Which Penny Stocks Are Seeing Gains as a Result of Covid?
Penny stocks have all been affected in one way or another by the pandemic over the past year. While some have come out on top, others have not faired as well. This all depends on the type of business and the industry it resides in.
There are a few ways in which we can categorize penny stocks by how they have been affected. First, we have reopening stocks. These are stocks that have been positively affected by states opening back up. This includes entertainment stocks, retail stocks, and more.
Second, we have pure-play coronavirus stocks. This includes pharmaceutical and biotech companies, work-from-home and learn-from-home businesses, and several others. To take this a step further, we can also categorize companies on whether or not they have been positively affected by Covid. While there are more ways to break down how the pandemic has affected the market, these two categories are a great place to start if you’re compiling a watchlist.
In addition to this, we have to consider the atmosphere that exists in the stock market right now. This includes the Coinbase Inc. (NASDAQ: COIN) IPO, which opened well above analyst price targets. Additionally, cryptocurrencies like Doge and Bitcoin hit all-time highs throughout the week of April 12th. This has helped to bring investor attention toward both cryptocurrency stocks and the stock market at large. Lastly, the higher-than-expected retail numbers that came out earlier in the week, are showing positive signs of a post-covid economic recovery.
Considering all of this, there is a lot of positive momentum for both blue chips and penny stocks right now. And while we can’t predict the future, here are three penny stocks that are benefitting from the pandemic right now.
3 Penny Stocks to Watch for a Pandemic Boom
- Rigel Pharmaceuticals Inc. (NASDAQ: RIGL)
- Ballantyne Strong Inc. (NYSEAMERICAN: BTN)
- Cinedigm Corp. (NASDAQ: CIDM)
1. Rigel Pharmaceuticals Inc.
Rigel Pharmaceuticals is a pure-play biotech penny stock. Shares of RIGL stock shot up on Tuesday, April 13th, after it announced exciting trial results. The results include positive topline data from the Phase 2 study of its therapeutic, fostamatinib. This is in studies to see its efficacy as a treatment for severely affected Covid-19 patients. After the announcement, shares of RIGL pushed up by almost 17% by end of day. With this, we see a very clear role for Rigel Pharmaceuticals in relation to the pandemic.
While fostamatinib is already approved in the U.S. and internationally for adult chronic immune thrombocytopenia, it is not yet approved for treating Covid. For this reason, it is being studied with the National Institutes of Health (NIH) and Inova Health System (Virginia-based healthcare nonprofit), in 59 hospitalized patients. So far, the trial has met all goals regarding safety, with zero deaths by the end of the 29th day. This is in comparison to three deaths in the placebo group.
In the past few months, investors have focused on biotech companies that are producing vaccines. This makes sense, but investors should consider that there is also a major demand for treatments and not just prevention. This is where companies like Rigel come in.
Additionally, Covid cases have been increasing in many parts of the world throughout the past month. This means that we could see even greater demand for efficacious therapeutics as time goes on. While fostamatinib is not yet recognized for treating Covid, the FDA is intent on approving compounds that show potential in treating or preventing coronavirus infections. Considering this, could RIGL continue to see a Covid-related boom?
2. Ballantyne Strong Inc.
Ballantyne Strong is a penny stock that we’ve been covering for a few months now. Since the end of March, shares of BTN stock have shot up by over 40%, indicating a solid bullish trend. Despite a 6% correction on April 14th, Ballantyne has several exciting prospects in the works.
For some context, Ballantyne Strong is a holding company that is made up of various assets and investments in both public and private companies. One of the main drivers of its recent bullish movement comes from an acquisition it announced in the second week of April.
Only a day ago, Ballantyne announced that one of its investments, GreenFirst Forest Products, has acquired a large quantity of forest and paper product assets based in Ontario and Quebec. The acquisition from Rayonier Advanced Materials is valued at $214 million and includes a large number of assets and inventory. The deal will be done through 85% in cash and 15% in shares of GreenFirst.
With this acquisition, GreenFirst should become a top 10 lumber producer in Canada. While Ballantyne’s primary focus is on entertainment and cinema, its movement into the paper and lumber industry serves as a way to diversify its assets. Because entertainment and cinema have both taken a large hit from the pandemic, this acquisition could help Ballantyne in the long run.
The assets included in the deal have an annual production capacity of around 755 MMFbm, which places it as a top ten lumber producer. Additionally, there is now a worldwide shortage of building materials, leading to incredibly inflated prices for lumber and similar building materials.
This is due to the heightened industrialization occurring as certain countries see declining covid cases. While it isn’t necessarily a pure-play pandemic stock, it does have a relation to Covid in several ways. Considering this, is BTN stock a penny stock to watch or not?
3. Cinedigm Corp.
Pushing up by almost 20% on April 14th, Cinedigm continues to be a leading pandemic stock to watch. It’s easy to understand the role of CIDM as it relates to Covid. To dive deeper into this, let’s look at an overview of the company.
Cinedigm is a leader in many areas of the entertainment industry. Every year, hundreds of millions of users view its content across several different platforms. It offers everything from premium content to enthusiast streaming channels and tech services. Its primary markets include media, retail, and technology. These industries have all increased in value over the past year or so.
On Wednesday, April 14th, Cinedigm announced record subscription and ad-supported user growth. In March alone, the company managed to reach almost 24 million viewers. This represents 208% in growth over the year prior. Additionally, CIDM reported that advertising requests increased by 431% in the same time frame.
Erick Opeka, Chief Strategy Officer at Cinedigm, stated that “a year ago, we announced an aggressive strategy to rapidly expand our footprint of FAST linear streaming and AVOD channels, and to also rapidly expand our SVOD channel subscriber growth through M&A, distribution expansion, and partnerships. Today, we are pleased to show that, in a turbulent world for entertainment, the relentless focus of our incredible team is paying off in record growth in subscribers, free viewers, engagement, and ultimately revenue.”
During the pandemic, the demand for quality, digital content has increased substantially. This means that companies like Cinedigm have seen corresponding revenue growth. Considering these positive signs, is CIDM a penny stock to watch?