Robinhood has created a new group of investors. In time, I’m optimistic this will be good for the markets. And I hope that many of these new traders will take time to develop a knowledge of the markets that can help them improve their personal financial position. One of those lessons is that speculating in penny stocks should only make up a small part of your portfolio.
But in the short term, there’s likely to be a lot more volatility. The allure of commission-free trades combined with some low-priced stocks has given speculators the ingredients for the parabolic movement in stocks. The most notable of these was GameStop (NYSE:GME), but it wasn’t the only stock.
However, if you’re thinking of taking a little of your play money to speculate in low-priced stocks, a little homework can go a long way. There are several penny stocks (i.e., stocks that trade for less than $5) that look to have short-term catalysts that may be realized in 2021.
Many penny stocks are that way for a reason. These are low revenue companies. And in some cases they may even be pre-revenue companies. They may not have fundamentals that make them long-term investments. But you’re not looking for that. These are stocks you buy with money that you’re willing to put at risk.
And here are seven of these penny stocks that you can buy on Robinhood.
- VistaGen Therapeutics (NASDAQ:VTGN)
- AIM ImmunoTech (NYSEAMERICAN:AIM)
- Tiziana Life Sciences (NASDAQ:TLSA)
- Senmiao Technology (NASDAQ:AIHS)
- Zomedica (NYSEAMERICAN:ZOM)
- Castor Maritime (NASDAQ:CTRM)
- Ferroglobe (NASDAQ:GSM)
VistaGen Therapeutics (VTGN)
VistaGen Therapeutics, like several of the penny stocks on this list, is in the biotech sector, among the companies that devote millions if not billions to developing drugs.
Many of these drugs never make it out of clinical trials. And if they don’t have a product already in-market delivering revenue, there’s not a whole lot of growth available to investors. That’s why you should look for companies that have a deep pipeline, like VistaGen. It just means they get several bites at the apple.
VTGN stock is a bet on its specialization in developing treatments for anxiety, depression and other central nervous system (CNS) disorders. If the world wasn’t already aware that mental health is a public health concern prior to the pandemic, it is now. The firm’s lead drug candidate, PH94B is moving into Phase 3 trials later this year. The drug is a “neuroactive nasal spray” that is being tested for treating anxiety-related conditions such as social anxiety disorder and PTSD.
The company has two other drugs that are in Phase 2 trials. VistaGen is not yet profitable; in fact, the company has very little revenue. And in its last earnings report, the company delivered a loss of 7 cents per share. While this was two cents worse than what analysts had forecast for the quarter, it was 8 cents better than the same quarter the prior year.
VTGN stock carries a $5.50 consensus price target which is more than twice the stock’s price as of this writing.
AIM ImmunoTech (AIM)
Another biotech stock that should be on your radar is AIM ImmunoTech. AIM stock is up over 300% since the beginning of 2020. In the case of AIM, the focus is on the company’s in-market drug, Ampligen. The company is seeking an expanded label that will allow it to be used to treat fatigue-related symptoms that are common in “long hauler” Covid-19 individuals.
Ampligen currently enjoys a first-mover advantage as the only approved therapeutic for myalgic encephalomyelitis or chronic fatigue syndrome (ME/CFS). Right now, it is only approved for use in Argentina. However AIM is pursuing a New Drug Application (NDA) with the FDA.
The company believes that the infusion therapy may work to treat individuals with long hauler fatigue from Covid-19 since the two conditions manifest themselves in similar ways.
And even if the company is not successful in getting Ampligen approved for the broader label, it still has an addressable market of one million individuals in the United States alone.
A note of caution would be that, at this time, only three analysts cover AIM stock. All of them recommend the stock to buy, with a median price target of $6.50 per share. That would likely go up if Ampligen’s NDA is approved.
Tiziana Life Sciences (TLSA)
The last of the biotech companies I’m putting on this list is the U.K. company, Tiziana Life Sciences. In the short term, the interest is on the company’s flagship drug, Foralumab. This is being used with Covid-19 patients to help rapidly suppress lung inflammation and improve sense of smell and taste. The latter are two symptoms that even mildly symptomatic individuals seem to deal with sometimes for several months after contracting the virus.
Foralumab and other therapeutics like it are a reminder that the medical community still believes there will be a need to manage symptoms in Covid-19 patients even as vaccines become widely available.
In the last 12 months, TLSA stock has shot up 315%. Most of that is attributable to its presence in the Covid-19 arena. However, the company has other products in its pipeline that focus on other immune system diseases such as multiple sclerosis and Crohn’s disease.
Despite the huge run-up in the TLSA stock price, the two analysts that cover it give the stock a median 12-month price target of $9.50 which is nearly 180% higher than its current price.
Senmiao Technology (AIHS)
The next penny stock on our list is Senmiao Technology. This is a Chinese company that provides “automobile services.”
At first glance, I was concerned that this was a company similar to Ideanomics (NASDAQ:IDEX). If you’ve read my articles on Ideanomics you know that I am bearish on the company because it seems to lack focus.
I don’t see the same problem with Senmiao. The company does have its fingers in a lot of businesses. However, in this case it looks to be more focused on the products it offers. And one of its more compelling draws in a post-Covid world is the company’s ride-hailing service, which the company launched in December.
In its most recent earnings call, the company reported 2.2 million riders since the launch. If that trend continues to rise, it should increase the $1.63 million in revenue the company brought in. That would be a nice catalyst for AIHS stock.
Zomedica stock has been on a tear, climbing 525% since the beginning of the year. And that has many investors getting ready to place a bullish or bearish bet. That’s the thing about penny stocks, there are a range of outcomes. And any of them could be true.
In the case of Zomedica, this looks like a company that has a large addressable market. The company is testing point-of-care pet diagnostics. According to the company, this market is expected to be valued at $2.8 billion by 2024.
However the company lacks an in-market product at this time. And its Truforma diagnostics system, as Matt McCall has pointed out, relies on licensed technology. This suggests that all the gains may already be priced into ZOM stock.
Fair enough, but we’re looking at stocks that you can speculate on. And if I had to bet, I’d guess that people will still spend on their pets. This may be a stock, you’ll want to wait for a more reasonable entry price, but it still could be worth a speculative buy.
Castor Maritime (CTRM)
One of the intriguing stories early in 2021 is the commodities market. Prices are rising as supply chains struggle to get back on line. This is a bullish narrative for Castor Maritime. This is a global shipping company that is in the business of transporting commodities.
Specifically, the company is using the pandemic-induced downturn in the dry bulk shipping market to increase the size of its fleet. The idea is sort of like penny stock investing. Castor Maritime hopes that by purchasing ships now (the company recently announced the first such purchase) that there will be a payoff down the road.
CTRM stock is up approximately 80% since the beginning of the year. Yet investors can still get on the stock for less than a dollar per share. But you may want to put this company on your watch list for now. The company is a heavy target of short interest at the moment. This is likely due to recent share issuances.
Clean energy stocks are drawing tremendous interest from investors. That’s a great reason to invest in Ferroglobe. If the world is going to embrace a renewable energy future, the companies that make up the supply chain will stand to benefit. Ferroglobe produces multiple silicon metal alloys that are used in products such as solar cell systems.
GSM stock is up nearly 120% in the first two months of 2021. Undoubtedly much of that has to do with the Biden administration’s $2 trillion dollar climate change agenda. Renewable energy was continuing to become more economically viable even though the focus of the previous administration was not overtly addressing climate change.
Nevertheless, having advocates in high places may be the trigger that propels GSM stock higher. Like many companies on this list, Ferroglobe is not yet profitable, but they are delivering revenue. And in its most recent quarter, the company announced a full-year loss of $1.13 per share. That was however, a marked improvement from the $1.66 per share loss from the year prior.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Gettting Scammed
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.