Are These Top Penny Stocks Worth Buying?
May is here, and thus, so is another month for penny stocks. Because speculation is standard with the territory, any factors including something as simple as the beginning of a new month can have a positive or negative effect on penny stocks.
Now, why are penny stocks so speculative? Well, the short answer is that due to their low price (any stocks under $5), values tend to shift very quickly. In addition, most investors tend to swing trade these stocks, which in turn, adds to their high volatility.
Lastly, most cheap stocks tend to move very quickly when news is announced. This includes everything from balance sheets to corporate filings and company updates. So, while none of this should serve to incite fear, it should help to mold your strategy into one that could be profitable.
Being a profitable trader involves understanding different variables that can impact a stock’s price, as well as certain technical indicators that could point to price movements. The best way to understand this is to have a proper trading education, but experience is also key.
Additionally, the influx of retail traders on platforms such as Robinhood or WeBull has helped to democratize trading more so than ever before. While this has resulted in more volatility in the stock market, it has also brought billions in capital that did not exist before.
Because there are thousands of stocks under $5 out there, making a penny stock watchlist can seem like a daunting task. But, with the right research at hand and the ability to find penny stocks on Robinhood or wherever you trade, it can be much easier than imagined.
3 Penny Stocks on Robinhood for May 2021
Safe Bulkers Inc. (NYSE: SB)
Safe Bulkers Inc. is a penny stock that we’ve covered several times in the past few weeks alone. Again on May 3rd, shares of SB stock are up in the double-digit percentage points. While a lot of this is speculation surrounding its upcoming Q1 2021 results, released on May 5th, there are some additional factors at play. One of those happens to be the high expectations for the company’s Q1 data.
Analysts have stated that the company could reverse its prior-year loss, where it could then pull in a $0.10 EPS on sales growth of roughly 27%. Additionally, this would indicate around $58 million in revenue.
One of the data points backing these predictions is the Baltic Dry Exchange Index (BDI). This index tracks the rates that shipping companies like Safe Bulkers receive for transporting bulk dry goods. Early in this year, the BDI sat at around 1,400. However, last week it surpassed 3,000, which obviously, is more than double its January levels.
Since the end of March, shares of SB have shot up by around 65%, and since January, by over 350%. While a gain like this is not out of the ordinary for penny stocks, triple-digit percentage gains are always worth noting. So, to consider SB stock a buy, investors should do their due diligence in addition to checking out its upcoming results. And with all this in mind, is SB worth adding to your watchlist?
Abeona Therapeutics Inc. (NASDAQ: ABEO)
Moving away from shipping and into a biotech penny stock, ABEO is a clear watchlist candidate. For some context, Abeona is a clinical-stage biopharmaceutical company developing both gene and cell therapy candidates. In its pipeline are compounds such as EB-101, a Phase 3 candidate for recessive dystrophic epidermolysis bullosa, ABO-102/ABO-101, a novel gene therapy for Sanfilippo syndromes, and several others. Its focus is on treating serious illnesses with relatively unmet medical solutions.
Back in March, Abeona reported its 2020 financial results and several corporate updates worth mentioning. This includes dosing the fourth patient in its pivotal Phase 3 VIITAL study of EB-101, following a successful Type B meeting with the FDA. In addition, we see that ABEO is well funded, ending the year with roughly $95 million in cash and cash equivalents.
“In 2020, Abeona advanced our three clinical programs toward bringing urgently needed treatments to patients with recessive dystrophic epidermolysis bullosa (RDEB) and Sanfilippo syndrome type A and type B, despite the macro disruptions that impacted the world. We remain laser-focused on executing our strategy and achieving upcoming milestones. Our recent momentum is highlighted by a successful Type B meeting with the FDA where we aligned on co-primary endpoints for the pivotal Phase 3 VIITAL study of EB-101 in RDEB.”
Michael Amoroso, CEO of Abeona Therapeutics Inc.
Because of its wide pipeline and breadth of late-stage pharmaceuticals, Abeona could be an interesting penny stock to watch. With this in mind, the choice is yours.
NexGen Energy Ltd. (NYSE: NXE)
NexGen Energy is as its name suggests, an energy penny stock. Based in Canada, it focuses on the acquisition and exploration of uranium projects domestically. NexGen has a longstanding track record of discovering large uranium deposits which can then be developed into sizable mining projects. This includes its large portfolio of assets in the Athabasca Basin, which is located in Saskatchewan, Canada. Within this is the Rook 1, which it owns a 100% interest in; which is also where the famed Arrow Deposit was back in early 2014.
In March of this year, NexGen announced the exercise of $22.5 million worth of over-allotment options. This coincides with its previously completed underwritten public offering of 33.4 million common shares. This option alone will bring its total financing for the year up to $172.8 million in proceeds.
With any mining company, funding is always the primary concern of investors. Because capital is the main necessity to any business and especially those in mining, fundraising opportunities like these are always exciting. While there is the worry of share dilution, this would likely not be a concern until the future.
One of the main reasons for the bullish interest in uranium is its potential as a renewable energy source. Because of the U.S. emphasis on becoming renewable, pushed by President Biden, investors are scrambling to find the next best renewable energy penny stock. While uranium still has a stigma around it, there is no doubting its efficiency and potential. Considering all of this, will NXE be on your penny stock watchlist?
Penny Stocks: Worth it or Not?
When it comes to penny stocks, the main thing to consider is whether or not a company fits into your portfolio. All investors have different goals. Whether it is short-term or long-term investing, finding the right penny stocks to buy is all about understanding your own unique investing style. Additionally, having a trading education can help to give you the best chance at making profitable investments. With these aspects in mind, are penny stocks worth it?
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