3 Penny Stocks to Watch if You’re Just Starting Out
With the advent of new platforms to trade penny stocks on, many investors have come onto the scene in the past six months to a year. And as a result, there are hundreds of thousands of new investors in penny stocks with billions in capital flooding into the market.
This has created both a highly profitable and highly volatile investing environment that can make it difficult at times to make money with penny stocks. But, to understand how to make a profit with small caps you first have to understand what penny stocks are.
What Are Penny Stocks
A penny stock by definition is any stock trading under $5 per share. It’s that simple. While many think that penny stocks are only traded on OTC markets, there are hundreds to choose from that are listed on the NASDAQ and NYSE. Over time, penny stocks have gotten a bad wrap from some who associate it with low volume and extremely high volatility. But, with so many to choose from, the majority tend to be legitimate businesses that simply do not have as large of a market capitalization as the big players.
When it comes to investing in penny stocks, there are usually two strategies. The more popular method tends to be short-term or swing trading. This is utilizing short-term momentum and price movement to capitalize on small gains. Swing trading is more popular with penny stocks as they tend to move frequently and in large gaps over the course of a given trading day. And as a result, those who know what to look for can make money off of tracking trading signals.
On the other hand, we have those who choose to long-term trade penny stocks. This means buying stocks at a low price and hoping for a long-term boom. While this is not as popular with penny stocks, it can be a great strategy if you have faith in the long-term future of a company.
At the end of the day, finding, buying, and making money with penny stocks all comes down to the individual trader. Before investing, traders should have a thorough understanding of their own tolerance for risk, and portfolio goals. This will help to ensure that the stocks on your watchlist, align with your comfortability for price movement. So, with this brief intro to penny stocks in mind, let’s take a look at three to watch right now.
3 Penny Stocks to Watch Right Now
- Grom Social Enterprises Inc. (NASDAQ: GROM)
- Professional Diversity Network Inc. (NASDAQ: IPDN)
- BEST Inc. (NYSE: BEST)
Grom Social Enterprises Inc. (NASDAQ: GROM)
Grom Social Enterprises Inc. is a penny stock that has continued to climb in value in the past few weeks. With an 11% gain at midday on October 7th, shares of GROM stock have climbed by over 44% in the past five days and 88% in the past month. This brings its YTD gain to over 189% which is quite substantial. If you’re unfamiliar, GROM is a media, technology, and entertainment-based company located in the United States. Grom actively operates a social media network for children under the age of 13 years. Additionally, Grom produces animated films and tv series and offers web filtering services.
On September 15th, the company closed a $4.4 million private placement. This investment is in the form of an original issue discount convertible note. This note has an 18-month maturity and a fixed conversion price of $4.20 per share of common stock. GROM is required to start making monthly payments in cash or shares 75 days after the closing date.
Grom intends to use the net proceeds from the private placement for joint ventures, potential acquisitions, partnerships, working capital, and more. Since this announcement was made, GROM stock has nearly doubled in price. The company has experienced a ton of momentum in the last month. Keeping this in mind, will GROM make your list of penny stocks to watch?
Professional Diversity Network Inc. (NASDAQ: IPDN)
Professional Diversity Network Inc. is a penny stock that has climbed by over 13% in the past five days. This company operates online professional networking communities with career resources. In addition, the company offers recruitment services, media, talent recruitment communities, corporate memberships, and much more. It also offers consumer advertising and marketing solutions. Right now, the jobs market is on fire as people return to work while Covid cases continue to drop. As a result, IPDN could see more demand in the coming months.
At the end of August, the company hosted a successful virtual summit. This was hosted by a business unit of the company called The International Association of Women (IAW). This event was sponsored by Trustworthy and raised awareness and support for the Hey There Beautiful Foundation.
“This summit brought more than a thousand women together to share stories, resources, and support. It was incredible to feel so much energy and passion in a virtual platform and left us with much hope and optimism for the future.”
President of the IAW, Megan Bozzuto
With a company like Professional Diversity, it’s important to stay up to date on the current state of the jobs market. This means looking at monthly reports, and understanding how that could impact IPDN stock. With high volume in several recent trading sessions, it’s clear that IPDN stock is seeing heightened popularity right now. Keeping this in mind, will IPDN be on your list of penny stocks to watch?
BEST Inc. (NYSE: BEST)
BEST Inc. is a company that we have discussed rather frequently in the past few months. This is a company that operates as a smart supply chain service provides. The company offers BEST Cloud which allows ecosystem participants to operate their business via SaaS applications. BEST’s technology is used for route optimization, sorting line automation, store management, and more. With the rate at which e-commerce is growing, companies like BEST Inc. are working hard to take advantage.
In August, BEST released its second-quarter results for 2021. BEST experienced a gross loss and a revenue loss during this period. It also experienced an overall net loss compared to a net profit the previous year. This seems bad on the surface, but BEST stock is performing well in the market on multiple trading days. The company is very optimistic for the future, and investors seem to be as well as BEST stock continues to make solid headway right now.
“In the second quarter we continued to press forward with our strategic refocusing plan and build on the encouraging signs we are seeing in network stability, service quality, and cost reduction while adapting to the competitive industry landscape.”
The Founder, Chairman, and CEO of BEST Inc., Johnny Chou
One thing to keep in mind is that BEST stock is a trending penny stock. This means that its price is likely to fluctuate greatly in a given trading day. And as a result, investors should understand their own tolerance for risk. Noting this info, will BEST stock be on your penny stocks watchlist this month?
Are Penny Stocks Worth it or Not?
Buying and selling penny stocks can be worth it for some, and not worth it for others. However, it truly depends on your own investing style and tolerance for risk. So, before investing, make sure that you fully understand what you’re looking for in a stock.
Are you searching for a company with low volatility and long-term potential? Or, are you more interested in making short-term gains? Regardless, there is plenty of opportunities to be had with penny stocks in 2021. Considering all of this, do you think that penny stocks are worth it or not?