The definition varies with countries but in the U.S., a penny stock is one which is trading under $5 and is often referred to as a micro-cap. A micro-cap is a company whose market capitalization is between $50 million and $300 million. These stocks trade mostly over the counter, rather than on main U.S. exchanges. But there are exceptions. You can find a few trading on the main exchanges as well, either U.S. or overseas or both.
A chief pushback against penny stock investing is the illiquid nature of most stocks. In other words, often there isn’t adequate trading volume and you can’t easily find a buyer if you are looking to sell.
Penny stock investors at times are taken for a ride by promoters, who operate with the intent of pumping and dumping. There have been instances where sponsors of these stocks may not have a legitimate company or viable business model. They play with the greed of investors and dupe them with the promise of superlative returns or by spreading false rumors. Once the stock is pumped up, these fly-by-night operators dump the stock and flee the scene.
The odds may be stacked up heavily against penny stock investing. But penny stock investing is not without its merits. The biggest allure is their affordability. And if you are lucky enough to zero in on a safer bet among penny stocks, you stand to take home superlative, or at least decent returns. Also, the current market downturn has pushed stocks of many companies with viable businesses into penny market territory. This gives us one more reason to take a look at penny stocks.
Here are a few penny stocks that I would recommend as relatively safer investment options. As always is the case, with any investment, I would remind investors that all recommendations should be carefully considered and weighed against your investment objectives.
|ASMB||Assembly Biosciences, Inc.||$2.09|
|SOLO||Electrameccanica Vehicles Corp.||$1.29|
|ADN||Advent Technologies Holdings, Inc.||$2.83|
|BRDS||Bird Global, Inc.||$0.53|
Penny Stocks: Assembly Biosciences (ASMB)
San Francisco, California-based Assembly Biosciences (NASDAQ:ASMB) is a clinical-stage biotech developing therapies for hepatitis B virus and other viral infections. HBV infection is currently treated with suppressive treatments, resulting in very low cure rates. This infectious disease currently affects about 296 million people worldwide, more than twice the number of people suffering from hepatitis C infection and human immunodeficiency virus (HIV) infection.
The company’s most advanced product candidate is vebicorvir and it is in mid-stage development in two different triple-combo formulations. BeiGene (NASDAQ:BGNE) has in-licensed the rights to develop and commercialize the product in mainland China.
Interim Phase 2 readout from the two Phase 2 studies are expected in the second half of 2022.
Apart from this, the company is developing next-generation core inhibitor product candidates ABI-H3733 and ABI-4334. Assembly Biosciences estimates the global HBV market opportunity at $3 billion, with $900 million of it attributable to the U.S. alone.
The average analysts’ price target for Assembly Biosciences stock is $10.88, according to TipRanks.
New York-based Boxed (NYSE:BOXD) was set up in 2013 as a business that can ride the crest of the e-commerce momentum. The company is an e-commerce grocery platform that sells bulk consumables. It also licenses its e-commerce software to enterprise retailers.
The company grew its revenue by 14.1% year-over-year to $46.6 million in the first quarter that ended in March 2022. Grocery sales accounted for about 95.3% of the total compared to the 4.7% from the software and services business. The latter segment, however, reported about 127% growth, markedly faster than the 14% growth for the retail business.
Boxed is confident of carrying forward the growth momentum. It expects B2B demand to increase amid the reopening. The bulk-sized cost savings and convenience could be pulling points for its business in the inflationary environment, Boxed’s chief executive officer and co-founder Chieh Huang suggested in the company’s first-quarter earnings release. He is also confident of continued growth in its software & services segment.
Finally, we remain focused on investing in the advancement of our technology, which will support growth of our Software & Services business across the globe.
The $12 average analysts’ price target for Boxed shares suggests potential for over 700% upside from current levels.
Electrameccanica Vehicles (SOLO)
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