3 Penny Stock Industries That Could Have Value as Markets Turn Down
Finding penny stocks to buy in today’s market can be challenging. And while penny stocks are in a slight correction, this is the natural ebb and flow of the market that investors need to be aware of.
But with any market and especially penny stocks, times of bearish sentiment are also times that opportunity could be found. In 2021, we find ourselves in an interesting time with Covid and the economic situation of the U.S. Because of this, massive uncertainty means that markets are more volatile than ever.
And, as prudent investors we need to always think outside of the box, considering how different factors can potentially lead to gains. Also of note is that cryptocurrencies such as Bitcoin and DogeCoin, have driven attention to other cheap assets such as the long list of penny stocks. Because of this, attention to stocks under $5 remains very high. So if we combine all of these factors at play, we can find industries that may be able to benefit both in the short and long term.
It’s worth considering that being the best investor is about knowing what will make penny stocks go up and down. And with penny stocks on Robinhood or penny stocks on Reddit, there are a lot of social factors that are influencing the price of stocks outside of pure fundamentals. So considering all of this, here are three industries that could be resilient during a bear market.
3 Penny Stocks Industries That Could Be Worth Watching
- Tech Penny Stocks
- Blockchain Penny Stocks
- Biotech Penny Stocks
1. Tech Penny Stocks
Tech penny stocks have been at the forefront of growth for the past year or so. While companies like Tesla Inc. (NASDAQ: TSLA) led the charge, others have grown as a result of the pandemic. When Covid-19 first hit, many companies scrambled to figure out work-from-home and education-from-home solutions.
This resulted in several penny stocks rising significantly in value in only a short period. And in the past year as well, the steep emphasis on tech has meant that these companies could be here to stay. When looking for penny stocks to buy in the tech sector, there are a few things that investors should consider.
First, what does the company do and what sub-sector are they in? Does it produce software, hardware, or a combination of both? Next, investors should understand what role the company has in the future of that specific industry. Is that role longstanding, or is it just supporting a short-term trend?
These are all important things to consider when looking for penny stocks to watch in the tech sector. However, some of these apply to making a penny stock watchlist in general.
Some leaders in the under $5 tech stock category right now include MoSys Inc. (NASDAQ: MOSY) and Nokia Oyj (NYSE: NOK), among others. Also of note is that investors should consider both the speculative and fundamental factors impacting a companies price. But if you invest in penny stocks nowadays, you probably already do this. With this in mind, are tech stocks right for you?
2. Blockchain Penny Stocks
Blockchain penny stocks have become more popular than ever in the past few months. Ever since the meteoric rise of cryptocurrencies like DogeCoin and Bitcoin, many investors have been searching for the best blockchain penny stocks to buy. But, within this industry, there are companies with varying degrees of separation.
One of the most pureplay blockchain stocks is SOS Ltd. (NYSE: SOS). SOS engages directly in the mining of cryptocurrencies such as Bitcoin, Litecoin, and DogeCoin. Because of this, its price rises and falls relative to the price of certain cryptos.
A less involved blockchain company would be Ebang International Holdings Inc. (NASDAQ: EBON). It produces technology and microchips used in the production of bitcoin mining machines. While both of these companies could have value, both are different in terms of what they offer and their volatility.
And as volatile as penny stocks are, adding in the layer of cryptocurrency can make them even more volatile. In this regard, we also have to account for the effects of Reddit and Robinhood on penny stocks.
In the past year, we’ve seen social media sites have a larger and larger impact on the price of the more talked about stocks. But, most who invest in penny stocks and cryptocurrency, tend to like this volatility. This allows for more entrance and exit points in a given company.
And with Bitcoin and DogeCoin prices skyrocketing in recent weeks, many investors are searching for any company involved in this industry. So while it is relatively in its infancy, there are plenty of blockchain penny stocks to watch right now.
3. Biotech Penny Stocks
Biotech penny stocks are some of the most popular stocks in 2021 and 2020. The main and obvious reason behind this is the pandemic. When the pandemic hit last year, many biotech stocks dropped in value alongside the rest of the stock market.
However, as vaccine efforts grew into a multi-billion industry, many quickly reached record highs. So a year later, the emphasis on biotech stocks has remained incredibly high, even if a company is not working on a treatment or vaccine for Covid-19.
With biotech stocks, there are a few things that investors need to consider. For one, what is in its pipeline? This is arguably the most important as it shows what a company is working on, and how far along its pipeline is in the stages of approval.
Additionally, does it have any compounds that arena the commercialization stage? While not all biotech companies do, it’s important to find the ones that are seeing revenue from a given product.
Lastly, what does its funding look like? This is also important as many biotech companies will engage in massive offerings as a way to raise capital. However, it’s important to consider the effects that this can have on share dilution. Some popular biotech penny stocks right now include Precipio Inc. (NASDAQ: PRPO), Obalon Therapeutics Inc. (NASDAQ: OBLN), and others. So with all this in mind, will you be looking for biotech stocks to watch?
Are These Penny Stock Industries Worth It?
Finding the best industry to invest in penny stocks depends mostly on your investing style. If your portfolio is more geared toward long-term holdings, then certain industries may be better for you. However, if you are inclined to day trade or short-term buy and sell, then others could be the right option.
While the stock market is in flux right now, any period of consolidation could mean future opportunities. And with so much going on, there are plenty of factors that are affecting both penny stocks and blue chips. Considering all of this, are these penny stock industries worth it?