under the Kids Fashion segment (Justice). Through its retail brands, it operates eCommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico.
This week ASNA stock traded higher after its latest update. Its board has adopted a tax benefits preservation plan which aims to “reduce the likelihood that an ownership change that would significantly limit the company’s ability to use its net operating losses” or other tax attributes to offset future income.
Any group or person who acquires 4.9% or more of the company’s outstanding common stock will trigger a dilutive event, Ascena said. The plan will remain in effect until May 25, 2021, unless earlier terminated or the rights are earlier exchanged or redeemed by board, according to the company. Can this poison pill help curb more downside risk or is this one of those “pit stops” before a further decline?
A few days ago we brought some attention to this company . On Deck Capital ( ONDK Stock Report ) has built a platform for online small business lending. The company "transforms small business lending by making it efficient and convenient for small businesses to access capital". Given the fact that there are likely still plenty of businesses thirsting for capital, companies like On Deck could be "on deck" for some momentum.
OnDeck offers a wide range of term loans and lines of credit customized for the needs of small business owners. The company also offers bank clients a comprehensive technology and services platform that facilitates online lending to small business customers through ODX, a wholly-owned subsidiary. OnDeck has provided over $13 billion in loans to customers in 700 different industries across the United States, Canada and Australia.
Since May 22, ONDK stock has climbed as much as 37%. At the time, shares traded around $0.65. This week the penny stock reached highs of $0.89 with heavy volume to back it up. Considering small businesses may need additional lending options aside from the government’s limited Payroll Protection Offerings, will companies like On Deck capitalize? Considering where ONDK stock traded prior to COVID-19, there’s still quite a way to go.
For those of you who’ve read our articles for at least this month, you’re probably well aware of Genius Brands ( GNUS Stock Report ). We reported on it throughout April but this month things became more exciting. Earlier in May the company came out with several key updates. First, Genius announced its Rainbow Rangers Toys from Mattel would debut in Walmart stores this summer. In addition, the company announced the launch of a new network brand, Kartoon Channel, going live on June 15, 2020.
In a corporate update, CEO Andy Hayward said, "This is an extraordinarily exciting time for Genius Brands and its assets. More than ever we are being thoughtful on how to harness the momentum of increasing viewership, and the accompanying advertiser revenue, alongside the power of the brands we have and are bringing forth."
After raising another round of financing in May, the company aimed to direct it to further progress. The net proceeds of the financing will be used to grow its newly-announced digital network for children, Kartoon Channel! on-demand and subscription-free, launching June 15, to fund the production of additional episodes of its series Rainbow Rangers, and repayment of certain outstanding debt. Wednesday saw shares explode to highs of $1.92 marking a month-to-date move of 519%.
Earlier this month the stock ran as high as $1.95. But keep in mind that after it reached that new 52-week high, GNUS stock contracted by as much as 36% in the days to follow. Will that be the case again or is GNUS setting up for more bullishness this month? Leave a comment on your thoughts if it’s on your list of penny stocks right now.
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