Penny stocks are off and running once again this week. One of the biggest drivers for these small-cap names has been news. If you remember late last week we wrote about a few high volume penny stocks that finished the week on a high note. One of the companies mentioned was Cassava Sciences (SAVA Stock Report), which we called an “honorable mention.”
It was done with the idea that Cassava was set to report certain clinical data. In many cases, especially with biotech penny stocks, data readouts are similar to earnings. Favorable results tend to trigger a breakout, lackluster results tend to do the opposite. It’s a risk, obviously, and more or less that “YOLO” moment.
However, if you’re right in your assumption then the gains can become compounded. This morning, Cassava announced that its data from the Phase 2b Alzheimer’s study was favorable. In response, SAVA stock exploded during premarket trading to the tune of nearly 200%.
Why mention this? Well, leading up to the actual announcement date, SAVA stock experienced a steady climb. From June 1 to Friday’s high, shares moved a respectable 61%. Those who were able to identify this early trend, speculating on the upcoming data, positioned for this potential move. Where many traders will look for short-term breakouts, others search for trends like this. They benefit from the lead-up, potentially taking profit along the way, then hold a small core in the instance that a news event is a catalyst to a larger move.Trading Penny Stocks
Do all penny stocks go through periods like this? The short answer is no, but that doesn’t mean you can’t find different opportunities. The example I gave you above was more along the line of a swing trade. There are, of course, day trades. Keep in mind that if you’re day trading penny stocks, your time horizon should be in the scope of a day, in general.
So if you read an article about penny stocks, reference the chart, its history, and any potential catalysts in play. Determine if that situation is set up for a swing trade or if, in fact, it’s just a day trade. I know it can be difficult and some day trades can turn into swings.
In that instance, it’s why I mentioned the “hold a core, trade a core” strategy above. Similar to a tiered trading strategy, the approach allows traders to take advantage of bigger moves, while also capitalizing on short-term breakouts along the way. – Learn More About Tiered Trading.
In any case, the stock market today is full of new opportunities. The main reason I’m going into a bit more detail about different trading strategies is simple. Penny stocks are high-risk equities. Assuming that all penny stocks are going “to the moon” isn’t a strategy. Learning how to manage risk and capitalize on the move in front of you is more important that hoping a stock goes higher. The home runs will come but along the way, don’t forget about the singles and doubles. With this in mind, here’s a quick list of penny stocks to watch this week.Penny Stocks To Watch #1: Freeman Gold Corp.
You can’t ignore the attention that gold and gold stocks have received this year. Freeman Gold Corp. (OTC:FMANF Stock Report) (CSE:FMAN) is somewhat of a new kid on the block. Its business model is centered around purchasing land to be developed into mining exploration projects. One of the bigger and more recent developments that came to light involves one of the top gold stocks in the market, Yamana Gold (AUY Stock Report).
Freeman acquired and extinguished a back-in right from Yamana Gold Inc. over the Lemhi Project in consideration of the issuance to Yamana of 4,035,273 common shares of Freeman. This represents 5% of Freeman’s issued and outstanding shares. Not only does the transaction remove the existing back-in agreement on five of Freeman’s patented claims, but it also brings in a Leading Gold Producer as a significant shareholder of Freeman Gold. The transaction also further de-risks the Lemhi project and frees it of all back-in rights.
Lemhi has over 355 holes drilled in the deposit area. Furthermore, the historical data suggests the potential for gold discovery in the area. According to the company, the Lemhi Gold Project has the potential to develop a 1.5 to 2M ounce plus resource. Furthermore, the peer comparable demonstrate that there is a premium for a US-based gold company with 1.5-2m oz. with grades around 1 gram per ton.
Will Randall, President & CEO of Freeman Gold, said in a press release, “We intend to commence drilling during the first week of September with the goal of completing the twin and infill program by November 2020, and the maiden resource estimate before year end.”Penny Stocks To Watch #2: Agile Therapeutics Inc.
Agile Therapeutics Inc. (AGRX Stock Report) has been on the move for months now. However, after pulling back in the middle of July, shares managed to recover and continue this uptrend through August and now into September.
If you’ve been a reader for a “few months” you might remember AGRS back in late-October, 2019. It had actually hit some of its lowest trading levels in the history of the stock. This is when we first started to pay a bit more attention to the penny stock. Last week, we continued the discussion on the biotech penny stock after the company made some fresh Q3 highs.
One of the biggest points of focus recently has been on its Twirla female contraceptive product. The company plans to begin shipping to wholesalers in the coming quarter. What’s important to note this week is the company attends the H.C. Wainwright Global Investment Conference. Next week Agile hosts its Investor/Analyst Day where the presents Twirla’s commercial plan at that Investor/Analyst day.
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In consideration of upcoming events, AGRX stock appears to have begun climbing again at the start of the week. Will this continue as one of the penny stocks to watch for the rest of Q3? Its 52-week high still sits at $4.77, which was reached back in February.Penny Stocks To Watch #3: Marathon Patent Group Inc.
Aside from gold penny stocks, crypto penny stocks are also in focus. Marathon Patent Group Inc. (MARA Stock Report) has started to reclaim some of the losses from earlier this quarter. During the period from late July to early-August, MARA stock surged. Shares jumped from around $1 to highs of $5.25. Since then, the penny stock has experienced a slow and steady decline. Recent uncertainty around global trade, unrest between governments, the election, fiscal stimulus, you name it – investors are looking to things like bitcoin as well as gold. This week, MARA got off to a stronger start, bouncing back over 7% from Friday’s close.
Some recent developments have placed a brighter spotlight on the penny stocks. Mainly, the latest plan of acquisition for Fastblock Mining. In late August the company signed a letter of intent to acquire the mining outfit. Through the deal, Marathon could achieve several significant milestones. First, it would experience lower bitcoin mining costs. This is due to lower electricity cost per KwH. The company will also acquire 3,304 ASIC miners , which will increase the company deployed ASICs to over 5,300 miners.
According to Marathon, this would produce approximately 16 Bitcoin per day and generate monthly revenue of $4,000,000 per month. With a monthly power cost of $1,127,000 , this could result in monthly Gross Profits of more than $2,800,000 per month. That was based on Bitcoin prices around August 26th, which was about $1,000 higher compared to the current price on September 14th. Needless to say, it will be interesting to see if or when this deal closes. The company said it expects to close this deal by the end of the month.Penny Stocks To Watch #4: CBAK Energy Technology Inc.
CBAK Energy Technology Inc. (CBAT Stock Report) is another one of the penny stocks kicking things of strongly this week. Certainly, the lithium-ion battery manufacturer and electric energy solution provider has benefited from the attention on EV stock recently. You might remember this was one we started following in June.
At the time, the company’s subsidiary, China BAK Asia Holdings Limited entered into a framework investment agreement with Jiangsu Gaochun Economic Development Zone Development Group Company. CBAK’s intention is to develop lithium battery projects through this deal.
At the time, this EV penny stock was trading around $0.80 and we watched it climb to highs of nearly $1.70 just a few days later. The recent pullback in share took the stock back to its 200 Day Moving Average, which has acted as support since the end of the 2nd quarter.
There hasn’t been much news from the company recently. However, there’s been a strong sentiment with growing competition in the space. The company manufactures five types of Li-ion rechargeable batteries namely aluminum-case cell, battery pack, cylindrical cell, lithium polymer cell, and high-power lithium battery cell.