What are penny stocks? According to the U.S. Securities and Exchange Commission, these are shares of companies trading for less than $5. While many traders carry their own definition of penny stocks, this is the standard issue and one we’ll use for this article.
Needless to say, low-price stocks like these carry plenty of risk/reward to consider. Outside of the standard market risks, the price can play its own role. Put simply, a lower price penny stock doesn’t need to move too much to record a substantial percentage gain (or loss). All things held constant, a $4 penny stock needs to move 40 cents to gain 10%, whereas the $0.50 stock gaining 40 cents has nearly doubled in value.
But if you’re looking for penny stocks to buy right now, you probably already understand this premise. Looking at the stock market today, several market factors play a bigger role in certain industries. Jerome Powell is speaking to the House Committee on Financial Services, which has helped boost markets. Everything from technology and financials to biotechnology and industrials are pushing higher. This is obviously a stark contrast to what we’ve seen over the last few sessions.
Tuesday saw one of the larger one-day drops in major markets this year. However, unlike what we saw in late January, this dip was rapid. The S&P 500, for instance, spent little time hovering around its 50-day moving average, bouncing swiftly throughout most of Tuesday’s session. The trend continued during Wednesday’s morning hours. So with such bullishness in the stock market today, there are several stocks to watch. Here’s a list of penny stocks that can be bought for under $3 today. Just because they’re cheap, are they worth the risk?Penny Stocks To Buy Under $3
- T2 Biosystems Inc. (NASDAQ: TTOO)
- Ampio Pharmaceuticals Inc. (NYSE: AMPE)
- Novan Inc. (NASDAQ: NOVN)
- Isoray (NYSE: ISR)
- Phunware Inc. (NASDAQ: PHUN)
Speculation has begun fueling the market in TTOO stock. That’s because next week, the company reports its fourth-quarter earnings. These are sure to include the usually financial results from the period. But I’m also sure traders are interested in getting management commentary on the outlook T2 has for the year ahead.
In 2020, the company built upon a growing interest in curbing the spread of the coronavirus. T2’s product portfolio includes several detection instruments for numerous uses. In this case, its T2SARS-CoV-2 Panel was designed to detect nucleic acid found in SARS-CoV-2 in upper respiratory specimens. The FDA awarded it Emergency Use Authorization in August.
Given its progress late last year, it will be interesting to see what its results yield. Furthermore, as stated above, it’s important to see what management says about its outlook for the year ahead in light of lower case numbers recently.Ampio Pharmaceuticals Inc.
Like many of the other biotech penny stocks today, Ampio has mounted a considerable recovery so far. The company made headlines this week after reporting new hospitals came online in its trial for inhalation treatment for COVID-19 with its Ampion platform.
Mike Macaluso, CEO of Ampio Pharmaceuticals, explained, “The trial involves only five days of treatment with Ampion delivered through inhalation, which our research suggests should be sufficient to show a clinical effect over the Standard of Care for lung inflammation in COVID-19. Preliminary data from the study shows that Ampion has improved all-cause mortality.”
Many companies are working on a vaccine. However, the side-effects of the virus and its lasting effects are also something to take into consideration. Lung inflammation is obviously one of these things. Looking ahead, Ampio is in a similar scenario as T2. Next week the company is set to report its 2020 financial results and provide its business update.Novan Inc.
Shares of Novan made a minor recovery on Wednesday. However, it wasn’t to the extent that AMPE or TTOO experienced. Needless to say, the slow yet steady recovery has come to attention as Novan gained momentum this month following several key milestones.
The most recent development came when the company was granted a U.S. patent titled “Nitric oxide releasing nail coating compositions, nitric oxide releasing nail coatings, and methods of using the same.”
We discussed Novan earlier this week in light of analyst expectations of the company. In particular, H.C. Wainwright analysts appeared bullish on the stock in light of their Buy rating. Furthermore, we highlighted the fact that NOVN stock has surpassed the initial target price set. This was in light of Novan’s advancements in treating molluscum contagiosum. The company’s SB206 treatment is currently expecting topline efficacy data before the end of next quarter.Isoray
Share of ISR stock bounced strongly on Wednesday. There weren’t any new headlines to mention. But it was in line with the move that the broader industry made. Isoray has made a huge move this year after announcing receipt of FDA 510(k) clearance for the use of C4 Imaging’s Sirius® positive-signal MRI Markers with Isoray’s Cesium-131, brachytherapy seeds.
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Isoray CEO Lori Woods commented, “This achievement represents another step forward in Isoray’s leadership in providing effective prostate cancer therapeutic tools to patients and the doctors who treat them.”
The analyst community has also gotten behind Isoray during this period of development. Oppenheimer boosted their price target on the stock from $1 to $1.50. Right now, the firm maintains an Outperform rating.Phunware Inc.
Finally, Phunware is another one of the penny stocks trading for under $3 right now. Shares have been climbing for most of the year. Even with the recent drop, PHUN stock is still up over 55% year-to-date. The company recently raised $25 million to put toward redeeming outstanding debt, among other things.
Phunware has gotten wrapped up in the cryptocurrency and blockchain technology niche of the market. The company has been ramping up efforts to commercially launch a blockchain-enabled customer data platform and mobile loyalty ecosystem. These will leverage Phunware’s Multiscreen-as-a-Service data platform to organize customer data and integrate it into a mobile engagement system allowing for 1 to 1 consumer interactions. The ultimate goal is to deploy this to drive more profitable behavior by enhancing its clients’ consumer experience.
Luan Dang, Co-Founder and CTO of Phunware, explained that its “dual-token ecosystem, powered by PhunCoin and Phun Tokens, will be managed by our PhunWallet mobile application portfolio and benefit from over a decade of experience and more than $100 million invested in developing our proprietary MaaS platform that is commercially available today.”