Investors would be wise to tread carefully as the U.S. Securities and Exchange Commission cracks down on small- and micro-cap stocks. While some penny stocks have plenty of upside, many of their competitors do not, and the playing field is about to get considerably smaller.
According to a recent report from Reuters, the regulatory agency is doubling down on its efforts to clean up America’s stock trading indices by delisting as many as 2,000 penny stocks, citing the “fraud-prone” nature of such small companies. As of next week, the off-exchange pink sheets upon which penny stocks have long traded could have sufficiently fewer names.
The SEC ruling hasn’t officially been handed down yet, but trading platforms are already preparing for it. Brokerage houses such as Charles Schwab (NYSE:SCHW) and Fidelity have already halted the purchasing of new shares of these companies and are urging current penny stock holders to sell off before it is too late.
Many stocks in the danger zone operate in sectors such as retail, mining and information technology services. If you think that only small-time companies are in danger, though, think again. This list includes companies who once stood as pinnacles of American commerce, such as Sears and Blockbuster. The following are only a small sample of the companies in danger of the pink slip axe, but they are among the more recognizable names from a sizable list.
10 Penny Stocks to Watch
- Sears (OTCMKTS:SHLDQ): SHLDQ represents a shell of a once-iconic household retailer that has truly fallen far from its peak. While its stock still attracts investor attention, it’s still easy to see why the company could face delisting.
- Blockbuster (OTCMKTS:BLIAQ): Remember renting videos from this former prominent chain? Maybe you actually subscribed to it before Netflix (NASDAQ:NFLX) took over. While there may be one retail store still remaining, BLIAQ actually represents the company responsible for liquidating Blockbuster assets.
- Bon-Ton Stores (OTCMKTS:BONTQ): The e-commerce boom hasn’t hit everyone and it certainly hasn’t hit this fashion retailer whose shares are down 90% for the past month. Given its history of bankruptcy and liquidation, this is hardly surprising.
- H.H. Greg (OTCMKTS:HGGGQ): This consumer electronics retailer isn’t doing much better than the name before it, with shares down more than 70% for the past month. For the past six months, shares have never risen above the 3-cent level.
- ITT Educational Services (OTCMKTS:ESINQ): The rising demand for digital educational services hasn’t done much for this technical degree provider, which officially closed its doors in 2016.
- Town Sports International (OTCMKTS:CLUBQ): Despite its ticker, this company doesn’t operate trendy nightclubs, it deals in gyms and fitness centers. The company’s shares have plunged by more than 70% over the past month and have declined by more than 90% over the past six.
- Coastal Caribbean Oils & Minerals (OTCMKTS:COCBF): Based in Bermuda, this oil miner is engaged through one of its subsidiaries, Coastal Petroleum. It has searched for oil and gas as far as Montana but these efforts haven’t done much for share prices.
- IGENE Biotechnology (OTCMKTS:IGNE): Some biotech stocks are booming but that’s definitely not the case for this specialty nutrition research and development firm. Shares have been in the gray all this week, flatlining at $0.00010 a piece.
- TreeCon Resources (OTCMKTS:TCOR): This Texas-based holding company claims to operate primarily in the areas of lumber and logging and does so through its subsidiaries. At 43 cents per share, it can boast the highest individual price on this list.
- Lee Pharmaceuticals (OTCMKTS:LPHM): This little-known pharmaceutical producer appears to mostly develop cosmetics. Its shares trade for just 17 cents and its website credentials expired at the beginning of this year.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Samuel O’Brient 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.