Penny stocks are an inherently volatile class of equities. And that risk can lead to massive gains for those who are bold enough to play their hand.
A lot of what it takes to be successful in trading penny stocks relates to being able to spot trends. That has recently become somewhat more difficult with cheap stocks being bid up through services like Robinhood.
However, the inherent strategy remains: find companies on the rise with the proper tailwinds and right stuff internally. And get them while they are less than $5 a share.
Bearing that in mind, here are seven penny stocks to buy that are on a tear right now.
- Mereo BioPharma (NASDAQ:MREO)
- Exela Technologies (NASDAQ:XELA)
- Amyris (NASDAQ:AMRS)
- CYREN (NASDAQ:CYRN)
- American Battery Metals (OTHEROTC:ABML)
- CNS Pharmaceuticals (NASDAQ:CNSP)
- New Gold (NYSEAMERICAN:NGD)
Penny Stocks To Buy: Mereo Biopharma (MREO)
Mereo Biopharma is absolutely on a tear right now. MREO stock jumped by as much as 87.33% on Dec. 18 to ultimately settle up 60.2% on the day. So why all the movement?
On Dec. 17 the firm released news that it will collaborate with Ultragenyx (NASDAQ:RARE) bring Mereo’s osteogenesis imperfecta (OI) therapeutic Setrusumab to market. Ultragenyx is a firm focused on bringing treatments for rare diseases to market. Setrusumab has been proven to increase bone density in patients with OI, a disease in which bones form imperfectly. The disease also causes abnormal bone metabolism leading to high rates of fractures. Setrusumab is clinically proven to increase bone density in such patients.
Ultragenyx already has a strong portfolio of bone disease therapeutics, but Setrusumab is the first approved for use in OI. Ultragenyx reported that it has received further go ahead for its bone metabolism disorder therapeutic Crysvita which boasts a $200,000 price tag.
Mereo will be able to leverage the infrastructure, know how, and network of Ultragenyx in this niche market with ultra-high price tags. The result could be very strong balance sheets for Mereo moving forward. MREO stock currently trades near $3.60 per share, some 19% below its 52-week high of $4.25.
Exela Technologies (XELA)
Exela Technologies is an IT solutions firm headquartered in Irving, Texas which very recently shot up on liquidity and loan facility news. On Dec. 17, Exela announced that it had entered into a five-year, $145 million dollar loan facility deal with investment firm Angelo Gordon.
Exela had announced its intention to increase liquidity to $150 million previously. Now that the company has reached its goal, which provides $92 million up front with $53 million in performance-based contingencies, markets are paying attention. This strong signal that Exela Technologies can meet its goals sent XELA stock from 36 cents to settle at nearly 46 cents.
Exela Technologies provides business process automation products and services across a broad swath of industries. Investment firm Angelo Gordon is a private company which has been investing in credit and real estate markets for over 30 years.
Exela reported Q3 revenues of $305.3 million, representing an 18.3% decline below Q3 2019. The liquidity boost and vaccine news should make XELA stock much stronger moving into 2021.
Amyris is a bioscience company which currently trades at $4.37 per share. Based on its recent movement AMRS stock could burst above $5 soon, taking it out of the $5 or lower definition of penny stocks. Regardless of that somewhat arbitrary definition of what defines a penny stock, AMRS stock is one to consider buying.
Amyris operates across three basic sectors: clean beauty, health & wellness, and flavors & fragrances.
AMRS stock has shown a lot of volatility year-to-date. Yet, recent events may provide the boost it needs to rise and become more stable. The company recently touted that it achieved three times greater Black Friday sales revenue in 2020 than it did in 2019. This is a good harbinger, if only a spot measurement. But the company does provide sustainable ingredients which are becoming ever more important in products, especially cosmetics.
Amyris then received a bump from the media when its Purecane sweetener was recognized by Popular Science in the Engineering category of its “Best of What’s New Award.”.
The company is experiencing growth in certain areas of its business including a doubling of consumer & ingredients revenue in Q3. Although the company has operational inefficiencies to sort out, its strategy and growth has Wall Street judging it as a 3-to-1 buy or hold.
When Cyren reported revenues of $9.1 million in Q3 of 2020, investors didn’t much care. It was a slight decrease from the $9.5 million the company posted the year prior. But CYRN stock essentially continued on showing its usual levels of volatility.
Then, on Dec. 18, CYRN shares rose roughly 50% from $1 to around $1.50. The reason is because of what Cyren does. The McLean, Virginia headquartered company provides email security and threat intelligence solutions.
In light of the recent cyberattacks targeting U.S. government agencies it is clear why Cyren is popping. The cyberattacks that began undetected in March exposed email and other communications information at several agencies.
Clearly the U.S. is going to retaliate and needs to first fully understand the threat and what occurred. So it is no surprise that security firms across the board are seeing bumps in their respective stock prices.
As a result, CYRN stock could rise very quickly and price appreciation may be rife for the taking.
American Battery Metals (ABML)
American Battery Metals engages in the burgeoning market of battery recycling. With the U.S. and the world fast adopting electric vehicles, a corollary market to dispose of decommissioned vehicles will become increasingly important.
EVs may produce zero direct emissions yet they require massive batteries which do contain toxic pollutants. Enter American Battery Metals, which:
“is engaged in lithium-ion battery recycling, battery metals and material extraction, and resource production. We are a leading US-based battery metals company producing low cost battery metals with a sustainable commitment to closed loop, clean energy technologies.”
The company clearly has strong tailwinds in the burgeoning EV market, pro-EV President-elect Joe Biden, and environmental friendly policies.
ABML stock has more than doubled over the past few days and clearly has momentum in its favor. The company is rebranding and will be known American Battery Technology. If it can pioneer a closed-loop metals process as it aspires to, it could really rise far above current prices.
CNS Pharmaceuticals (CNSP)
CNS Pharmaceuticals develops therapeutics for brain cancer. That means the company has to navigate stringent FDA guidelines and regulations in order to bring any product to market. Any biotech that can’t manage that will fail. Conversely, when biotechs announce they’ve passed clinical phases they move up quickly.
That’s exactly where CNSP stock finds itself on news that its brain cancer drug Berubicin received approval for clinical trials. The drug is approved for patients suffering from glioblastoma multiforme. Berubicin is an investigational drug to be used on patients who didn’t respond to first-line therapy.
CNS Pharmaceutical holds a worldwide exclusive license for Berubicin, which has proven effective in treating 11 of 25 glioblastoma multiforme patients.
New Gold (NGD)
New Gold has been on a steady run higher since the pandemic trough in March. Back then, NGD stock was trading around 50 cents per share. It has quite steadily run up to its current price of $2.29.
The company has three major assets from which it derives its business: a gold-silver mine in Ontario, a gold-copper mine in British Columbia, and an 8% gold stream on a property it sold in British Columbia.
The name of the game in mining is processing as much throughput as possible to get to the gold or whatever is being mined. The company reached the maximum amount of throughput allowable under its permit during the quarter. Digging enough payload and processing it through massive machines is a deceptively difficult task. Mining companies often face significant trouble in achieving what New Gold has.
New Gold managed $174 million in revenues for the quarter and $16 million in profit. The company had an all-in-sustaining-cost of $1,313 per ounce and $1,349 per ounce for the quarter and year respectively. This is similar to break even price.
Considering that Kitco predicts gold can rise to $2,200 per ounce on inflation concerns in 2021, New Gold may well continue its steady upward trend.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.