Personally, I haven’t seen this level of enthusiasm among retail investors in penny stocks in some time. It appears the retail investor is not only alive and well, but shifting his focus to lottery ticket opportunities. Looking at various Reddit forums on this topic, we are seeing a ton of discussion on such stocks. Two stocks that have been alive with chatter of late have been OBSV stock and BLU stock.
Let’s dive into what these companies do, and why there’s so much momentum in these penny stocks.
Analysts Believe These Penny Stocks Could Rally 100%
A report released today on TipRanks has identified that both BLU stock and OBSV stock could be short-term, double-up opportunities. As such, investor enthusiasm for these stocks appears to remain strong.
ObsEva is a company which is in the process of achieving approval for therapeutics aimed at women’s health issues. The company is nearing the end of its Phase 3 trials. Accordingly, the European Medicines Agency has validated the company’s request for review, upon trial results. This review will be for ObsEva’s leading drug candidate, Yselty.
BELLUS Health is another biopharma company in clinical trials. This company is focused on therapeutics aimed at hypersensitivity disorders. These symptoms include chronic cough and other disorders the company’s leading prospective drug, BLU-5937, hopes to tackle.
Penny Stocks Are Inherently Risky, So Trade Carefully
Both BLU stock and OBSV stock carry a market capitalization less than $500 million. These stocks are still clinical-stage biopharma companies. Their products have yet to be approved or proven. As such, investors are taking a leap of faith of sorts with these stocks.
As mentioned, many of these stocks are “lottery ticket-like” in nature. They trade almost as options would, and provide massive upside potential, along with serious downside potential. If clinical trials don’t go well, or catalysts don’t materialize, these stocks have the potential to return to their penny status quickly.
Investors should be very careful with their position sizing and diversification with respect to these stocks. Spreading one’s bets across a number of high-quality penny stocks is one strategy. Ensuring that the one 10,000% winner offsets all the losses from the 90% of positions that are zeros (or close to it) is important.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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Read More: Penny Stocks — How to Profit Without Getting Scammed