Penny stocks are risky in the best of times. Often thinly traded shares of small capitalized companies with few products and little to no revenue, penny stocks are speculative investments and tend to attract investors with an extremely high appetite for risk. However, that risk can be handsomely rewarded when penny stocks jump in price. Because they trade under $5 a share, penny stocks are cheap to buy, and a move of only a few cents can result in big profits for investors. For these reasons, penny stocks are increasingly attracting interest from retail investors who frequent the Reddit forums. In fact, several penny stocks have gotten huge boosts after being targeted by investors on various subreddits.
In this article, we’ll take a look at seven penny stocks that are moving higher this year with help from retail traders.
- Asia Broadband (OTCMKTS:AABB)
- Sundial Growers (NASDAQ:SNDL)
- Zomedica (OTCMKTS:ZOM)
- Ocugen (NASDAQ:OCGN)
- Castor Maritime (NASDAQ:CTRM)
- Allied Esports Entertainment (NASDAQ:AESE)
- American Resources (NASDAQ:AREC)
Penny Stocks Moving Higher: Asia Broadband (AABB)
Investors with nerves of steel who want a penny stock that is prone to big and sudden jumps should check out Asia Broadband, a cryptocurrency mining company based in Las Vegas, Nevada.
The company’s share price rose 2,400% in February, climbing from just 2 cents to 54 cents per share. In March, Asia Broadband’s stock price jumped from 14 cents to 47 cents, an increase of 235%. Of course, the highs are short-lived and Asia broadband stock is now down to 23 cents a share. But it likely won’t be too long until the next big run-up.
Strong interest from retail investors is helping to move AABB stock. The company’s involvement in the red-hot cryptocurrency sector is also attracting investor dollars. Plus, Asia Broadband has made a few significant announcements in recent weeks, including that the company reported a profit of $16.8 million from its cryptocurrency mining operations during 2020, and plans to plow the surplus money into expanding its crypto mining operations.
Also, Asia Broadband has launched a new cryptocurrency token that is tied to the price of gold. This all adds up to a promising future for Asia Broadband. The stock is subject to wild swings up and down, but it does have potential.
Sundial Growers (SNDL)
Canadian cannabis play Sundial Growers has been tightly squeezed by traders who frequent Reddit. From Jan. 26 to Feb. 10, SNDL stock rose 427% to a high of $2.95 from 56 cents. The share price has since fallen 60% and is now down to $1.17. Sundial Growers got a big jump when the mob on r/WallStreetBets decided to target the entire cannabis sector, pushing shares of multiple marijuana stocks and exchange traded funds (ETFs) to new highs. In the case of Sundial Growers, the February price move was welcomed, but bittersweet for long-term investors who remember when the company’s share price was as high as $11.50 in August 2019.
Beyond the rise along with the broader cannabis sector, there has not been a lot to recommend SNDL stock lately. There are rumors that Sundial Growers could be targeted for a takeover as the cannabis market consolidates this year. These rumors have grown louder as Sundial Growers has reported one disappointing financial result after another. Revenue for the last three months of 2020 increased to $13.9 million, up 8% from the previous quarter, but down 6% from the year earlier period. The company’s net loss for last year was $64.1 million. Not great.
Pets have become increasingly popular during the pandemic, a fact that has sent the stocks of pet-focused companies sharply higher over the past 52-weeks. One of the big beneficiaries has been animal health company Zomedica. ZOM stock, while still trading among the pennies, is up 618% year-to-date at $1.66. And, unlike many of the stocks featured in this article, Zomedica stock has managed to retain much of its gains. While the stock has slumped with the broader market weakness of the past month, the company’s share price was at just 35 cents on the first trading day of the year.
Much of the rise in ZOM stock can be attributed to the high hopes that the company and its shareholders have for its “Truforma” platform used for diagnosing common ailments in cats and dogs. Truforma can provide immediate results for tests that typically require samples be sent to a laboratory, saving costs and time for both veterinarians and pet owners. Zomedica is targeting veterinarians for its Truforma platform, and stresses that the animal diagnostics market is projected to reach close to $5.4 billion by 2026. The company needs for its Truforma platform to be a hit given that it didn’t generate any revenue in 2020 and posted a net loss of $16.9 million for the year.
OK, so this one is cheating. Ocugen stock is currently trading out of penny stock territory, at $6.83 per share. In late January, OCGN stock was trading around $1.66 a share. Less than two weeks later, the biotech company’s stock had popped 852% to a peak of $15.81 as the Reddit crowd got hold of the shares. Few penny stocks have rocketed so high so quickly this year. Ocugen’s share price has been propelled higher over excitement about its Covid-19 vaccine candidate “Covaxin,” as well as news that the Malvern, Pennsylvania-based company is partnering with experienced Indian-based Bharat Biotech on the vaccine’s development and marketing.
This is all heady stuff for a company that had revenue of only $43,000 in 2020 and posted a net loss of more than $20 million. Nevertheless, investors have high hopes for Ocugen’s Covid-19 vaccine, which has demonstrated greater efficacy in clinical trials than vaccines produced by more established companies such as Johnson & Johnson (NYSE:JNJ) which has received an Emergency Use Authorization from the Food and Drug Administration (FDA). Ocugen’s Indian partner, Bharat, has already secured a deal to supply the Brazilian government with 20 million doses of the Covaxin vaccine, worth nearly $300 million.
Things are looking promising for Ocugen’s vaccine, though it has yet to receive FDA approval. OCGN stock depends on that approval coming sooner rather than later.
Castor Maritime (CTRM)
Global shipping company Castor Maritime saw its share price rocket from just $0.19 at the start of 2021 to a 52-week high of $1.95 on Feb. 11. That’s an increase of 926% in six weeks. CTRM stock has since crumpled, falling 61% to $0.76 a share. However, shareholders remain hopeful that Cyprus-based Castor Maritime’s stock can again take a run at the $2 share price. There’s some reason for optimism given that the company, which was founded in 2016, is expanding its number of ships this year, adding four new vessels and bringing its total feet to nine ocean going vessels.
With a current market capitalization of about $389 million, Castor Maritime managed to increase its revenues 159% through the first nine months of 2020 compared with the same period of 2019. It had $37 million in cash, about $30 million in fixed assets and long-term debt of $11 million. While not the strongest balance sheet around, it’s important to remember that Castor Maritime is still a young company in growth mode. CTRM stock leapt in February because Reddit traders tried to execute a short squeeze on the stock. At that time, trading volumes of the stock were as high as 700 million shares in a single day. The short squeeze aside, Castor Maritime does have some momentum behind it.
Allied Esports Entertainment (AESE)
Irvine, California-based Allied Esports Entertainment is another company whose stock price has grown steadily this year despite several peaks and valleys, and it has managed to hold onto most of its gains. The company, which hosts esports games at various venues and through its network of mobile trucks around the world, has seen its share price rumble 88.61% higher year-to-date. AESE stock now trades at $2.99 per share. The upward trajectory comes as video games have grown in popularity during the Covid-19 lockdown period, and as next generation gaming consoles drive the industry forward.
While it’s a comparatively small company with a market capitalization of just $130 million, Allied Esports Entertainment does own the popular “World Poker Tour” that is broadcast on television in addition to its esports productions. And, Allied Esports has received an unsolicited takeover bid from Bally’s Corporation (NYSE:BALY), which has offered to buy Allied Esports for $100 million. News of the takeover offer from the casino and racetrack operator helped send AESE stock higher.
Regardless of whether Allied Esports accepts Bally’s deal or not, the company’s stock price could continue to appreciate on continued strength in the video game and e-sports markets.
American Resources (AREC)
Based in Fishers, Indiana, American Resources is a raw material supplier. The company sells coal products that are widely used, and considered essential, in steel manufacturing. Founded in 2006, the company has coal operations in Kentucky and West Virginia. AREC stock had a fantastic run earlier this year, sprinting ahead 324% to an all-time high of $8.02 a share from just $1.89 on the first trading day of 2021. Unfortunately, the stock’s gains have been cut in half in recent weeks, and the share price now stands at $3.74. Reddit investors seem to be growing cold on American Resources.
But retail investors who have abandoned American Resources may regret it, as the company is working to expand and diversity its operations. American Resources has announced plans to grow its operations into the area of rare earth elements that are used in smartphone, electric vehicles and other technological devices. The company is developing these rare earth elements in a socially responsible manner too, using a unique and proprietary process to reuse coal products so they can be used in the development of batteries for electric vehicles and other electronics. Some analysts feel American Resources is a company that is in the right place at the right time when it comes to technology.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.