No matter how many warnings experts issue regarding penny stocks, people invariably find their way into this speculative arena. And that issue has become even more prominent thanks to mobile trading apps like Robinhood (NASDAQ:HOOD). With the ability to wager on the full spectrum of investment vehicles right at your fingertips, Robinhood is somewhat of a mixed bag.
On the one hand, let’s at least give credit where it’s due. Prior to the novel coronavirus pandemic, financial analysts bemoaned that younger people were investing at a lower rate than prior generations at their age milestones. Suddenly, with extra time on their hands and government stimulus checks in the mail, many folks started making up for lost time. However, quite a few did so through penny stocks.
That’s not to say that this segment of the market is inherently a poor choice. Many of today’s blue chips once started off as little more than a dream, with share prices reflecting this risk profile. But with patience and truckloads of good fortune, you can make a killing with penny stocks.
At the same time, you can also end up on the other side of the equation. So before you embark on a journey dedicated to penny stocks, it’s worth reminding ourselves that stock trading is a stressful business.
I’m not trying to prevent you from whatever choices you want to make — it’s your money after all. But before you dive into these penny stocks you can buy on Robinhood, do a self-assessment (for your own good).
- Globalstar (NYSEAMERICAN:GSAT)
- Tonix Pharmaceuticals (NASDAQ:TNXP)
- Inuvo (NYSEAMERICAN:INUV)
- Bit Brother (NASDAQ:BTB)
- Cyren (NASDAQ:CYRN)
- OneSmart International (NYSE:ONE)
- Camber Energy (NYSEAMERICAN:CEI)
One last note — all of these penny stocks are risky and most are so treacherous I don’t have an adequate vocabulary to describe the dangers. Please note that this is for entertainment purposes only. That said, let’s take a closer look at the stocks on this list.
Penny Stocks to Buy: Globalstar (GSAT)
Thanks to digitalization technologies and the broader Internet of Things (IoT) movement, multiple industries are now connected in ways that they could only dream about decades ago. Globalstar is on the frontlines of this development, providing satellite services for businesses and individual clients. Specifically, the company offers “customizable Satellite Commercial IoT Solutions, connectivity for mobile and field personnel, fleet asset tracking, equipment monitoring, and enabling business efficiencies beyond cellular.”
Early this year, GSAT stock was trading at around 34 cents. During the panic speculation that took over throughout January and much of February, GSAT shares found themselves swapping owners at $2.57 a pop. But quickly, sentiment dried up as traders feared holding the bag. After a brief dip below a buck, Globalstar worked its way at time of writing to $1.23.
Of course, the question becomes, can you trust this rally? As society normalizes, you’d expect Globalstar to build back its revenue channels. However, sales for both its first and second quarters of this year have been disappointing — a characteristic not uncommon for penny stocks. If you’re going to take a shot, do so with eyes wide open.
Tonix Pharmaceuticals (TNXP)
A clinical-stage biopharmaceutical company, its website states that it’s “committed to discovering and developing innovative and proprietary new therapeutics that address the needs of patients.” Specifically, Tonix focuses on “developing small molecules and biologics to treat CNS (pain, neurology, psychiatry, addiction) and immunological (vaccines, immunosuppression, oncology, autoimmune disease) conditions.”
As you might guess, the immunological component drew much interest for speculators. With Covid-19 infections spiking sharply earlier this year, TNXP stock likewise jumped on traders gambling on the company’s coronavirus vaccine, which is based off a proprietary horsepox vaccine platform. Because “horsepox has the potential to serve as a vector for vaccines to protect against other infectious agents,” Tonix could leverage its research and development toward other diseases.
While the longer-term scientific narrative is appealing, investors are also worried about the financial profile. Here, the story is much more challenging, with net losses continuing to expand both in 2020 and on a trailing-12-month (TTM) basis. Like other Robinhood penny stocks, there might be a catalyst based on worsening U.S. coronavirus infections, but it’s a risky proposition.
Penny Stocks to Buy: Inuvo (INUV)
From here on, we’re going to dive into the riskiest side of risky Robinhood penny stocks — beginning with Inuvo. A next-generation marketing services firm, Inuvo leverages the power of big data and artificial intelligence to provide programmatic media solutions. A major component of what makes Inuvo tick is its patented technology, particularly its audience categorization program designed to “extract consumer intent from engagement with digital content.”
In the second half of January, INUV stock exploded higher and not for unsurprising reasons. While Covid-19 cases were spreading like wildfire at the time, many investors likely reasoned that this actually benefited Inuvo. After all, no one was really interested in outdoor advertising solutions considering the lack of foot traffic.
But as the vaccination rollout began in earnest, INUV stock shares started to fade as well. Though the idea of online marketing campaigns gaining momentum during a pandemic made sense, the harsh reality was that Inuvo wasn’t getting the job done in the books.
Revenue for 2020 was just under $45 million, down 27% from 2019’s result. Also, the company’s first-quarter and second-quarter sales are conspicuously below their respective pre-pandemic quarters. However, INUV stock is picking up some chatter on social media, so gamblers may want to take a look.
Bit Brother (BTB)
I’m going to take this opportunity to break the fourth wall and be quite blunt with you: I don’t think you should buy Bit Brother. To me, BTB stock has the posture of one of those penny stocks that are trading merely on flavor-of-the-week sentiment. What brought up that idea, I hear you asking?
According to its corporate statement, Bit Brother changed its name from Urban Tea to reflect its “vision for the future to conduct business in the cryptocurrency and blockchain industry.” Let me reiterate that for you. Bit Brother was formerly focused on the “distribution and retail of specialty tea products.” Now, it wants to do crypto mining. Wonderful.
Still, I don’t want to be too dismissive. Recently, the crypto sector made a huge leap, with multiple benchmark digital assets hitting multi-month highs. As a result, BTB jumped as well, which leads to the possibility that shares could correlate with crypto prices.
There are two problems, though. First, cryptos are inherently risky. Second, the pivot freaks me out as no logic exists. Still, if you want to gamble with your speculation funds, this might do it for you.
Penny Stocks to Buy: Cyren (CYRN)
On a somewhat related note to cryptocurrencies, cybersecurity concerns have erupted over the trailing year. In the most recent case regarding the Colonial Pipeline hack, online nefarious actors revealed just how much damage they can inflict on a country’s vital infrastructure. Of course, Colonial made headlines after it paid a ransom in crypto coins to restore its systems.
Under this context, Cyren — an enterprise Software as a Service (SaaS) internet security technology firm — commands tremendous relevance. Through constant monitoring of digital infrastructure and assessing potential incoming attacks, Cyren helps its clients protect themselves against an evolving threat profile. Therefore, the idea is, if you’re going to gamble on speculative penny stocks, you might as well do so with a valuable underlying business.
The problem, though, is that the upside has never panned out for CYRN stock this year, shedding 51% since its January opener. More critically, Cyren’s present-year revenue profile is not trending in the right direction relative to what it hauled in pre-pandemic. That’s rough for prospective buyers considering how much cybersecurity is in the news.
Nevertheless, data breaches will happen with greater intensity in the years ahead so this may be one to watch for speculators.
OneSmart International (ONE)
A leading K-12 afterschool education service provider in China, OneSmart International’s various solutions seek to “improve children’s learning motivation, abilities and perseverance and activate students’ enthusiasm for study.” Furthermore, OneSmart “stresses multiple interactions among students, teachers and students and between families and schools in order to improve children’s power-learning abilities comprehensively.”
On the surface, a private tutoring provider makes sense. China invests heavily in educating its youth, part of its governmental efforts to dominate the technologies of tomorrow. However, “China’s move to ban private tutoring firms from making a profit from teaching core school subjects and raising capital” created a mass exodus of venture and private equity investors, according to a July 2021 Reuters report.
So, where does that put ONE shares? Not in a good place, even compared to extremely speculative penny stocks. That being said, speculators may be banking on the idea that the recent selloff in the private education sector has been too harsh. Over the last year, ONE stock has hemorrhaged more than 86%.
Frankly, I’d consider OneSmart to be a sell. Nevertheless, it has been picking up chatter on investment forums so speculators may want to give it a look-see.
Penny Stocks to Buy: Camber Energy (CEI)
Finally, Camber Energy popped up on my radar when searching for popular Robinhood penny stocks. With society gradually making its way to somewhat normal, oil and gas demand will likely rise — thereby boosting Camber’s business, which through its majority owned subsidiary Viking Energy Group owns a working interest in energy projects across Texas, Louisiana and Mississippi.
Fundamentally, there’s some justification for bullishness in CEI stock. According to data from the U.S. Bureau of Transportation Statistics, vehicle miles traveled soared 62% between April 2020 and May 2021. Additionally, with pent-up demand from consumers who forcibly had to abstain from vacations last year will likely go on them this year. That should bode well for the entire energy industry.
Unfortunately, Camber failed to generate much momentum and its recent sales performance are downright worrying. Still, it seems the upside narrative revolves around speculators gambling on a full and quick recovery from the Covid pandemic.
For CEI stock, I’m going to leave it up to you. It’s popular and that alone might drive shares but I’ll be watching from the sidelines.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. 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.
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