As you will be reminded at the end of this article, penny stocks are incredibly dangerous. Of course, we are all naturally attracted to a low price tag. However, there’s a big difference between a discounted opportunity and a cheap one. The former may have some real potential, but the latter can leave you stranded.
Think of it this way: penny stocks are like a secondhand Maserati. Don’t get me wrong — those Italian luxury cars are true works of art. Yet, Maseratis also have some of the worst depreciation rates in the industry. A good deal, you might say? Only for the used-car salesperson. Buyers quickly find out why the vehicles drop more than 70% of their value in five years.
That said, we shouldn’t kid ourselves. Penny stocks can garner tremendous interest and it’s not just because of the current speculative state of the market. This sector has always attracted attention for the get-rich-quick angle. So, while you shouldn’t take stock tips from cold callers and the like, a nugget of truth does exist in their sketchy marketing pitches.
To be clear, penny stocks are wildly treacherous. Beyond the dangers of market volatility, they generally trade in the over-the-counter (OTC) markets. The bid-ask spread in this space can be very wide, meaning your speculative vehicle of choice will have to jump quite far for it to be worth it. But, because of the law of small numbers, it often doesn’t take too much energy to move these tickers higher relative to their blue-chip counterparts. That’s one of the main reasons why social media forums like Reddit’s r/WallStreetBets love this sector. If enough people join in, everyone could make out like bandits.
Further, when shares are so far removed from major indices, some of the factors that impact blue-chip stocks may not even apply to these speculative names. For many, this disassociation is worth its weight in gold. But ultimately, everyone’s looking for massive profits. So, here are some penny stocks that could get you exactly that.
- Ammo Inc. (NASDAQ:POWW)
- Worksport (NASDAQ:WKSP)
- Outlook Therapeutics (NASDAQ:OTLK)
- Inpixon (NASDAQ:INPX)
- Patriot One Technologies (OTCMKTS:PTOTF)
- Biolargo (OTCMKTS:BLGO)
- First Graphene (OTCMKTS:FGPHF)
Penny Stocks to Buy: Ammo Inc. (POWW)
In a way, I’ve been pounding the table on ammunition manufacturer Ammo Inc. — one of the penny stocks in the vice section of the market — for quite some time now. Sure, part of the bull thesis here is very cynical. With the pandemic and a large dose of uncertainty, some people have become increasingly concerned with protecting themselves.
Obviously, firearms don’t do much without ammo. No ammunition and you’re essentially out of options if there’s a threat. But self defense isn’t the only reason to buy POWW. Recently, ABC News noted the following about shooting sports in the United States:
“The National Shooting Sports Foundation, an industry trade group, says more than 50 million people participate in shooting sports in the U.S. and estimates that 20 million guns were sold last year, with 8 million of those sales made by first-time buyers.”
That’s a massive base of demand — and it’s even causing law enforcement agencies problems with inventory. Plus, there’s no end in sight to the supply shortage, even as producers pump out as much ammo as possible. Therefore, POWW stock is definitely a pick to keep on your radar.
Formerly one of the pure penny stocks with a sub-dollar price and changing hands on the OTC market, Worksport recently enjoyed an uplisting to the Nasdaq exchange. While not an initial public offering (IPOs), uplistings are like IPOs in a spiritual sense because they give the broader public an opportunity to learn about a company and its stock.
Worksport is a truck-bed-cover maker and clean-energy specialist that offers tremendous relevance through its solar-panel tonneau covers. In combination with a battery power pack, the company offers a modular renewable-energy solution for both regular drivers as well as commercial fleets. For instance, while driving to work sites, contractors can charge their battery packs via the solar-panel tonneau covers on their trucks. Those packs can then support various tools and lighting equipment with renewably generated electricity.
But that’s not all. In my view, there’s also growing demand for clean outdoor generators, especially with Covid-19 incentivizing people to spend more time in the great outdoors. This is a largely untapped market that Worksport can fill.
Granted, as with any opportunity among penny stocks (or equity units that share their characteristics), you’re going to want to perform your due diligence with WKSP stock. Still, for the speculative side of your portfolio, this name has some serious credibility.
Penny Stocks to Buy: Outlook Therapeutics (OTLK)
A late-stage biopharmaceutical firm, Outlook Therapeutics specializes in addressing an eye disorder called wet age-related macular degeneration (wet AMD). By the numbers, the condition underlines a massive need. According to Gene.com, “approximately 15 million people in the United States have AMD, and more than 1.7 million Americans have the advanced form of the disease.” The site continues:
“About 200,000 new cases of wet AMD are diagnosed each year in North America […] Due to the aging baby boomer population, the National Eye Institute estimates that the prevalence of advanced AMD will grow to nearly 3 million by 2020.”
Because of its relevance, Outlook has been one of the penny stocks attracting significant attention on social media. Additionally, the company recently justified that attention. Outlook announced “positive clinical and highly statistically significant top-line results” for its flagship therapy called Lytenava. Naturally, OTLK stock skyrocketed on the news.
Of course, enthusiasm slowed soon after, leading to choppy trading in the following session. Perhaps a buy the rumor, sell the news phenomena took effect here. But given that Outlook is now seeking a commercial launch in anticipation of marketing approval from the U.S. Food and Drug Administration (FDA), OTLK might be something to keep an eye on.
With Inpixon, I’m really digging into the speculative side of the market. Therefore, if you ignored the above warnings about penny stocks, this would be a great time to reconsider the tremendous risks involved in this arena. But if you know what you’re getting into, INPX stock could potentially be your ticket.
Billed as an indoor intelligence platform, Inpixon “provides organizations with the tools to ingest, interpret, and integrate data with indoor maps.” More specifically, the company stated that its technology allows client enterprises to “create smart indoor spaces with location awareness and accurately pinpoint the location of people or assets inside a building using smartphones, mobile devices, tracking tags or other devices.”
Inpixon’s technology is perhaps most pertinent when it comes to indoor security, helping to facilitate situational awareness. In particular, client operators can be alerted to rogue devices and other security threats. Further, Inpixon’s platform allows enterprises to “enforce no-phone zones, keeping [a customer’s] data, organization, and employees safe while reducing risk.”
Interestingly enough, INPX stock has charted a technical support line at around the $1 mark, accentuated by strong movements to the upside. Should a return to the office become the post-Covid-19 norm, these gains may be more sustainable and robust.
Penny Stocks to Buy: Patriot One Technologies (PTOTF)
Running on a similar theme of security, Patriot One Technologies fully meets the definition that’s traditionally applied to penny stocks. This name is a lesser-known OTC equity unit which is priced well below $1 — trading at around 40 cents today. Still, I think PTOTF stock has potential because of its underlying relevance for the post-pandemic era.
According to its site, Patriot One utilizes highly sophisticated artificial-intelligence (AI) systems to “detect a wide variety of threats such as weapons and crowd disturbances, as well as autonomously monitor perimeter security and assess evolving community health risks.” So, this company can provide alerts for things like terrorism. However, crowd disturbances are becoming an increasingly prevalent issue as well — and something that PTOTF can address.
According to an Association of Flight Attendants (AFA) spokesperson, “air rage” among unruly passengers is “the worst it’s ever been.” Moreover, according to AFA President Sara Nelson, “Flight attendants often will see the tip of the spear of whatever is happening politically or socially in our country.”
But trouble is not just brewing in the air. According to NBC News, restaurant patrons are becoming increasingly unruly as pandemic-related frustrations mount. These kinds of issues make this stock more and more cynically pertinent.
To me, one of the more exciting aspects about penny stocks (aside from the fact that you can get rich or lose your shirt in an instant) is that many of the underlying companies are involved in early-stage innovative solutions. A great example of this is Biolargo, a highly speculative play that carries immense upside potential.
According to its website, Biolargo “invents, develops, and commercializes innovative platform technologies to solve challenging environmental problems like PFAS contamination, advanced water and wastewater treatment, industrial odor and VOC control, air quality control, and infection control.”
Although society strives for a complete pivot toward clean-energy infrastructures, that’s going to take time. Meanwhile, Biolargo can aid the transition through its necessary services. Moreover, some of its services are incredibly relevant. For example, Fortune Business Insights reports that the global water and wastewater treatment market was worth $265.3 billion in 2018. Recent estimates by industry experts suggest that by 2026, this segment could hit $456.7 billion.
BLGO stock has been charting a series of higher lows since the beginning of this year. So, while it’s not a guarantee of anything, you may want to give this one a closer look.
Penny Stocks to Buy: First Graphene (FGPHF)
First Graphene is one of the few companies that is legitimately on the cutting edge of graphene research. Of course, this pick of the penny stocks may not take off right away due to lack of awareness of both the company and the industry. However, the namesake material — an essentially flat two-dimensional carbon allotrope arranged in a honeycomb lattice — is a “miracle.” Basically, graphene is ridiculously small yet the strongest material ever discovered.
Naturally, then, graphene offers paradigm-shattering industrial applications. But, since the market is unregulated, it’s difficult to know what you’re getting. Therefore, this sector has a reputational problem as fly-by-night operations claim to forward graphene-based innovations while really doing nothing more than sophisticated sleight of hand.
When it comes to FGPHF stock, though, I personally don’t believe that’s the case (which is also why I’m putting my money where my mouth is). One of the factors that led to my decision? When developed and applied correctly, this material has profitable implications across just about every industrial sector.
For instance, concrete accounted for about 8% of total global carbon dioxide emissions back in 2018. And guess what? We’re not going to stop building anytime soon. Therefore, I see huge upside potential here. However, you need to be patient with this one. FGPHF may also be more volatile than other penny stocks.
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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.
On the date of publication, Josh Enomoto held a long position in FGPHF. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.