[Ed. note: The stock selection in this article is not inspired by InvestingHaven’s research team, nor is this in any way tied to the stock selection from InvestingHaven’s premium services like Momentum Investing. The stock ideas are from the author from this article.]
Penny stocks are typically traded over-the-counter (OTC), or as pink sheets. Of course, many of them are listed on official exchanges, and they are subject to stringent reporting requirements by the Securities and Exchange Commission (SEC). Regardless of where penny stocks are traded, due diligence must be exercised to ensure that the right stocks are selected for trading purposes.
Penny stocks can cost as little as a fraction of a cent, all the way up to $5 per share. The simplest definition of penny stocks, as defined by the regulatory authorities is as follows, ‘… Any stock that trades for $5 or less.’ This gives traders plenty of leeway when picking penny stocks. There are 4 tiers of penny stocks to choose from, including Tier 1, Tier 2 (<0.01 < $1.000), Tier 3 (>$0.01 per share), and Tier 4 (priced with 3X 000s).
The Best Penny Stocks to Buy Heading into December
Penny stocks traders routinely scour the literature in search of the best penny stocks to purchase. Stocks screeners are a great resource to use, allowing for automated behind-the-scenes scanning of the top penny stocks. Once these AI-powered constructs have identified volatile penny stocks, they are presented at the top of the listing of available options. Stocks to Trade (STT) is one such trading platform utilizing a powerful artificial intelligence search engine known as Oracle to do precisely that.
These Oracle alerts identify ‘hot stocks to trade’ by scanning the market after it opens, creating watch lists, and handpicking selections of the hottest stocks. These are then sent to traders via alert messages. For the remainder of November, and the first couple days of December 2020, the following penny stocks are worth checking out.
(CLVS: CLVS) – Clovis Oncology
Clovis Oncology is a classic penny stock. It is currently trading around $4.18 per share, with a 50-day moving average of $5.48, and a 200-day moving average of $6.52. As you can tell from the chart, the price has retreated since its September and October highs, when it reached around $8.00 per share. However, this penny stock is regarded as short-term bullish over the next 2-6 weeks, mid-term bearish, and long-term bearish. In terms of trends and patterns, a bullish pattern has been detected.
In Q3 2020, the stock outperformed expectations, with an earnings beat. In all quarters before that – Q4 2019, Q1 2020, and Q2 2020, Clovis Oncology missed its forecasts. In terms of revenues heading into 2021, there has been substantial growth since 2017, from around $50 million per annum through $150 million + per annum. In terms of recommendation ratings, on a scale of 1 (Strong Buy) to 5 (Sell), Clovis Oncology is currently rated at 3.3 by Yahoo! Finance analysts. The company currently has a market capitalization of around $432 million, with a 1-year price estimate of $7.33. This bodes well for this penny stock’s future price movements.
(NYSE: SPCE) – Virgin Galactic Holdings
Virgin Galactic Holdings Inc is not a penny stock per se, since the price has appreciated markedly since inception. However, it started at $10 per share, making it a low-cost stock option for stocks traders. The company has a market capitalization of $5.837 billion, with bullish performance expectations over the short-term, mid-term, and long-term. While the stock is currently regarded as overvalued, and the 1-year target estimate price is $25.78 per share, it is gaining tremendous traction with traders at this time.
The stock price has whipsawed wildly in recent weeks, what with increased interest in space exploration given a major boost with the Trump administration’s huge investments in Space Force. While this company has ploughed funds into research and development, Virgin Galactic has been hamstrung by coronavirus-related restrictions on its operational activities. However, with a new administration and potential game-changing vaccines on the horizon (Pfizer, Moderna et al), it is difficult to see how this stock can be suppressed for too much longer. The company already has several contracts linked with NASA, and has big plans in place to sell tickets to space in 2021!
(NASDAQ: DFFN) – Diffusion Pharmaceuticals
Diffusion Pharmaceuticals is the epitome of a short-term, bullish penny stock. The company currently has a market cap of $46.51 million, and the stock is priced at $0.7265 per share. The year-to-date performance has seen the stock rise from $0.44 per share to its current levels. While not spectacular, there have been periods of incredible growth with the stock, particularly in May and July when it towered towards $1.50 per share.
DFFN stock is short-term bullish and medium to long-term bearish. While it is overvalued, the 1-year target estimate price is pegged at $2.75 per share. A bullish pattern has been detected, as evidenced by the sharply rising price on the bottom right of the chart above.
The 50-day moving average price is $0.82, and the 200-day moving average price is $0.80. This indicates price stability which is typically negative for trading purposes. The Bollinger Bands (20, 2), make for interesting reading. The top band is $0.89, the bottom band is $0.62, and the median band (center band) is $0.76. Based on what we are seeing, the stock was oversold and is now correcting with traders buying the dip.
With the holidays approaching in coming weeks, it is likely that they will be tremendous interest in the stock. Be advised that the company has missed its consensus earnings forecasts in Q2 and Q3 of 2020, and it has yet to post a profit margin. The company’s return on assets are -38.57%, and the return on equity is -65.69%. Clearly, the stock is in its infancy stages, with much growth needed.
(NYSEAmerican: EMAN) – eMagin Corporation
eMagin Corporation is another classic penny stock currently trading at $1.10 per share. The stock is characterized by a neutral pattern, with no bullish or bearish activity detected. The company’s market cap is $74.25 million, and the 1-year price target is $2 per share. In terms of performance forecasts, eMagin Corporation is short, mid, and long-term bearish. On the plus side, the company’s annual revenues have steadily been increasing.
This company manufactures organic ‘light-emitting diode technology’. It appears as if the current price is moving towards the lower Bollinger Band at $1.00, at which point it is expected to reverse, being oversold, as traders by the depth and the price starts rising. Keep a close eye on the performance of the stock, particularly as the Bollinger bands narrow, with all the recent price stability in effect. Any exciting news wall widen those gaps between upper and lower Bollinger Bands, and cause a spike, or a fall in the price of the stock.
The 50-day moving average price is $1.24, and the long-term 200-day moving average price is $0.84. There is still plenty of juice left in EMAN to warrant closer consideration as a viable penny stock.
*All Charts Provided Courtesy of StockCharts.com