Are you new to trading penny stocks? If you are, then welcome to a whole new world of volatility. For starters, let’s go over the basic definition of penny stocks so we have the bases covered. Simply put, you can define penny stocks as shares of companies that trade for less than $5 a share. Plain and simple, quick, and easy.
Now, I’m sure you’ll run into some who will argue the point but at the end of the day, one thing matters and that’s making money with penny stocks. If you prefer stocks under $1, for instance, then that’s part of your plan; your trading strategy. For us, we like to write about as many trending penny stocks as possible so for this reason, any of the stocks under $5 is what we’ll focus on.
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With the bases covered, let’s talk some shop. When you’re getting ready to start trading penny stocks, you should keep a few things in mind. First, a list could be your best friend. Putting together a well organized and well thought out list of penny stocks is your first line of defense in getting distracted. Lately, it has been very easy to have those “squirrel” moments.How To Find Top Penny Stocks To Buy
So many cheap stocks have been breaking out 50%, 100%, and even more than 500% within a single session at times. It isn’t hard to lose focus on the trade setup you were waiting for because you just caught wind of a big momentum mover you’re trying to chase. So, a strategy is key and the Fear of Missing Out – FOMO – shouldn’t be something you factor into it. At the end of the day, there are always more trades out there if you “missed out” on one.
Also, don’t forget that cheap stocks to buy aren’t always the lowest-priced stocks. Some stocks under 10 cents might take longer to see gains than a $4 penny stock. The simple reason may come down to share structure or dilution. So, before you look for the cheapest stocks to by, look for trends you think could be profitable based on your trading style. With this in mind, these can all be bought for under $4 but are they the best penny stocks to buy right now?Penny Stocks To Buy Under $4: AutoWeb Inc.
Last week, AutoWeb Inc. (AUTO Stock Report) was in focus after reporting select preliminary unaudited results for July 2020. Jared Rowe, President and CEO of AutoWeb explained, “Our improved results over the past several months are further evidence of the strength of our turnaround. Gross margin has continued to hold above 35%, and we generated positive cash flow and adjusted EBITDA in both June and July. In fact, we drove a higher level of adjusted EBITDA in July than we did for the entire second quarter.”
At the time, AUTO stock was trading around $1.85 and what has followed is a rally to highs of $3.69 so far this month. Friday’s session saw shares of the penny stock consolidate and fill the gap between the August 19th close and August 20th opening price. This set the stock up for a pivot. The likelihood of AUTO stock either rallying or breaking down increased following the gap fill in my opinion. So far, shares have continued to perform well this week. The stock reached a closing high of $3.45 and continued its momentum after the bell too.
Analysts at B. Riley and Lake Street both recently upgraded their ratings on AutoWeb. B. Riley upgraded AUTO to a Buy and gave a $4 price target. Lake Street followed suit with the same rating while giving a $5 price target for the penny stock. Month-to-date, AutoWeb stock is up more than 150%. Will that continue before the end of August?Penny Stocks To Buy Under $4: VivoPower International
VivoPower International PLC (VVPR Stock Report) is another one of the penny stocks making big moves in August. At the start of the month, VVPR stock traded around $1.78. Last week, shares hit a high of $4.27 after VivoPower announce that its wholly-owned subsidiary in Australia was awarded a contract. Similar to AUTO, VVPR slid lower at the end of the week, effectively erasing most of last week’s gain, in general.
This week, VivoPower is on watch not only after releasing earnings. More importantly, the companies aftermarket conference call struck a chord with traders on Monday afternoon. Prior to the market open, the company released its earnings results. The company experienced record annual group revenues of $48.7 million, up 12% year-on-year. The company also saw a large improvement in an adjusted net after-tax loss. It came in at ($1.7) million and adjusted EPS of ($0.12) per share. Despite reported a loss, it’s considerably lower than what was reported for Fiscal 2019. Last year VivoPower reported an adjusted net after-tax loss of ($8.9) million loss and ($0.66) per share for FY19.
The trading day, in general, was quiet right up until the final moments. That was when VVPR stock began to surge and continued doing so well after the bell. It looks like the biggest contributing factor was the company’s earnings conference call that began at 4:30 PM EST. It will be interesting to see how this plays out heading into the remainder of the week especially considering the bullish sentiment behind alternative energy stocks.Penny Stocks To Buy Under $4: Avinger Inc.
Avinger Inc. (AVGR Stock Report) is another one of the COVID-19 penny stocks gaining ground this week. After pulling back for its 3rd consecutive day on Friday, AVGR stock sharply rebounded on Monday morning. Now, readers have followed progress on the company since the start of August. After last week’s drop, AVGR stock is essentially flat for the month. The main catalyst behind that drop was something we’ve cited in the past as a potential risk for penny stocks, in general.
Specifically, we discussed how companies can come out with public offerings at a discount, seemingly at random. When that type of event happens, it typically comes down to the price at which the financing was done. Meaning if the company raised funds, what is the price per share they did it at.
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In the case of Avinger, the company announced the offering of $5.2 million at a price of $0.47. In light of the fact that shares were trading above $0.75 just a day prior, of course, the market reacted the way it has. However, the offering is expected to close on or about August 25th so, optimism about the closing of this financing might be a catalyst to point to on Monday.Penny Stocks To Buy Under $4: Gevo Inc.
You might remember Gevo Inc. (GEVO Stock Report) from the beginning of the third quarter. The company focuses on renewable chemicals and biofuels. Furthermore, the company has a portfolio of long-term, take-or-pay contracts for its products. As of Gevo’s last prospectus for an $18 million raise, the company listed several contracts with notable clients. These included Delta Air Lines, Scandinavian Airlines System, and HCS Group GmbH to name a few. Gevo also holds 118 patents and patent applications directed to its technologies and specific methods & products.
Last week, things started to get active in a major way after Gevo announced a binding Renewable Hydrocarbons Purchase and Sale Agreement with Trafigura Trading LLC. The Agreement is a long term, take or pay contract, and is the largest contract in Gevo’s history. Trafigura is one of the world’s leading independent commodity trading companies with over $171B and over $54B in revenue and assets, respectively. Under this contract Trafigura is expected to take delivery of 25MPGY of renewable hydrocarbons, the majority of which is expected to be low-carbon premium gasoline with a smaller portion of the volume for sustainable aviation fuel, starting in 2023.
“This is our largest single contract to date, and with it, brings Gevo to over $1.5B of revenue in long term contracts when added to the other contracts we have in place,” said CEO Patrick Gruber. While GEVO stock slid following news of a $51 million raise on Friday, this week appears to be back on the same track from last Thursday. The penny stock is up over 150% since the start of August. With shares back on the rise this week, is GEVO stock back on the radar for penny stocks to buy or should this be on the list to avoid?