Penny stocks are much higher risk than most other stocks. Aside from a lack of general fundamental growth, the price alone makes for a unique scenario. Let’s take, for instance, penny stocks under 10 cents. Even the slightest move in price can mean a change of 10% or more in position value. When you’re talking about the same $3 penny stock, for example, the results are much different. However, they’re both still penny stocks and carry with them volatility risk.
This is one of the biggest reasons that people look for ways of day trading them. Where else can you see a return on investment of 30% or more in less than an hour? Some of these stocks even record gains of 100% or more within a single day. But what about the cheap stocks that break out big and continue higher? Is there a way to continue taking advantage of the move in price? Of course, there is and a few schools of thought as to how to do just that.
How To Day Trade Penny Stocks
There’s a saying that goes: if a stock’s trend is truly strong, there will be more opportunities to trade it. In this case, we’re talking about traders who enter a position, then exit with a stock continuing higher afterwords. If the stock’s trend doesn’t crumble and maintains new technical levels, there’s likely a chance to “get back in” the trade. On the other hand, traders may take up a tier trading approach. This will see them enter a trade in different tiers or allotments of the total money to invest.
For example, let’s say a tier trader wants to allot $1000 to a trade. They would enter the trade with a “starter” position equating to a small percentage of the $1000. If the trade begins working out, they’d take a larger allotment and put it into the trade. With the trading continuing to work out, they’d then sell some, buy more, sell some, buy more, etc.
In any event, we’re not here to talk about how to day trade penny stocks. We’re here to see a list of names that might be worth watching. Here’s a list of 3 to take a look at.
Torchlight Energy Resources
Shares of Torchlight Energy Resources (TRCH) have been one of the top stocks to watch under $1 this quarter. Since October 1st, the energy penny stock has jumped from a quarter to as high as $0.87. Following some consolidation early last week, TRCH stock is back on the move heading into the holidays. Over the last 2 sessions, we’ve seen TRCH jump 28% with volume increasing this week.
Obviously, with COVID vaccines en route, speculation surrounds a “return back to normal” or whatever that might look like in 2021. The expectation for things like travel, manufacturing, and the like increasing place a focus on energy providers. Torchlight is an oil and gas exploration compnay.
This month the company formally signed a deal with Metamaterial to combine forces. The pending merger is expected to close expeditiously with Metamaterial holding 75% equity interest in the combined company. What’s interesting about this deal is that Metamaterial is a cleantech company. Its products are used to manipulate light. So among its applications, Meta’s technology is used for things like solar energy as opposed to oil and gas. With the new directive, this new company could be one to watch as renewable energy stocks have earned a captive audience with the incoming President of the US.
Speaking of alternative energy sources, Denison Mines (DNN) was one of the penny stocks under $1 we discussed over the weekend. Unlike Torchlight, it doesn’t have a foothold in oil & gas. Rather, the company is part of the nuclear energy production ecosystem. One of the main ingredients is obviously uranium, which Denison mines.
One of the biggest things we pointed out this weekend is the company’s potential use of the in-situ recovery (ISR) mining method. This could allow Denison the take advantage of a more streamlined methodology of uranium recovery. It may not even need to discover and develop massive-scale uranium mines. The mining method has the potential of generating optimal output by other means. So it is looking to deploy a strategy at its current Tthe Heldeth Tú é deposit.
“The selection of the ISR mining method for the Tthe Heldeth Tú é deposit has transformed our expectations for the Project – generating robust preliminary financial results with comparatively modest upfront capital costs,” said David Cates, President, and CEO of Denison, in a recent PR.
With the obvious push toward a carbon neutral world, companies like Denison could be worth a closer look. December has been a big month for DNN stock. Shares have climbed from $0.37 to as high as $0.6295. Can this trend continue into 2021?
American Battery Metals Corp.
If you’ve followed our coverage of electric vehicle stocks, you’ve definitely come across American Battery Metals Corp. (ABML). In fact, since we first began covering this company, ABML stock has skyrocketed from under $0.30 to nearly $0.90 this week. That move comes as momentum continues building behind electric vehicle stocks and renewable energy.
Can you guess what American Battery Metals Corp does? If you said drill for oil, you’re wrong. But if you said supply battery materials, then you’re on the right path. The company is in the process of opening its pilot lithium-ion battery recycling plant in Nevada. Plans for the facility include recycling some 20,000 metric tons of feedstock a rear to recover different materials necessary for manufacturing electric vehicle and consumer batteries.
In addition, the company extended its ESG model by deploying a two-fold strategy. First, recycling allows the company to add to the growing demand for fossil-fuel-free power sources. This takes into account the “environmental” impact. What’s more, is that recycling these batteries in the first place detracts from the negative impact that lithium-ion batteries have should they go to a landfill instead. This adds to the “social” and “environmental” parts of the ESG equation.