4 Penny Stocks For Your May 2021 Watchlist
Penny stocks remain some of the most popular assets for investors to consider. This is because the potential for short-term gains can be greater when compared to blue chips. To be considered a penny stock, a company must be valued at under $5 per share. These cheap stocks allow investors to enter the market at a much lower cost than traditional blue chips.
What turns some away from penny stocks is the risk that comes with them. Stocks under $5 can move greatly throughout a given trading day. For example, it’s common to see a penny stock jump from $0.10 to $0.20, doubling in a single day. However, it’s not common to see a blue-chip jump from $100 to $200 in a single day.
To help mitigate risk, investors should have an investing strategy to use alongside a trading education. Research is an essential step when investing, no matter what. The best way to secure potential profit, is to understand a company wholly. Look out for things like financial reports, filings, news, rumors, and speculation.
Looking at a company’s trading volume is also important when investing in penny stocks. If volume is low, it could indicate low liquidity. This could make it difficult to buy and sell shares in a company. That is why it is imperative to look at more than just a stock price and the direction it’s going in.
Penny stocks have become a lot easier to access in the in 2021. As time goes on there are more penny stocks on Robinhood and other accessible brokerages than ever before. This makes it easier for retail investors to enter the world of stocks under $5.
Applications like Robinhood, WeBull, and TD Ameritrade have brought in a lot of new penny stock investors. This democratization of investing has also brought billions in capital into the stock market. With all of this in mind, let’s look at four penny stocks that you may consider for your watchlist.
Penny Stocks To Watch In May
- Ault Global Holdings Inc. (NYSE: DPW)
- Sonnet BioTherapeutics Holdings Inc. (NASDAQ: SONN)
- Farmmi Inc. (NASDAQ: FAMI)
- Castlight Health Inc. (NYSE: CSLT)
Ault Global Holdings Inc. (NYSE: DPW)
Ault Global Holdings Inc. is a holdings company that purchases businesses and disruptive technologies through strategic investments. This includes investments in aerospace, automotive, industrial, and medical among many others.
Ault made notable progress on April 16th when it reported its year-end financial results for 2020. Let’s first talk about Ault’s fourth quarter in 2020. The company’s revenue was $7.2 million for the period, which is a 14.8% increase year over year. Ault’s gross profit grew 374.9% year over year to $1.9 million. In its year end highlights, its revenue and gross profit grew 6.7% and 145% respectively.
“The past year has been extremely rewarding and is the result of years of strategic planning. During this time, we have strengthened our operating businesses, improved our balance sheet tremendously, and positioned the Company to capitalize on the very promising technologies at our subsidiaries.”
Founder and Executive Chairman Milton “Todd” Ault III
After this news was released, DPW stock briefly increased but shortly after it saw a small correction. This is common with penny stocks, as volatility is the name of the game. Since its financial results were released, DPW stock has seen more bullish momentum in the days following.
Sonnet BioTherapeutics Holdings Inc. (NASDAQ: SONN)
If you’re looking for a biotech penny stock, Sonnet BioTherapeutics Holdings Inc. could be worth adding to your watchlist. Before we dive into its recent upwards momentum, let’s talk about what the company does. Sonnet is a biotech penny stock that creates a platform for biologic medicines.
Its primary candidate is SON-080 which has completed Phase 1 and is looking to treat patients with chemotherapy-induced peripheral neuropathy. On March 29th Sonnet released an update on SON-080. The company announced that the product is expected to be available for clinical trials during the second half of this year. Currently, it is studying the design protocol to make a Phase 1b and 2a study.
Sonnet develops what they call fully human albumin binding technology. This uses a human single-chain antibody fragment that attaches to human serum albumin for transport, with the goal being targeting tissues. The company announced updates for a lot of its other trials on the same date. Founder and CEO Pankaj Mohan stated, “This year we expect to be in the clinic with multiple programs, which we believe is an important milestone for patients.”
When biotech penny stocks show progress in trials and commercialization, often their stock price will follow suit. It seems like investors see Sonnet as making good strides because its stock price has increased a lot in the last 5 days.
Farmmi Inc. (NASDAQ: FAMI)
Farmmi is a penny stock with an agricultural focus. The company will supply, process, and retail edible fungi products such as Mu Er mushrooms and a variety of other agricultural products. In recent news, Farmmi announced the pricing of an upsized underwritten public offering. The offering of 140,000,000 shares at $42 million will be used for working capital and corporate purposes. After this announcement, FAMI stock significantly dropped overnight by more than 60%.
Now FAMI stock is moving back up in the market again, being up more than 20% on April 30th. The company has more going on than just this recent public offering. It recently announced that its subsidiary Zhejiang Forest Food Co. Ltd. achieved something big last week. The company received a multi-product order for export to Japan of its flavored dried mushrooms and dried black fungus. Zhejiang received a similar order for the same products to the United States one week before this.
Castlight Health Inc. (NYSE: CSLT)
For Castlight Health Inc., its bullish movement on April 30th is easily understandable. However, let’s get you up to speed on Castlight before we jump into its recent news. Castlight is a health company that provides health navigation solutions. These solutions are used in schools, retail, government, and tech industries. One of its products is the Care Guidance Navigator, which lets users make better care decisions and look at employer-sponsored healthcare benefits.
On April 29th, Castlight released its first-quarter results for the period ending March 31st, 2021. Its revenue totaled $35.1 million, and its GAAP gross margin grew 0.7%. The CEO of Castlight, Maeve O’Meara said, “We executed well in the first quarter and made meaningful progress against each of our three priorities for 2021 while delivering strong financial results, including sequential ARR growth and our fourth straight quarter of non-GAAP profitability.”
This positive growth reported on the 29th caused CSLT stock to move more than 9% higher the following day. Castlight expects revenue of $135 million to $140 million for all of 2021. In the next quarter, the company expects $33-$35 million in revenue. With all of this in mind is Castlight a healthcare penny stock to watch in May?
The Future Of Penny Stocks
As technology and the world changes around us, so do penny stocks. With platforms like Robinhood and WeBull changing the way we trade, investing in stocks has never been easier. With the market changing daily, investors always need to stay up to date to be the most profitable trade you can be.
Cryptocurrency has grown in popularity as well, with assets like Bitcoin and DogeCoin swiftly growing in price at some points. At the end of the day, the trends that occur in the market will always be the most important aspect for both short and long-term traders. So with all of this in mind, which penny stocks will end up being on your watchlist?