Trading activity is a sure sign that stock price will move; the question then becomes, which direction will it take? While trading volume is a sign of market interest, it never tells you if the bulls or the bears are active. That knowledge comes from other factors, including fundamentals, market outlook, profits, sentiment, and technical indicators, which must align for these stocks to advance and sustain their gains.
Penny stocks are risky and volatile because thin markets lead to sharp moves; the more volume, the better. This is a look at three of the Most Active Penny Stocks ranked by Marketbeat.com and whether they are a Buy, Sell, or Hold.
Nikola Volume Is Ramping Higher: Company Turns a Corner: Hold
Nikola (NASDAQ: NKLA) is still struggling with profits, cash, and the need for capital, but there are signs that it is turning a corner. The company recently began returning the recalled BEV trucks to customers and is ramping up production and sales of the FCEV. The FCEV is the real story as it provides greater range and flexibility with lower user costs and is the more likely avenue for company success. Recent news includes the production of forty-three Tre FCEVs, all sold. Forty were sold in Q1; the remainder will be delivered this month. The takeaway is that Nikola is in its revenue-generating phase and is expected to ramp EV sales over time.
Regarding volume, Nikola has appeared at or near the top of the Most Active Penny Stock rankings for the last few months. The stock average daily volume quadrupled in 2023 and recently doubled again. The spike in volume is consistent with bottoming and a potential reversal that the indicators support. MACD and stochastic suggest upward movement for this market with plenty of room to run. Technically, the stock could advance to the $1.60 and $3.00 levels without hitting market-halting resistance. Analysts have steadily lowered their price targets but still see 1000 basis points of upside at the low end of their range and 50% at the consensus.
Plug Power is Trending Lower: Sell
Plug Power’s (NASDAQ: PLUG) volume started to ramp higher in late 2023 following its going concern notice and stock price implosion. However, as hopeful as the market is and as promising as recent developments, the company stock is still in a downtrend. While Plug has aided its cash position, it will lean into dilutive efforts and may still (probably) need to raise additional funding before it crosses the line to sustained profitability.
Short interest is a risk for this stock and Nikola. Nikola short-sellers are selling into the rally and have lifted the interest to 20%. They may cap gains and cause a market downturn. Plug Power short-sellers have no rally to sell into but are still selling and lifted the interest in that stock to 25% on the last date of record. Analysts rate Plug as a Hold and see a nearly 100% upside at the consensus but have been downgrading and lowering the price target enough that this stock is also on the Most Downgraded and Lowest Rated Stocks pages, a tremendous headwind for price action.
CXApp Inc. is Showing a Strong Buy Signal
CXApp Inc. (NASDAQ: CXAI) is an enterprise app that recently announced an expanded partnership with Google. That announcement spurred a rally that began the month before to a new high, which was marked by record high volume. The technical picture alone makes this stock a speculative buy, and its position in the cloud aids the outlook. The risk for investors is that the platform has yet to be deployed, slated for sometime this summer. A single analyst rates this stock at Buy, but there is no price target. The technical outlook suggests this stock could double or triple if it can exceed the $7.50 level. A move to $7.50 is worth 50%, with shares near $5.00.
