In this article, we’ll discuss a few things. First, what are penny stocks, and second why would anyone want to buy them? I’ll also discuss a few popular penny stocks that have begun trending among Robinhood traders. Many of these are in one of the hottest industries in the market this week: biotech.What Are Penny Stocks
Penny stocks are shares of companies that trade for less than $5. According to the Securities & Exchange Commission, this is the basic definition and is generally the standard for those trading cheap stocks. Of course, you’ll have the people who have their own definition of penny stocks, but these are the stocks we’ll focus on for this article.
What’s more, if you choose to buy penny stocks, you’ll also want to weigh the risk that comes with the potential for higher rewards. In this case, I’m talking about price alone. Typically, the lower the share price, the higher the volatility. Case in point, stocks under $1 only need to move 10 cents or less to see a 10% move or more. When you’re comparing that to stocks over $5, a 10 cent move isn’t significant.
So why would anyone want to buy penny stocks? Obviously, one of the main reasons is to leverage smaller sums of money to generate strong returns. Basically, $130 put into Apple will get you 1 share-ish (depending on an option for fractional shares). If AAPL stock moves $13, the position jumps 10%. This usually takes much longer. But for a $1 stock to move, 10 cents isn’t uncommon and still results in the same value change.Penny Stocks On Robinhood
Herein lies a unique scenario for traders looking for cheap stocks to buy. If they use apps like Robinhood or Webull, access to stocks under $1 may be limited. The main reason has everything to do with listing requirements. Most stocks on Robinhood are traded on major exchanges, including the NASDAQ & NYSE.
Since these exchanges have minimum listing requirements, including minimum bid price, it’s a risk when you’re talking about stocks under $1. That’s because this is usually the threshold that these exchanges require their companies to remain above to maintain a listing.
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While there is plenty of risks, there’s obvious potential for reward. Just keep in mind that some companies are on the clock, so to speak, to meet minimum listing requirements by a certain time. If they don’t, there’s a risk they get delisted from the exchange. Regardless, this hasn’t prohibited millions of Robinhood traders from buying penny stocks under $1. Here are 4 that’ve begun trending this week.Penny Stocks On Robinhood To Buy For Under $1Acasti Pharma Inc.
This year has been a strong one for Acasti Pharma Inc. Shares opened for trading at $0.3389 on January 4th and are now sitting steadily above $0.65. One of the ore initiatives of the company has centered around the strategic review of the business by Oppenheimer & Co. Less than favorable data reported back in August of 2020 sounded the alarm for the company to focus on strategic alternatives to rebuild shareholder value.
In particular, the company’s CaPre drug failed to meet its primary endpoint of statistical significance to reduce triglycerides in patients with severe hypertriglyceridemia. The company went as far as to say it wouldn’t even explore additional clinical trials for CaPre. With a big question mark, speculation ended up driving momentum in ACST stock for the time being.
The latest initiatives have Acasti focusing on raising cash. The added flexibility of having liquidity in hand could aid in its strategic review process. The biggest thing to keep in mind: without a clearly outlined path, ACST stock has been a very volatile penny stock to watch this year.Advaxis Inc.
Another biotech penny stock that has climbed its way back from the depths of penny stock levels is Advaxis. The company reported its Q1 results ended January 31, 2021, last week. Among several highlights was its ability to streamline options in the sense that it managed to decrease its EPS loss from $0.15 to $0.05 year-over-year. Furthermore, sales came in at $1.61 million compared to just $3,000 the year previous.
Like most early-stage biotech companies, the bigger focus was on Advaxis’ pipeline. In a portion of its update, Advaxis highlighted that data presented on its ADXS-503 Phase 1/2 trial demonstrated a strong response. According to the company, ADXS-502 resulted in a disease control rate of 67% and an overall response rate of 17% in the first six evaluable patients with immediate prior progression on KEYTRUDA®. Something else revealed was that the company would present at the upcoming American Association for Cancer Research meeting.
Kenneth A. Berlin, President and Chief Executive Officer of Advaxis, explained that “Based on our encouraging data, we are prioritizing the ongoing and recently expanded ADXS-503 trial in diverse treatment settings for NSCLC, and will remain focused on continued clinical execution. We look forward to our presentation at AACR, which will further expand upon the previously reported on-mechanism innate and adaptive immune stimulation which we believe are driving meaningful and durable clinical benefit for patients treated with ADXS-503.”Synthetic Biologics Inc.
The interesting part about penny stocks under $1 is that even analysts pay attention. Maxim Group upgraded Synthetic Biologics this month. The firm boosted its Hold rating to a Buy. Maxim also issued a price target of $2.50. Considering that SYN stock is trading about $0.77, that puts a forecast of more than 240% right now. Whether or not SYN will end up reaching that market depends heavily on how it executes its business, obviously.
The name of the game for Synthetic is advancing its treatment pipeline. A particular focus is the company’s SYN-004. It’s set to begin dosing patients in the first antibiotic cohorts of a Phase 1b/2a trial this quarter, actually. Topline data is expected by the end of the year. SYN-004 is being developed for allogeneic hematopoietic cell
This isn’t the only treatment in the pipeline with potential near-term catalysts. Synthetic anticipates the SYN-020 Phase 1 single-ascending-dose study beginning next quarter with top-line data in Q3. There’s also a second Phase 1 multiple-ascending-dose study of SYN-020 anticipated for the third quarter. SYN-020 is being studied for the prevention of enteropathy secondary to radiation therapy for pelvic cancers. With numerous potential catalysts ahead, will SYN be on your list of penny stocks right now?Are Biotech Penny Stocks Hot Right Now?
If you look at the stock market today, you’ll see that the S&P and Nasdaq are both red hot. This is a stark difference from what we saw at the end of the week last week. Needless to say, one of the big drivers of this momentum has roots in the biotech industry. Just look at some of the benchmark ETFs like S&P Biotech ETF (NYSE: XBI) and the Nasdaq Biotechnology Index ETF (NASDAQ: IBB).
Both have pulled an about-face and are now making their way back up from last week’s lows. Whether this trend continues is something we’ll have to watch for this week. In any case, Monday has seen a very bullish push in biotech names and might be something to keep a closer eye on as the week goes on.