In 2020’s speculation-fueled market, many penny stocks thrived. And these were not just speculative growth stories. Even some companies in the middle of Chapter 11 bankruptcy proceedings saw their share prices go parabolic. The unique factors that drove last year’s market (Covid-19 indirectly fueling a rise in day-trading) could continue. But that does not mean it’s high time to join the wave of speculation in low-priced stocks.

Why? Namely, for many of them, risk-return is not in your favor. Either the share price fails to reflect the underlying value of the business, or, in the case of bankrupt penny stocks, shareholders will likely end up with nothing.

Overall, dabbling in penny stocks is more gambling than investing. Yes, in some cases, there can be opportunity in low-priced stocks. But, in those situations, there’s a solid reason (low valuation, catalysts) to be bullish. However, buying “hot” penny stocks, in the hopes they head higher? Not as wise of an idea.

So, which penny stocks should investors avoid as 2021 unfolds? These eight stand out as ones to steer clear of:

• Chesapeake Energy (OTCMKTS:CHKAQ)
• Genius Brands (NASDAQ:GNUS)
• Hertz Global Holdings (OTCMKTS:HTZGQ)
• Remark Holdings (NASDAQ:MARK)
• Ocugen (NASDAQ:OCGN)
• StoneMor (NYSE:STON)
• VBI Vaccines (NASDAQ:VBIV)
• XspresSpa (NASDAQ:XSPA)

Penny Stocks to Avoid: Chesapeake Energy (CHKAQ)

As I said back in July, there’s nothing left for shareholders of CHKAQ (formerly CHK) stock. As energy prices remain depressed, the value of its assets isn’t even enough to pay bondholders back in full. Fortunately, early speculators in this energy stock got the message after its bankruptcy. Shares have fallen back significantly since getting irrationally priced earlier this year.

However, some are betting that Chesapeake Energy still has some value. Don’t be one of them. As InvestorPlace’s Ian Bezek said on Dec. 11, the company’s bankruptcy plan is in its final stages. Once it’s complete, bondholders will get 100% of the equity. Common shareholders? Zero, zilch, nada.

Putting it simply, the bear case for Chesapeake is pretty cut-and-dried. Sure, there is still a remote chance speculators could bid them up again, erroneously thinking the equity still has some value. But, given that the irrational bullishness in bankrupt stocks has long-faded, don’t count on it.

The total destruction of shareholder value by CHKAQ stock has been a long time coming. Already damaged by poor management, the pandemic simply accelerated the total wipeout. The verdict? Avoid, with a capital “A.”

Genius Brands (GNUS)

Next on my list of penny stocks to avoid is Genius Brands. Last summer, this producer of children’s entertainment climbed from well under 50 cents per share to prices nearing $8 per share. But, as the “Robinhood effect” faded with this “mostly sizzle, little steak” stock, Genius Brands has since given up the lion’s share of its gains.

As GNUS stock bounces above $1 per share and below $2 per share, some may see it as an opportunity to “buy the dip,” ahead of a second rally. Yet, taking a look at the fundamentals, there’s little reason to believe that, out of the blue, investors will again go bananas and send it parabolic a second time.

Right now, Genius sports an enterprise value of $302.4 million. But it generated just $2 million in sales in the past twelve months. Operating earnings are negative as well. Admittedly, using trailing-12-month results may not be fair. The company has potential with its owned children’s media properties, like Rainbow Rangers.

But, add in heavy shareholder dilution and the risk of competition from the big media oligopoly, and it remains an upward battle for Genius Brands. With shares priced as if it has already climbed its continued hurdles, it’s best to stay away from GNUS stock for now.

Hertz Global Holdings (HTZGQ)

The trading of Hertz stock following its bankruptcy is truly one for the stock market history books. Instead of falling toward zero (as stocks in companies filing for Chapter 11 typically do), amateur investors bid it up following the filing. As a result, the company tried to take advantage of the irrational exuberance with a planned equity offering. But, fearing regulatory repercussions, it quickly rescinded the plan.

So, about six months later, what’s the verdict? Not good. As this Seeking Alpha contributor (a specialist in bankruptcy situations) put it on Dec. 1, HTZGQ shareholders are still expected to get zero recovery under the rent-a-car company’s reorganization plan.

Granted, given car rental companies could, in theory, be a solid recovery play (as vaccines roll out in 2021), this company’s operations may see material improvement. But, it’s likely too little, too late. For those who dabbled in HTZGQ stock after the bankruptcy filing, still count on it being a “total wipeout.”

Some may see quick profits, if speculators irrationally bid this up once again before the bankruptcy is over and done with. But, don’t get caught holding the bag, and steer clear of Hertz stock.

Remark Holdings (MARK)

After grabbing the attention of speculators in June, longshot AI (artificial intelligence) play Remark stock sold off into the fall. But, with investor enthusiasm for overhyped stocks picking up after election and vaccine news, shares have gone on a wild ride yet again.

Surging more than 100% since Nov. 3, those who bought MARK stock early have seen quick, solid gains. Yet, despite its pandemic-related catalyst, mass adoption of its AI-powered thermal screening devices hasn’t really taken off.

Sales for the quarter ending Sept. 30 were just $2.8 million. And with the world hoping that vaccines can bring us “back to normal,” it doesn’t seem likely there will be a big market for thermal screening in airports, casinos and malls as some anticipated a few months back.

However, there’s another variable that could help sustain Remark’s valuation: its stake in ShareCare, which some have said could be worth as much as $76.5 million. But, despite this “hidden asset” providing (some) margin of safety, the best move is to avoid this “mostly hype, little substance” pandemic play.

Ocugen (OCGN)

Trading for mere pennies just a month ago, a spate of good news has so far sent OCGN stock up tenfold. News of the biotech startup helping to bring coronavirus candidate COVAXIN to the U.S. was the first spark that sent the shares parabolic in late December. As InvestorPlace‘s Robert Lakin wrote on Jan. 4, further news of its vaccine receiving emergency-use authorization (EUA), fueled another big one-day move.

But, after going from zero to hero, further gains may not be in the cards for Ocugen. While it has some Covid-19 vaccine exposure, the details are far less exciting than the headlines.

For starters, this isn’t a vaccine the company developed in-house. Instead, it’s simply partnering with India-based Bharat Biotech to bring this candidate to the U.S. market. Despite the recently announced EUA, experts have slammed Bharat and its candidate, citing ethical concerns with its Phase 3 trials. Also, it’s debatable how much this deal will translate into upside for OCGN stock. Even with the vaccine news, Roth’s Zegbeh Jallah still has a price target on the stock of $1 per share, well below its current trading price (around $2.55 per share).

Putting it simply, what sounds good on paper may not translate into tangible results for Ocugen. Stay away, as this penny stock’s recent strong performance could quickly change course.

StoneMor (STON)

My next pick for penny stocks to avoid is StoneMor. STON may not be a household name, but shares in the cemetery company have soared in recent months. Mainly, due to news of divestitures that allow the company to deleverage its balance sheet.

However, after rallying 293% in the past six months, it’s clear STON stock has moved up too far, too fast. Why? While the divestiture news is a positive, it may not be much of a gamechanger. The asset sale’s proceeds total $57 million, but the company’s outstanding debt tops $343 million.

Also, getting back to profitability remains a work in progress. Admittedly, things are moving in the right direction. Operating cash flow has seen material improvement in the past three quarters. But this hardly warrants the stock’s near-term move higher. Investors are pricing it as if this turnaround play has, well, turned itself around.

As a result, it’s hard to see shares moving dramatically higher from today’s prices. But the risk STON stock falls back remains high. With risk-return not in your favor, stay away from this less exciting but still richly priced penny stock.

VBI Vaccines (VBIV)

Like other vaccine stocks, VBIV stock soared in the summer, as investors made a longshot bet on its Covid-19 vaccine contenders (VBI-2901 and VBI-2902). But, after climbing sixfold between April and July, shares have since pulled back around 50%.

Given frontrunner vaccine contenders like Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) are already rolling out their approved vaccines, this makes sense. VBI Vaccines is still working on their candidates. As of December, clinical trails for both its candidates were still in the early stages.

However, while most of its 2020 gains were due to Covid-19 vaccine speculation, I wouldn’t call this a binary pandemic play. Before the outbreak, the company’s main catalyst was its Sci-B-Vac hepatitis vaccine. But, still waiting for regulatory approval in the U.S. and Europe, progress on this has been slow as well.

So, with several potential gamechangers, why go against VBIV stock? While its still down big from its highs, it’s best to stay away from this high-risk vaccine play right now. With most of its potential from both its longshot Covid-19 contender and its longstanding Sci-B-Vac catalyst priced in, the potential for further gains looks limited here.

XpresSpa (XSPA)

When Covid-19 first hit the U.S., shares in airport-spa operator XpresSpa cratered. However, after announcing its plans to retrofit its closed spa locations into testing centers for Covid-19 and other communicable diseases, shares skyrocketed from under 50 cents per share to over $5 per share.

As the speculation in pandemic recovery plays cooled, XSPA stock has slid back toward prior price levels. Some may be interested in buying it while it remains far below prior highs, given the current vaccine rollout could mean a “return to normal” by 2021.

Yet, as our own Matt McCall put it last month, XpresSpa is more trouble than it’s worth. In short, don’t consider this a great air-travel recovery play. Even before the pandemic, when airlines were making record profits, this company was losing money.

Put simply, no matter what the future holds, chances are it’ll be a losing situation for XSPA stock. Either the pandemic continues through 2021, and the company attempts (but fails) to make money from its testing centers. Or, things rapidly return to the “old normal,” and it resumes operating its airport spa locations at a loss.

Add in the dilutive capital raises it executed at the height of the health crisis, and it’s easy to see shares continue falling toward $1 per share (and below).

On the date of publication, Thomas Niel did not (either directly or indirectly) hold any positions in the securities mentioned in this article.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.