Are Penny Stocks Affected by Cryptocurrency Swings?
Penny stocks have become extremely popular throughout the past few years. The term “penny stocks” refers to any stocks trading under $5 per share. Investors often ask themselves, why invest in penny stocks? Well, because they are relatively cheap, they provide an interesting entry point that investors could use to their advantage.
Despite risk being a big factor to consider, the large swings that we see with penny stocks can potentially deliver sizable gains. This, of course, depends on the individual trader and how much time they are spending on research and education. While it’s not common to see a stock go from $100 to $200 in a single day, we do see penny stocks move from $0.10 to $0.20 for example, quite often.
If risk is your concern, there are some easy ways to mitigate these fears. Some traders will hold a long-term position, taking profit along the way. Others will day trade penny stocks which is referred to as swing trading. When it comes to strategy, there are a few basics that can help out. The best way to build a personalized approach is through identifying market trends and events that could impact larger sectors.
Additionally, going through, filings, news, rumors, and reports are all aspects that can help in your search for a penny stock to buy. Lastly, looking at analyst recommendations and price targets can help to give an idea of what the market thinks about a given security.
Moving on, we see that cryptocurrency has begun to have a large relationship with penny stocks. While some companies are working with crypto-related technology, the correlation between the two asset classes goes far beyond this. The main reason for the comparison is that penny stocks and cryptocurrencies can both be relatively cheap and high in volatility.
Often those who trade penny stocks also trade cryptocurrency. While we did witness a correction on April 19th with crypto, we are already seeing value climb back up. Additionally, we are seeing heightened attention with penny stocks as well. Whether or not these two are correlated remains to be seen. With all of this in mind, here are three penny stocks to watch during the crypto boom.
3 Top Penny Stocks To Watch Right Now
Ashford Hospitality Trust Inc. (NYSE: AHT)
One penny stock showing high volume right now is Ashford Hospitality Trust Inc. This penny stock, up 15% today, is a real estate investment trust (REIT) focused on providing its offerings for upscale full-service hotels. Ashford also offers the Ashford App for the investor community to use as a way to research the hospitality industry.
In the United States and internationally, the real estate market is booming. In January, home prices recorded an 11.2% annual gain, which is one of the largest increases witnessed in a long time. Last month, the Dow Jones Equity All REIT Total Return Index (INDEXDJX: REIT) reached a new 52-week high in the last month.
In the past, seeing gains like this on large indexes has always been a solid sign for economic growth. Right now the U.S. housing market is nearing a 15 year high. It is safe to say that real estate is in the midst of a very large rally. As a result, AHT stock has been moving upwards in the the past few months.
The company has several aspects that are helping to push it upward in value right now. In less than a month, the company will be releasing its first-quarter results for 2021. While we don’t know how its Q1 results will affect its share price, May 4th is a day that prospective AHT investors may want to mark on their calendars.
Ambev S.A. (NYSE: ABEV)
Many investors are focusing on finding penny stocks that could perform well as the economy opens back up. Traders have coined the phrase “reopening stocks” to refer to these companies. Ambev is an example of a reopening stock that could see more attention as COVID restrictions lessen globally.
Also, Ambev has benefitted from the pandemic which shows it could be an all-around interesting penny stock to watch. Ambev is a producer of soft drinks, beer, and other beverages with operations spanning the globe. Some of the brands under its name are Bud Light, Pepsi, Budweiser, Lipton, among many others.
The company has shifted its focus to help its business thrive during the pandemic. For example, Ambev converted part of one of its Brazillian breweries into an oxygen-producing and bottling facility. The idea behind this was to help hospitals in the area, which were running out of the oxygen used in treating critical Covid patients.
Additionally, Ambev is a good example of a penny stock on Robinhood. This has helped to bring in a sizable amount of retail investors. Because the beverage market tends to thrive during all economic conditions, ABEV stock continues to see heightened popularity among all types of traders. This is especially true if we consider the market for alcohol and the high demand for it throughout periods of economic hardship and prosperity. So considering all of this, is ABEV stock worth watching?
Cinedigm Corp. (NASDAQ: CIDM)
Cinedigm has gone through several periods of large fluctuations in the past few months. After moving down around 45% over the past thirty days, CIDM stock is now back on the up and up. Trading around 3.2% higher on April 19th, Cinedigm is an entertainment stock that distributes movies, television, and short-form content. One reason that CIDM stock has gone up recently has to do with NFTs. Even if you are not familiar with the cryptocurrency market, you have likely heard of non-fungible tokens.
NFTs have entered the mainstream, with big media and even Saturday Night Live referencing the blockchain technology. At the end of March when Cinedigm announced that it would be developing NFTs using its inventory of content, CIDM stock rose up accordingly. The company has not yet released detailed plans regarding its NFT, however, investors are excited about this long-term prospect. Recently, the company posted record subscription and ad-supported user growth numbers that help to support its recent bullish gains.
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Cinedigm’s total streaming viewers went up 208% year over year to 23.8 million. Additionally, its total subscribers on its SVOD (streaming video-on-demand) services rose 574% year over year, at more than 640,000.
The Chief Strategy Officer and President of Digital Networks for Cinedigm Erick Opeka said, “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.” With the growth of the entertainment industry occurring in tandem with the pandemic, CIDM stock remains a penny stock to watch.